Small businesses losing faith in Government following 2009 Budget
In all, 97% of respondents to the organisation’s post-Budget online survey believe nothing has been done to ease the burden of costs they face and 94% feel that the Budget did not address the issues threatening the survival of their businesses.
Fewer than 1% of business owners surveyed thought that the Budget was an effective response to the needs of their businesses. 68% of respondents said it would prove to be ‘ineffective’ and a quarter that it would prove to be ‘harmful’ to their businesses. Small firms were more positive about measures announced in the Pre-Budget Report than the Budget according to the FPB’s most recent Referendum quarterly survey of members, which was conducted in March 2009. 6% of the business owners taking part said the Pre-Budget Report contained effective measures, 63% believed it was ineffective and 16% deemed it harmful to their businesses.
66% of businesses surveyed before the Budget announcement said that restoring business confidence should be prioritised. In addition, 64% felt that the Government should address plummeting consumer confidence. However, in the latest survey, 91% of small business owners felt that the Budget did not address these issues.
Ongoing research shows that small business finance is a major concern for the FPB’s members because of issues such as credit restrictions, declining markets and increasing late payments. However, despite the revelation that a publicly-funded investment bank could be set up to boost lending to some small businesses, 84% of respondents in the post-Budget survey believe the issue not been adequately addressed.
Despite measures designed to ease cash-flow problems, such as extending ‘loss relief’ (the ability of firms making a loss of up to £50,000 to reclaim the tax paid on previous profits) from one to three years, doubling some capital allowances and, following an increase in late payments, a new £5 billion credit insurance scheme, fewer than 5% of respondents believe their chances of survival have increased as a result of the Budget. Further, 81% stated that they have not been given the support required for their businesses to grow and diversify.
Fewer than 10% of the small business owners surveyed said that initiatives addressed in the Budget will help businesses to grow and diversify. Some respondents applauded the increase in capital allowances.
The rise in statutory redundancy pay and new £1.7 billion job creation fund were viewed as inadequate methods of protecting employment by 88% of respondents. The FPB is concerned that the Government has not listened to its call to protect existing jobs by better supporting smaller business employers, for example, by modifying Working Tax Credits to subsidise shorter working hours and freezing increases in employment costs.
“The 2009 Budget has received a big thumbs-down from the FPB‘s members,” said Jane Bennett, the FPB’s Campaigns Coordinator. “The results of our survey highlight the Government’s missed opportunity to support employers and prevent job losses. The Budget proposals we submitted to the Chancellor in March would have supported staff on short-time working and prevented further redundancies. The scheme would be cost neutral if it prevented 2% of staff projected to be made redundant in 2009 from losing their jobs and therefore could be implemented at little cost to the Treasury.”
FPB member Geoff Gollop is the owner manager of Geoff Gollop Accountants which employs 4 people in Bristol. He said: “Small owner-managed businesses have the most potential to pull the economy out of recession but there is not much in the Budget to help them. The Budget is a case of civil servants thinking of ways to save the economy without understanding how businesses work. Most firms would not spend enough to qualify for the increases in capital allowances and the idea that pub owners will stop at midnight on New Years eve to put up VAT by 2.5% is a sign of how out of touch with reality the civil service and government ministers are.”