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BY MIKE HARRISON
CARTOON BY DAVID SMITH

What has this Government done for SMEs?

  
 

And will this second Labour term see the promises of the first delivered?

There are signs that the Government may be beginning to listen to Britain's small firms - at last. On 1 November the Minister for Small Business, Nigel Griffiths, called a meeting with small business representatives at Downing Street. He wanted to tackle growing unrest about red tape. By the end he had hammered out three SME concerns for priority attention: employment regulations such as parental leave and dispute resolution; reducing the burden of compliance with regulations; and cutting the admin load caused by form-filling.

Regulation is likely to be the issue that makes or breaks small business confidence in this Government - a swathe of red tape-busting initiatives introduced since 1997 has done little to help it. A spokesman for the CBI's SME interests, Doug Godden, says: 'They're giving signals about their opposition to regulation but if you look at the ones that have been introduced it's a very different story. The commonest complaint from SMEs is on the employment side - like the Working Time Directive, Minimum Wage and now a lot of new Parental Rights. And the whole cost of administering a payroll is significantly increased because of recent changes - the Working Families Tax Credit or Student Loan repayments, for example. Businesses are unpaid collectors on behalf of government.'

A louder voice

Much of the structure of the business environment in the UK evolved around big business but the voice of the SME sector is growing louder. For example, it can take some credit for the fact that the High Street banks have been forced to consider giving small businesses the respectful attention that large firms get.
The increased influence of the SME sector is illustrated by the CBI - commonly thought of as the big-firms club - which has introduced a specialist council to ensure its policies don't overlook the interests of smaller firms.

Life support

The first term of the Labour Government was not entirely without SME-friendly initiatives. New measures included the Small Business Service (SBS) to provide support and hand-holding. The appointment of an experienced small business adviser, David Irwin, to head it up, and the creation of an independent steering committee of business people to oversee it, were all positive signs.

The SBS launched a phone and Web help service in July - the Gateway service. It unifies six government sources of advice for SMEs within one Web and telephone portal, directing enquirers to appropriate sources of help and information about relevant legislation.

'Regulation is likely to be the issue that makes or breaks small business confidence in this Government'

One early step taken by the SBS - the reform of the Business Link network - appears to have succeeded. The SBS opened up the work to competitive tender. Several of the incumbent organisations did not make it to the shortlist. Now a leaner, fitter network provides consultancy, finance-raising advice and other support.

Taxation

The term 'stealth taxes' has entered the UK's political language under the present Government. It refers to taxes whose function is obscure or manipulative and not simply linked to turnover or profit. Some add to the cost base of a business whether it is in profit or not.
But it has not been all bad news on the taxation front. Fears that taxes might be raised to pay for the anti-terrorist military campaign were allayed.

Access to finance

The Government can take some credit for taxation reforms directed towards stimulating investment in SMEs. For example Enterprise Management Incentives give tax relief on share-based rewards, and steeper Capital Gains Tax taper relief now gives rates of 10 per cent after only four years. The Government is considering reducing the period to two years.
The Small Firms Loan Guarantee Scheme - an existing initiative retained under the present Government - is working well.

Britain and the euro

The question of whether Britain will abandon sterling and join the euro zone is an unsettling factor in business confidence. Leaving aside any personally-held political convictions on the euro, many small businesses stand to be directly affected by the decision.
Whatever the final decision about monetary union, small firms cannot afford to ignore the euro and the Government cannot ignore their concerns. It is more than just another foreign currency - a new set of accounting rules go with it. More trades are likely to be affected than just importers, exporters and travel companies.

For the full article, see page 12 of the December 2001/January 2002 issue of First Voice

  

 

Whilst every care has been taken in the compilation of this magazine, errors and omissions are not the responsibility of the publishers or of the editorial staff. Opinions expressed are not necessarily those of the publishers or editorial staff. All rights reserved. Unless specifically stated, goods or services mentioned are not formally endorsed by the FSB which does not guarantee or endorse or accept any liability for any goods and/or services featured in this publication.

Copyright NFSE (Sales) Ltd 2001