Chancellor Alistair Darling will be making his pre-budget speech next Monday, yet the Federation of Small Business are still hoping that tax cuts and new funding will be made available for small businesses around Britain.

The Federation of Small Businesses is attempting to back the move to scrap Small Firms Loan Guarantee plans and instead replace them with a refreshed $1 billion ‘survival fund’.  The Federation is also pleading for the chancellor to ditch the proposed corporation tax increase.  The FSB is demanding that companies with up to 250 employees and a turnover of below £5.6 million should be targeted first and given a generous 75 per cent guarantee of the loan.

This cry of help from the FSB comes days after a ‘Keep Trade Local’ campaign by the Federation, seeing the FSB promoting the use of small businesses over faceless corporations.  The FSB has heavily promoted the fact that Britain runs on the success of small businesses, which make up 99 per cent of all UK businesses.

John Wright, FSB national chairman, said, “Small businesses are facing a crisis as finance dries up and the cost of finance rises. The Government must do everything it can to ensure small firms do not need to turn to alternative and expensive sources of finance. A Small Business Survival Fund will provide the urgently needed solution.”

The FSB has recently stated that small firms have recently been made to feel uneasy after the proclamation of new corporation tax rises, which would see smaller businesses pay over £1000 when two years ago they were paying nothing.

The Federation is also calling upon the Government to utilise funding that was recently made available by the European Investment Bank and calls for the funding to be made available through Regional Development Agencies.

John Wright also said, “The UK’s 4.7 million small businesses need more than talk, we need action. Alongside new funds made available in new ways, we also need to see the Government act immediately to reduce the burden of small companies’ taxation.”

Both the Federation of Small Businesses and the British Chambers of Commerce have recently criticised David Cameron’s proposal for a £2,500 ‘national insurance holiday’ for every worker removed from the unemployment list.  Cameron claimed that the proposed £2.6 billion strategy could slash unemployment numbers by 350,000 in only one year, however, the BCC’s director general warned, “Companies are not in a position to think about recruiting new staff right now. Businesses are shedding staff.

“Cash flow is of primary concern to businesses at the moment. This policy announcement would have been a valid welfare to work initiative in better times, but it is not a survival tool for small businesses during a severe downturn.”
The FSB was also cynical, saying, “Small businesses would be better helped by long-term reductions in national insurance contributions, rather than short-term breaks.”

However, Gordon Brown highlighted the importance of working with the banks to guarantee access to finance and hinted that tax cuts would feature in next weeks pre-report budget with the intent to boost the market out of the current financial downturn.

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