£2,000 NI break a real boon for smaller employers
Business lobby group the Forum of Private Business has given George Osborne an overall thumbs-up for his Budget.
The not-for-profit employer support organisation welcomed much of what was in the Chancellor’s speech, with the only immediate criticism his inaction on business rates.
But it said the Employment Allowance, worth £2,000 to all businesses with employees, was a real boon for smaller UK businesses.
'We’ve been calling for a scheme like this for a number of years now, so our only disappointment with this is that it’s 12 months away, and that’s a mighty long way off,' said the Forum’s Head of Policy, Alex Jackman.
'While business will love the concept, the fact that no financial benefits will be felt until April 2014 somewhat takes the shine off it. Still, it will allow for businesses to prepare and plan ahead.
'The bottom line here though is that this initiative will have a double function, that is to either incentivise employers to take on more staff, or to take the saving and boost their profitability. For many small firms who’ve been operating on extremely small margins the latter would be welcome relief.
'For businesses looking to grow though, it means they’ll be able to employ an additional employee earning £22,400, or an additional four employees working full time on the adult minimum wage without any increase in their employer NICs. That’s got to be good for employment figures and therefore the wider economy.'
Alex Jackman also welcomed the growth vouchers concept, but said this was not nearly well funded enough.
'It’s a recognised fact that expert advice on key business processes and issues can significantly improve business performance – small firms who take advice are much more likely to survive,' he said.
'Growth vouchers will help if it enables SMEs to do this. £30 million may seem a small amount but we are already working with government on this project to see how best their investment can be used.'
The Forum was however critical of the Chancellor’s inaction on business rates, which it said would have been a blow to many SMEs hoping for at least a freeze.
'Ask any small businesses what they wanted to see from this Budget and many will have said: ‘action on business rates’,' added Alex. 'We said before the Budget government couldn’t keep clobbering businesses with hike after hike, and unfortunately we haven’t seen that sentiment acknowledged today by Mr Osborne.
'It was really a case of enough already years ago, and April’s increase which now goes ahead as planned will mean rates have spiralled by a mammoth 13% in just three years. There aren’t many businesses who’ve seen income increase by anything close to that figure with sluggish growth and recession to contend with in the same period.
'Business rates have risen so much in just a few years they are the number one enemy to many small firms, and we believe they are a big part of the problem with our high streets too. It’s disappointing to see no action here – it was the obvious way to relieve pressure and is a missed chance for quick relief for business.'