The Spending Review – What’s Missing?
We’ve now had the spending review and George Osborne has delivered his and he Government’s outline on their future strategy for the economy. We all have our opinions on the advisability of the high risk strategy set out by the Government, but what about small business? After all, its this sector of the UK society that the Coalition is depending on to pull us out if the mire.
Small business membership organisation, the Federation of Small Businesses has urged the government to implement a new growth programme for smaller companies. FSB research has shown that three quarters of small businesses in the UK thought the coalition government should cut spending to tackle the public deficit and six in ten said they were more willing to accept cuts in public spending because of the size of the public sector deficit.
Whats missing from the spending review?
However, the FSB said the missing link in the Government’s deficit programme is the need to create growth – using strategies such as increasing the tax base, creating more businesses and incentivising small firms to grow and innovate.
It said a programme for growth is even more crucial given that latest FSB research shows that 10.4 % of companies expect to DECREASE employment over the next 3 months, since business confidence in future prospects and revenue growth weakened over the July to September 2010 period.
The FSB believes a Programme for Growth aimed at small firms will be very relevant given that more than 80% of jobs in the EU were generated by small businesses between 2002 and 2007.
As a result the organisation is calling for an extension to the National Insurance Contributions holiday to include existing firms with up to four members of staff and provide incentives when they take on three new employees – funded by scrapping the £1 billion regional growth fund.
Its also asked for a cut in VAT to 5% in the construction sector to help create jobs and stimulate the economy, but also increase revenue to the Treasury.
So, not exactly a ringing endorsementf or the spending review from the very people that the Government expects to take the lead in bringing the UK out of its current difficulties. If this really is to happen, the Coalition will really need to build on the the “cutting to the bone” strategy coming out of the spending review, by also introducing measures to assist business to invest, employ and grow.
Click here for more details about the 2010 spending review.