Make the Big Breaks for Small Business

Small and Medium Enterprises (SMEs), small business to you and me, are the true creators of real, productive jobs in the United Kingdom.   They provide more jobs than do the PLCs.

David Cameron has promised to create 2 million jobs – promised – that word again.   Hard to believe particularly as the only jobs government creates are those in the public tax payer funded sector.   That is not entirely nugatory of course, we sell medical training to overseas student through NHS teaching hospitals, for example, and employing armed forces leads to creation of jobs in industry, manufacturing equipment and building ships.  That said, it is really the private sector which has the potential  to create jobs.

The business environment, however, can kill small business.   We now have EU procurement rules that makes selling to the public sector a game for the multi-nationals, we have all too tight restrictions, often unnecessary, in the work place and restrictions like the working time directive. 

But I consider that the biggest problems for Small Business to overcome are rates and slow or late payers.   We can tackle both.

Business Rates need to be simplified, and divided into two bands; a band for PLCs, which the chancellor can see as a reasonable source of revenue, and a band for SMEs.  Given that we have a large SME sector, it is acceptable for them to pay rates as a resource for the common good, but the system must not weigh against them in favour of PLCss as now. A corner shop pays more in proportion than does a supermarket.  Those hit thus, will know that.

I propose a simpler system based on a straight forward levy per square foot for both PLCs and SMEs, regardless of location. That will help city centre businesses and encourage revitalising small traders in town centre etc.  Secondly, the rate set for SMEs would be in a band factors lower than the PLC band.    I support local responsibility local authorities should be the rate setters for their areas.

Now the big one – dealing with late payers, by whom I mean PLCs, and even local authorities, who keep SMEs waiting for payment.  Indeed, bigger SMEs might well be guilty too.  

The man with the power and tools to sort this out is our dear friend the VAT man.  VAT registered businesses have to render their dues to the VAT man on a regular basis and can be hammered if they do not pay.  All the VAT mand needs to do, is to require VAT payers to include in their returns on VAT , the additional information of how much they owe their creditors beyond a 30 day limit.  There would be an automatic fine by the VAT man on that figure (helping his public pot) and inducing the slow payers to pay on time.   Being a slow payer would be highly uneconomic, and would probably dry up.