The problems with banks and rising unemployment have been at the top of the aims-list for the Budget for years, but in the Budget this year (April 22nd), these two things are possibly more important than ever.

The Federation of Small Businesses (FBS) has come up with a list of practical solutions to help tackle the recession. It is therefore calling on the government to put in place an automatic rate relief for small businesses and to increase the threshold before Income Tax and National Insurance contributions are taken.

According to a recent survey by the FBS, one in three small companies have complained that their bank is more unhelpful  now, when needed the most, than before the credit crunch began.

The FBS are also asking for the government to support businesses in accessing finance and regulating their cash flow, which they see as an urgent priority.

The FBS suggest that:

• The Corporate Mediator could act as an autonomous intermediary between banks and businesses to negotiate a resolution if financial problems arise, and giving companies clear communication and support. Their suggestion is a Post Bank be set up in the Post Office.

• If the threshold for Income Tax and National Insurance were to be risen to £10,000 this year, this would see money being left in the pockets of employees and cut the cost of employing staff. This could help the lowest income families, the self employed and those claiming back tax credit.

• As business rates are the third highest cost for small firms, the FBS suggest that the government make this rate relief automatic (which has already been done in Wales and Northern Ireland). This will give small businesses extra finance without costing the government or tax payers any money.

The Chairman of the FBS, John Wright has said:

“The Chancellor is about to announce possibly the most crucial budget in decades and he has got to get it right. The government must take decisive action to inject life into the economy and resolve the big problems faced by small businesses: the double whammy of irregular cash flow and lack of finance from the banks.

“The FBS has come up with strategic solutions to these problems in calling for the Chancellor’s next Budget to include Corporate Mediator to rebuild the relationship between banks and businesses; alternative banking solutions such as the Post Bank; and making rate relief automatic – at no extra cost to the Treasury at all.

“Tackling rising unemployment is also going to be vital. Wage subsidies for employers and employees moving towards short-time working, coupled with rising personal tax thresholds to £10,000, will put money back into the pockets of staff and the businesses that hire them.”

 

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