SBC's manifesto for small business

Published just days before the Chancellor outlines, in the Pre-Budget Report, his plans to help UK businesses, the Small Business Council's (SBC) 2004 Annual Report sets out a manifesto for what the country's four million small businesses are entitled to expect from Government.

It wants:

• Better policymaking: effective consultation with small firms; regulation as a last resort; clear sign-posting and communication of new legislation; recognition that one size doesn't fit all
  
• That Regulatory Impact Assessments (RIA) should be re-named Policy Impact Assessments and undergo an overhaul to ensure that they are meaningful
  
• That the cost of being governed and doing business with Government be reduced each year
  
• That retained profits should be tax-free to encourage business growth
  
• That individual regulators simplify, or abolish one or more regulations per year per person.
  
• That business support should be demand-led not supply-led.

Engine room

SBC chairman William Sargent said: "Our Annual Report sets out some fairly radical thinking on how the Government can make life better for millions of small businesses. They are the engine room of the British economy and policymakers across the board must get better at listening to them and addressing their needs.

"We are pleased with the successes the Council has had since it was set up in 2000, but the wider small businesses community still has a disproportionately low level of influence over Government policy."

Civil servants

The Council also calls for all senior civil servants to be required to spend at least one week a year in a business operating in the sector for which they are responsible, and that this activity should be directly tied to their annual appraisal. Furthermore, every policymaker should be required to simplify, reduce or remove a regulation or regulatory cost each year, and this should also be reviewed as part of their annual appraisal.

Regulation

The Small Business Council's (SBC) 2004 Annual Report calls upon government to overhaul the Regulatory Impact Assessment (RIA) to take into account the needs of the country’s four million small businesses. The Council's research shows that 200,000 small businesses would potentially create at least one new job if employment regulations and bureaucracy were reduced.

Mr Sargent said: "The regulation assessments (RIA) are sometimes not worth the paper they are written on. Attention must shift to their quality and relevance, starting with the feasibility of a policy proposal, and whether or not it will achieve the intended outcome. It must also examine the cost implications for small firms - shockingly only 7 per cent of RIAs do this at present. Lastly, we would like to see each government department being required to publish details of how it has considered alternatives to regulation."

The Council also wants to see the Government tackle the cost of compliance with regulation, setting a target of a 25 per cent reduction (as adopted by the Dutch Government). It also wants to see all regulatory forms stipulate how long they will take to fill out, and says that the Government should then commit to reducing the time taken year on year.

The SBC also recommends that:

• Treasury and the Small Business Service (SBS) should develop a model which can assess the effects of potential policies upon various types of small businesses
  
• Common Commencement Dates should apply to all government departments
  
• Legislation confirming European Community Directives should be open to challenge if it attempts to broaden the scope of legislation from that of the original Directive
  
• The Cabinet Office should measure and publish the degree to which government departments comply with the requirement to issue guidance on new legislation at least 12 weeks before it comes into force.

Finance

The SBC also calls for the Government to encourage businesses to invest in growth by not taxing retained profits.

Mr Sargent said: "There are nearly four million small businesses in the UK, which together account for 58 per cent of private sector employment and 52 per cent of UK annual turnover, so this measure could be a crucial driver of economic growth. Revenue lost in Corporation Tax would be recouped through the additional PAYE and higher VAT payments that would result from the ensuing economic activity."

Skills

In the report, the SBC expresses disappointment at the Government's approach to the skills shortage where it relates to the needs of many small businesses.

Mr Sargent said: "The National Skills Strategy is being diluted in its implementation at ground level partially by too much focus on formal qualifications. To be effective it must be demand-led, and that means recognising the important role of informal learning among small businesses."

He expressed 'frustration' with the slow speed with which Government is engaging with small businesses on the skills issue.

Pre Budget Report

The Chancellor will outline his future plans in the Pre Budget Report on Thursday (December 2). One issue which will be trailed in a discussion paper is the tax treatment relating to owner-managed businesses and how they remunerate themselves.

UKTECH will report on news and developments from the Pre Budget Report.