Budget 2011: Small businesses say 'budget didn't go far enough'

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THE Federation of Small Businesses (FSB) has welcomed announcements in the Budget which will help provide stability, but believes it didn’t go far enough to incentivise job creation.

With 70 per cent of respondents to an FSB survey saying that their car or van is crucial to their day-to-day operations, the FSB is pleased that the Government has decided to not only scrap the 1p increase in fuel duty and the fuel duty escalator, but also to reduce fuel duty from today.

This will give much needed help to tackle inflation. The introduction of a limited form of fuel duty stabiliser is welcomed – something the FSB has been calling for. The unpredictable nature of fuel prices damages growth for businesses across the UK – with a recent FSB survey showing that 62 per cent of businesses are increasing prices, one in 10 laying off staff, a quarter freezing wages and 36 per cent reducing investment.

The FSB has long called for the re-introduction of Enterprise Zones across the UK and the announcement that 21 are to be created is good news.

Communities secretary Eric Pickles has vowed to ensure the enterprise zone set to be established in the South West will boost economic growth and stimulate private sector employment. However, with unemployment at 2.5 million the FSB is disappointed that the Government has not extended its National Insurance Contributions (NICs) holiday to existing businesses – this is a missed opportunity.

This policy would have been cheaper to implement than keeping people on benefits.

The extension of the Enterprise Investment Scheme and the doubling of Entrepreneurs Relief to £10 million will provide a much needed shot in the arm for entrepreneurship in the UK.

Small businesses are key to innovation and the 200 per cent increase in SME R&D is welcomed.

For small independent retailers struggling with inflation and other VAT rises, the extension to Small Business Rate Relief for properties with a rateable value below £6,000 will help greatly. Almost seven in 10 apprenticeships currently take place within small firms and so the plan to add an additional 50,000 apprenticeships is a significant development for the small business community and young people alike. The FSB also welcomes moves to reduce the main rate of Corporation Tax over the next three years, but is disappointed that there was no mention of how the small business rate of 21 per cent would be affected.

"We are pleased that the Government understands that the burden of regulation hinders businesses across the UK and that it has imposed a three year moratorium on new regulation for micro-firms," a spokesman said.

"This will give the smallest firms the confidence to employ more staff without having to worry about constant changes in employment law.

"But, the Government needs to look at extending this to all small firms to really open up an environment for businesses to take on more staff."

Ian Dyer, Somerset & Wiltshire Chairman, Federation of Small Businesses, said: “The Chancellor has said that this Budget would be a ‘Budget for Growth’ and in part that is what we have – however, there are vital components missing for small firms to create jobs.

“We are pleased that the Chancellor has introduced a fuel duty stabiliser, has committed to cutting fuel duty and has introduced 21 new Enterprise Zones. This will provide much needed stability for struggling small businesses.

“The Government has committed to cutting red tape, but we believe new employment laws will still come into force in this year, which could hinder businesses from taking on staff.

"The biggest opportunity missing from this Budget is by not extending the NICs holiday nationwide to existing businesses, which would really have provided incentives for small firms to take on more staff.”

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