Mark Prisk speaks up for small business

Opposition spokesman, Mark Prisk, used the Queen's Speech debate in Parliament to make the case against unjust regulations and the complex tax system relating to small businesses.

Mark Prisk, Conservative MP for Hertford and Stortford turned the economic debate from the broad landscape of the global picture of economic affairs to what he described as something more local but just as important - the concerns of small businesses and the self-employed.

Mr Prisk has been an active spokesman on behalf of freelancers and small businesses and was self-employed for more than 10 years before joining Parliament. He is also treasurer of the all party small business group, the largest all-party group in Parliament.

Mr Prisk told the House of Commons: "There are 3.8 million small businesses in the UK and 3.6 million people are self-employed. Those distinct but overlapping groups represent the backbone of our economy. After all, they employ more than half the private sector work force and they generate much of the wealth that enables us to afford the public services that we debate in this place. They are also often the most entrepreneurial and innovative enterprises in our economy.

"There is an additional reason why I believe that small enterprises matter; indeed, it is one of the reasons that I joined the Conservative party. Family businesses - the self-employed and small enterprises - send out a clear message that no matter what someone's background is, whatever the colour of their skin, whatever their race or creed, if they have the ambition, the ability and the will to work they can be their own boss and make their own way in the world. That is a very powerful reason for us to consider the role of small businesses - not only in the context of the economic debate that we are holding today, but because those businesses reach beyond mere economics."

Struggling

Mr Prisk went on to explain that he was personally aware of the burdens that regulation and the tax system placed on small businesses.

Mark Prisk MP: He said: "As a former freelancer, and having met many of the small business organisations in my constituency, it is clear to me that entrepreneurs are struggling. They tell me that they are struggling for two main reasons: the burden of regulation and the burden of the tax system. It is evident that both the volume and scope of regulation has worsened over the past seven years. We know that there are 15 new regulations every working day - a 53 per cent. increase since 1997. In absolute terms, the number is between 3,500 and 4,000 in any one year.

"I am well aware that many of the regulations come from Brussels, but the majority still come from Whitehall. It is fair to say that Whitehall manages - extraordinarily - to make EU regulations even worse than they might otherwise be, but nevertheless regulations, and their burden, matter. They matter not simply as a debating point - in the jousting between the Opposition and the Government in this place - but because, no matter what their worthy aims may be, the costs of complying with regulations and of administering them actually count for businesses."

He continued: "I have found that, for many small entrepreneurs, the problem is one of time. The Federation of Small Businesses found that the average time involved in dealing with the cumulative impact of regulations is now over 28 hours a working month. Many of those present will realise what an impact on family time that clearly has on many small businesses, and it is an unsustainable burden. That is why more and more of what I would describe as the serial entrepreneurs - the people who create and recreate enterprises - the people whom we want to keep, are retiring or selling up. That is a significant drain on the skills and the ambition that this country can ill afford to lose.

Over the past seven years, the tax system, as part of the regulatory burden, has become hideously complex. This year's Finance Bill contained 310 clauses and more than 500 pages of new tax rules and regulations. It is a symptom of a Chancellor who, frankly, cannot help meddling, interfering and tinkering. Every year we have a raft of new rates, thresholds and rules."

'Dividend tax'

Mr Prisk offered the Government's U-turn on the zero corporation tax as an example of the Chancellor's meddling in issues which directly affect small businesses.

He explained: "In 2002, the Chancellor introduced a zero rate of corporation tax on the first £10,000 of profits - apparently a very good idea, although the Government had not looked at it carefully. Of course it created a significant tax advantage for small firms to incorporate. Indeed, as I recall, the Paymaster General told us that this was a 'gift horse, which small businesses should not look at in the mouth'. That was the exact quote; I apologise for the English.

"However, the result, of which the Government had been warned, was a massive 43 per cent. increase in incorporations in the first 12 months. That was far more than the Government had expected, so suddenly they realised that they were losing more than £1 billion, as I understand it, in tax revenue that they had not accounted for.

"Suddenly, we were warned by the Paymaster General that this was not a gift horse but a tax avoidance scheme - what a farce! To compound the error, they have proceeded not to reverse the policy and admit their own error but instead to add a further change with a 19 per cent. non-corporate distribution tax rate, to try to recoup the loss. Therefore small businesses have in three years seen four changes on different rates, which directly impact on their profitability. That is a measure of the tinkering and meddling of this Chancellor."

IR35

He also cited IR35 as another 'farce' affecting small businesses. He said: "IR35 is a crude attack on freelancers and the self-employed. The regulations create barriers to work, especially in information technology. Even worse than that, however, despite being warned at the start that they would cost the Government £900 million and that they must act immediately, we discover three years on that, of the 500 cases that the Inland Revenue brought to challenge that apparently pernicious threat, it has won fewer than two - a woeful record. It has created enormous uncertainty for thousands of entrepreneurs and enormous legal bills for taxpayers.

"In conclusion, small businesses do not want the Chancellor interfering and meddling. They want smaller government. They are fed up with being unpaid tax collectors and unpaid benefit officers for the benefit of the Government. They want fewer, not better, regulations. Above all, small businesses want to know where they stand. "

He concluded by calling for a tax system for small businesses that is simpler, fairer and lower as opposed to one that is more complex, constantly changing and 'something they can never trust'.

He said: "Frankly, this Labour Government have failed to deliver for small businesses. They talk positively about deregulation, yet they pass more regulations. They talk warmly about tax reform, yet what have they done? Each year, they have passed a record-sized Finance Bill, with more rules, regulations and statutory instruments. That is the truth and the evidence of their record.

"Despite the talk, the result of all that is that when I talk to small business organisations - I am sure the same thing happens when many of my colleagues speak to them - I discover that they have finally realised that behind the spin and the smokescreen this Government will never deliver for them and that only the Conservative party understands small businesses. Frankly, it is only a Conservative Government who will deliver for them."