News: SMEs call for post-election stability

Phil Orford, chief executive of the Forum of Private Business (FPB), said that regardless of the colour of the new Government, it had to create an environment of "certainty and stability" in order for businesses to grow.

"Many small businesses have faced extremely tough conditions during the credit crunch," he said.

"Just when we were getting a bit of positive news about the economy coming through, the campaigning started. The general election could not have come at a worse time."

Mr Orford continued: "It's wrong that such a key part of the economy is being used as a political football."

In the small business sector, all of the major parties focused on Labour's plans to increase National Insurance by 1%, with the Conservatives planning to raise the threshold when the increase kicks in to £35,000 and the Liberal Democrats intending to reverse the policy.

But, Mr Orford said that overall the parties' policies were not that different.

"We would like to think we could get this tax on jobs removed completely but we understand that with the deficit any Government will have to raise revenues," he added.

In the Federation of Small Businesses (FSB) 2010 manifesto, John Walker, FSB policy chairman, said the Government would be forced to make "complex and tortuous decisions" in order to lead the country to recovery.

"A sustained recovery will require more finance than the banks are currently able or willing to give; it will require a sympathetic tax regime, a stable and predictable business environment, and targeted measures to bring on innovation and entrepreneurship," he added.

Labour
• Increase National Insurance (NI) contributions by 1% except for those  individuals earning under £20,000
• Establish a UK finance for growth fund of £4bn for small to medium-sized enterprises (SMEs) in need of finance
• Create a new small business credit adjudicator with statutory powers ensuring that SMEs are not turned down unfairly when applying to banks for finance

Conservative
• Only apply the NI increase to those earning more than £35,000 and exempt new businesses from paying NI on the first 10 employees it hires during its first year of operation for two years
• Use government guarantees to create more diverse sources of affordable finance for SMEs
• Cut the main rate of Corporation Tax from 28p to 25p and the small companies' rate from 22p to 20p

Liberal Democrats
• Reverse the 1% increase in NI after identifying matching spending cuts or alternative sources of revenue
• Simplify the Corporate Tax system by removing avoidance schemes and reform business rates
• Establish local enterprise funds to provide capital to start-up businesses and establish a network of regional Stock Exchanges to provide finance for established smaller businesses

Source: Insurance Age – May 2010