George Osborne’s third Budget since coming to office is likely to be his most crucial to date.
That’s the opinion of the Forum of Private Business
which believes the impending Budget which will be commended to the
House by the Chancellor on March 21 will need to focus on tax incentives
and job creation.
The member lobby group has said the onus will be firmly on Mr Osborne
to deliver an economic blueprint with a clear emphasis on
business-friendly policies, and able to effectively light the economic
touch paper to achieve the necessary fiscal growth across the UK.
The not-for-profit employer support group has outlined in its pre-Budget
submission a raft of ideas and measures it would like to see
implemented by Government in order to ‘Get Britain Trading’ – also the
title of the group’s 2012 business support campaign launched last month.
Boosting cash flow
In a Budget submission based largely on that campaign’s central
themes, heading the forum’s ‘wish list’ is action from Government to
improve cash flow for businesses, something it says has remained a huge
barrier for small firms in recent years.
While the Government’s National Loan Guarantee Scheme will come in to
effect later this spring, the forum is urging the Chancellor to tweak
the initiative so as to ensure all loans from £10,000 upwards are
included. In its present guise only loans exceeding £20,000 are covered,
effectively restricting the scheme to borrowing requirements that are
larger than those of the average micro-business.
For start-up and low-turnover firms particularly, the Government should
looking at further tax breaks for investors wanting to lend through
The forum is also supporting a reduction to 0 per cent on the tax on
interest outstanding during the lifetime of the loan, providing the loan
is still outstanding after three years, and an additional tax relief if
a business fails before the loan is repaid.
The perennial problem of late payment also continues unchecked, with
the latest data even pointing to a worsening of the situation, according
to the forum. It is calling for more help from Government to clamp down
on large companies at the top of the supply chain via the introduction
of the EU late payment directive to make 30-day payment terms mandatory.
It would also ensure against any new legislation preventing suppliers
from being coerced into new payment terms against their will.
The Government’s own procurement process could be used more
effectively to promote best practice, by avoiding businesses with over
250 employees if they are notoriously bad payers. The risk of losing
choice Government contracts would spur firms to clean up their act.
When it comes to tax the forum is continuing to call for a simplified
tax system that’s fair and proportionate. Therefore, the forum is
proposing the 50p tax rate be abandoned, but says this would need to be
countered by rises in PAYE tax thresholds from the £7,470 lower rate.
There is growing evidence, it says, to suggest the 50p rate is a barrier
to entrepreneurship and inward investment, and is, on balance,
outstripping the Government’s tax take. This could also be done in
conjunction with a reduction in VAT on home improvements as a way to
The forum is also supporting calls for a cap on business rates that
are due to spike by 5.6 per cent in April. This should be reduced to 2
per cent and held at that level for the duration of the current
Parliament. At the proposed 5.6 per cent, the rise would amount to
nearly £900 for the average high street convenience store.
On another issue of tax, the forum is asking that the Chancellor
either postpones or does away with August’s planned 3p hike in fuel duty
altogether. At a time when business costs are spiralling out of control
in areas such as energy, another significant leap in fuel duty with
diesel and unleaded prices already teetering on the brink of record
breaking prices, will strangle economic recovery and further decrease
With so many small firms reliant on fuel to power their businesses,
this is an inescapable tax which is the highest in Europe, and puts UK
businesses at a massive disadvantage to their EU counterparts.