Tax rises threaten faltering recovery, say small firms

Responding to the Chancellor Rishi Sunak’s speech at Conservative Party Conference, FSB National Chair Mike Cherry said:

“Small firms and the self-employed are coming up against unprecedented strain with the cost of doing business rising ever higher, and they were hoping for more on this from the Chancellor today. On top of upcoming hikes in National Insurance Contributions (NICs) and dividends, small businesses are being hit by disruption to supply chains and increasing costs taking away working capital that businesses would use to grow, invest and create jobs.

“Rishi Sunak says Conservatives want to be the party of business, but ambition is not enough - small firms need to see action. While it’s good to see some practical changes being announced by the Chancellor to get people back into work after the end of the furlough scheme, there needs to be far more focus on helping employers actually create jobs. 

“Kickstart is a vital scheme to help young unemployed people gaining workplace experience and develop new skills, so it’s good to see the scheme extended to March next year to help with the backlog. The scheme is supposed to help 250,000 people into work, but is currently stuck at just 76,000. Small firms will be pleased to hear the Government will bring back the employer incentive to create apprenticeships in England, which we have long been calling for to be extended.

“Public finances must be brought back into balance, however it is a false economy to do so off the back of a stalled recovery. If the economy dips in response to the largest permanent tax burden in history, or if tougher COVID restrictions return, this will end up costing the public coffers far more.

“The economy faces skills shortages and we need new schemes to help those furthest from work. More could be done to help this group to refresh their skills, or train to gain new ones. The Government should consider new tax reliefs and a national expansion of the Treasury’s self-employment skills pilot with FSB and the Greater Manchester Combined Authority.

“It’s disappointing to see that more is not being done to tackle employment costs which are huge drain on small businesses. Increasing the Employment Allowance would help protect the smallest employers who are being hit hard by the end of furlough and NICs rise. The Government should also expand Small Business Rates Relief to premises with a rateable value of £25,000, removing an additional 200,000 small firms from the scope of this tax, which we proposed into the Government’s review and has now been adopted by the Opposition.

“We hope to see action from the Prime Minister on Wednesday. The challenge to show the Conservatives are a pro-small-business party is still very much in the balance.”