Modify Working Tax Credits to subsidise short-time working, says business lobby group | Knutsford Times

Modify Working Tax Credits to subsidise short-time working, says business lobby group

By on April 20, 2009

Amid calls to subsidise the introduction of short-time working by compensating workers’ lost earnings, the FPB is proposing changes to the WTC scheme as part of its submission to the 2009 Budget, to be announced on Wednesday, 22 April 2009. The move would allow businesses struggling to survive as a result of unstable markets, credit restrictions and poor payment practices to reduce costs while avoiding making unnecessary redundancies.

Following the Government’s announcement to award subsidies of £2,500 to businesses taking on and training workers who have been unemployed for at least six months, the FPB’s Chief Executive, Phil Orford, argued that supporting the retention of staff should also be prioritised in the forthcoming Budget.

“The administrative structures are already in place to modify Working Tax Credits to allow for the retention of key and skilled staff on shorter working hours,” said Mr Orford. “This process should be based upon the actual hours worked, with income validated by the employer, rather than the current scheme’s method of basing calculations on the previous year’s earnings.”

He added: “A modified Working Tax Credit scheme to subsidise short-time working and protect both businesses and their staff would directly address increasing business closures and rising unemployment. Based on our estimation, if 20% of employees taking part in the scheme kept their job, it would pay for itself.”

FPB member Noel Hope is the Managing Director of Dorset Aluminium Products Ltd in Dorchester. He has been forced to make redundancies as a result of the economic downturn.

“The Government is providing incentives to take on the long-term unemployed, but what business owners really need is help protecting people who are already employed,” said Mr Hope. “We are a small manufacturing company and times are tough, but, as far as I‘m aware, there are no incentives to retaining staff at all. A Working Tax Credit scheme for employers makes absolute sense. It would mitigate the need to make redundancies by enabling people to work shorter hours, and allow businesses to retain the skills they need. It would buy us time to adjust to the circumstances we find ourselves in.”


About the Forum of Private Business
The Forum of Private Business (FPB) is a member-led business support organisation, representing 25,000 small and medium-sized businesses, which in turn employ more than 600,000 people. Member-firms are spread across the UK and cover all sectors of industry.

The FPB was founded in 1977 to fight for fair treatment of private businesses by decision-makers. It continues to lobby today, on issues including late payment, overregulation and unfair competition. Members have access to a range of specially negotiated money-saving deals on services from asset and invoice finance to telecoms and utilities.

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