Think small to help boost micro businesses and the economy

  • 3-19-2012

On Wednesday, George Osborne will deliver the Budget. He will do so at a time when the number one priority must be to continue with necessary austerity measures that will help reduce the deficit and put public finances back on an even keel.

 

The recent 0.2% contraction in the economy demonstrates that the road to recovery will indeed be a rocky one. Matters such as the eurozone crisis only serve to hinder progress.

 

Perhaps even more so than in stable economic times, I suspect the Chancellor will be receiving advice from all quarters on what he should include in his Budget. Somewhere within the large pile of submissions sitting on his desk will be some thoughts I have jotted down. In my submission, I ask the Chancellor that, as others focus on high matters of macroeconomic policy, he does not forget about our micro businesses.

I established the All-Party Parliamentary Group (APPG) for Micro Businesses back in February last year to provide our very smallest businesses with a voice in Parliament. I believe the importance of micro businesses cannot be underestimated. An estimated 90% of all businesses employ less than five people. More people are currently self employed than ever before and, between 2008 and 2011, the number of businesses with fewer than five people rose by 7%. In the same three years, the number of businesses with 100 employees or more declined by 2.5%.

It was within the above context that I submitted my thoughts to the Chancellor. I do so fully accepting that the number one priority for the Government has to be to take whatever steps are needed to reduce the deficit, get public finances under control and retain our status as a safe bet in what are uncertain economic times globally. However, I also believe that we should take any chance we have to get finance flowing to our smallest enterprises.

 

I also want to see the taxation burden simplified and eased for our micro businesses and I really want to see the Government undo the reams of red tape that continue to suffocate the life out of many of our micros.

 

How can we do this? Well, I put forward one or two thoughts which are based on conversations I have held with micro businesses based across the country since the APPG was set up. Among them was a proposal to extend small business rate relief even further than we already have and to announce any extension now to provide a degree of certainty.

 

In addition, I would like to see our official understanding of what is meant by a micro business redefined both before the EU does it for us and in order to guarantee schemes designed to help our smallest enterprises are reaching those they are intended to reach.

 

Other suggestions included creating a limited liability status for sole traders, reforming schemes like the New Enterprise Allowance or the National Insurance holiday so more budding entrepreneurs can benefit from them and better promoting initiatives that could help more of our micro businesses (for example, I wonder how many businesses eligible for the flat rate VAT scheme take it up).

 

Speaking of VAT, I also believe we should look into giving the tourist industry a helping hand, in what promises to be a huge year thanks to the Diamond Jubilee and London 2012, by reducing VAT on hotel accommodation and B&Bs. I also called not only for the proposed fuel duty rise planned for August to be scrapped, but also for serious consideration to be given to extending the rural rebate scheme to parts of our country, such as Devon and Cornwall, where the car is often a necessity and not a luxury.

 

Out of all the proposals I submitted to the Chancellor (of which the above is only a selection), the one thing I really want to see happen is more targeted assistance to be offered to those wanting to start their own business.

 

At the moment, we tend to operate a one-size-fits-all method. However, I believe the needs of an 18-year-old are often very different to those of somebody who is 60. As a result, I have been working with Virgin to champion the Youth Investment Fund. Essentially, this fund would offer a relatively small amount of finance to wannabe young entrepreneurs on similar terms to the student loan in order to allow them to start their own business.

 

I have backed this because I believe we should support youngsters who want to earn as much as those who want to learn. I believe we must not be afraid to champion our young people and back their ideas where we can. I also believe a similar scheme (although one based more on information, advice and guidance) should be offered to those of a more mature vintage who want to start a business.

 

Let us harness the drive and determination of those who want to be their own boss and help them turn their efforts into businesses that employ local people and offer the goods and services that we want.


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