2009 Budget must support small businesses hit by declining confidence

18 March 2009

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The FPB has handed the Government proposals for a ‘Budget for Business Survival', focusing on boosting business confidence and lifting the UK's economy out of recession.

The 2009 Budget will be announced on 22 April 2009; the FPB's submission addresses four key elements:

- Improving access to finance for small businesses
- Minimising the cost burdens of small businesses
- Protecting employment
- Improving economic activity

In its latest quarterly Referendum survey, members of the FPB voted for restoring business confidence (65%) and restoring consumer confidence (63%) as the two issues they most want the Government to prioritise in the 2009 Budget in order to support their businesses.

"Rebuilding confidence is key to ensuring that small businesses are able to survive and, ultimately, as the economy recovers, begin to grow again," said the FPB's Chief Executive, Phil Orford. "That means workable policies creating the right conditions for both small businesses and consumers, which is why we are urging the Government to implement short- and longer-term strategies to help bolster cash flow, remove costly barriers to growth, protect key staff and stimulate trade. At present, most business owners are receiving confusing messages from the Government and the banks."

In all, 82% of respondents fear that taxation will be increased on smaller businesses to pay for the measures announced in the Government's Pre-Budget Report (on 24 November 2008), which was deemed ‘ineffective' by 66% of respondents, and ‘harmful' by 13%.

The planned hike in National Insurance (NI) in 2011 was considered to be ‘damaging' by 62% of respondents, and ‘very damaging' by 29%. This was followed by the scheduled increase in fuel duty by 2p per litre in 2009 and again in 2010, this was seen as ‘damaging' by 52% of FPB members surveyed and ‘very damaging' by 27%.

Further evidence from the FPB's recent Economic Downturn Panel survey, which was carried out between 4 and 11 March 2009, shows that a reason for this declining confidence is a perceived lack of support, with 59% believing that support from the Government has not improved and 35% that it has deteriorated. Only 5% said the Government is providing them with better support. Not a single respondent said that bank support has improved. Half reported no improvement and 50% said it is getting worse.

The FPB is urging the Government to seize the opportunity to address the deterioration of the economy by focusing on the wealth and job creating sectors in order to break the cycle of decline, providing the certainty and stability that small businesses need in order to survive and grow.

Other issues identified as priorities for small businesses in the 2009 Budget Referendum survey are: business rates (59%), cost of utilities (52%), minimizing other regulations (50%), taxation policy (49%), health and safety law (40%), late payment/bad debt provisions (37%), weak pound (35%), other employment law (35%), access to finance (35%), cost of finance (29%), laws involving redundancy (28%), cost of raw materials (24%), credit/trade insurance (19%), improving transport system (17%), access to public contracts (17%) and skills of local labour force (14%).

2009 Budget must support small businesses hit by declining confidence

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