Action to make it easier for small and medium-sized companies to grow and create jobs is top of a wide-ranging pre-Budget report “wish list” drawn up by business leaders in the West Midlands.
They are also calling on chancellor Alistair Darling to tackle issues ranging from the reform of pensions to reinstating rate relief on empty commercial properties and from scrapping the rises in National Insurance to stimulating the low carbon economy.
The proposals are contained in a report drawn up ahead of next week’s report from Mr Darling by West Midlands Chambers of Commerce (WMCC), the umbrella group for seven chambers which between them represent about 13,500 companies.
Chairman Simon Topman, chief executive of Birmingham company Acme Whistles, said: “Our report outlines the measures which our members believe will provide the framework for businesses to create the growth and employment which will drive recovery, both within our region and nationally.
“If we are to tackle rising unemployment, government policy must now focus on giving employers the flexibility and appropriate support to maintain workforce levels.”
The proposed increase in employee, employer and self-employed rates of National Insurance contributions by 0.5 per cent from April 2011 will be a tax on salaries and employment, the WMCC says.
“We believe this will jeopardise job creation opportunities and business investment,” said Mr Topman.
“It is crucial that the current uncertainty around our taxation regime is resolved.
“At the very least, businesses will be looking for some respite from the very dramatic changes that have followed Budget and pre-Budget report announcements over recent years.
“We are stressing the need to avoid the implementation of unfair stealth taxes, such as the workplace parking levy, introduced simply to plug holes in public finances.”
To support investment in the West Midlands’ infrastructure, the WMCC is urging the government to introduce pilots of Tax Incremental Financing and Accelerated Development Zones without delay.
“If we are to secure UK business competitiveness, we must continue to attract key development projects despite the economic slowdown and the reduced state of public finances.
“TIF and ADZs present an opportunity for local authorities to borrow significant sums of money to invest in major projects based on anticipated future income stream which will generate increased outputs and tax revenues for UK plc.”
Calling for a stimulus for low carbon technology, Mr Topman said: “In order to become best in class with regards to developing environmental technology, we are calling upon the government to support the 40 per cent of our members that wish to diversify into eco products and services, by stimulating demand.
“We have also urged the government to address the limited availability of energy credit which is stifling intensive energy users in our region.
“The WMCC’s pre-Budget report outlines the measures which our members believe will provide the framework which will allow business to create the growth and employment which will drive recovery both within our region and nationally.”
Chamber member Tony Waldron, managing director of Executive Communication Centre, a Birmingham lettings firm specialising in managed office space, called for the restoration of rate relief on empty commercial and industrial properties.
He said his company has seen a five-figure increase in business rates following the scrappage of relief in 2008.
A call for the chancellor to restore tax credits on dividends earned by pension schemes comes from Howard Cooke, of Redditch metals group Howard S Cooke & Co. The relief was removed in 1997 and some experts have calculated that pension funds have collectively lost about £100 billion in investment income since then.
“I would like the chancellor to restore the tax credit because defined benefit schemes are being destroyed,” Mr Cooke said.
“Without a shadow of a doubt it makes a huge difference to long-term employees.”
Also looking ahead to next week’s pre-Budget statement, Rob Gunn, a tax expert at Birmingham accountants RSM Bentley Jennison, said: “With the challenges the UK is facing our chancellor, Captain Darling, needs all the support he can get from Blackadder and Baldrick.
“A cunning plan is called for, but do we really expect to get one?
“Let’s face it the UK’s finances are in a mess. Our banking sector was close to melt down last year, we’ve been in a hard recession and property values have been falling.
“Tax revenues have also been falling as over 25 per cent of the corporate tax revenue have in the past come from the financial and banking sectors.”
Other EU countries are looking at increasing their international competitiveness to attract more inward investment, Mr Gunn said.
“I am not sure that this is something the UK has really focused on and we’re losing out with businesses moving to locations with more certain and tax friendly regimes.”
Mr Gunn also speculates that the UK’s “comparatively low” rate of VAT – which reverts to 17.5 per cent on January 1 – could rise to 19 per cent. Mr Darling could trump the Conservatives by matching their pledge to cut the top rate of corporation tax to 25 per cent at a time when many companies are losing money in the recession.
“I do hope that the chancellor does not mess around with business tax losses but I feel that this would be an easy win and one that does not cost UK businesses much in the short term, but is it right going forward?
“This close to Christmas we can only hope that the pre-Budget report tries to address some of the competitiveness issues rather than further and higher levels of tax and complexity.
“Whilst a Christmas cracker with a good joke, a good toy and a party hat that fits, is what we are hoping for, everyone could be disappointed when the PBR cracker has been pulled.”
* The federation of small business pre-Budget report wishlist
* National Insurance rebate for new jobs in small businesses.
The FSB proposes businesses with fewer than 50 members of staff which take on new employees receive a national insurance rebate for a year.
* Stop the corporation tax increase
A report commissioned by the FSB shows corporation tax has a negative impact on small business investment; therefore corporation tax increases would have an impact on the economy.
* Employers’ National Insurance contributions
“An increase in Employers’ NICS would have a very detrimental effect on job creation”.
* Delay the VAT rise
Changing the rate on New Year’s Eve will be hugely problematic for many small businesses, particularly those in retail who have to change price lists.
* Cut VAT to five per cent for all construction work
“This would benefit millions of UK homeowners by getting rid of cowboy builders, helping those who cannot afford vital repairs to their homes, bringing empty properties back into use and protecting the countryside”.
* Fuel Duty
The FSB calls on the Government to remove the 2p per litre increase imposed last December.
* Reform Jobcentre Plus
The lobby group wants small business managers introduced into job centres and funding, training and support should be targeted at SMEs.
* Regulatory budgets for all Government departments
The FSB calls for a review of all regulators to consider whether they deliver value for money.
* Funding For Regions
The FSB believes Regional Development Agencies should be evolved into regional finance houses providing funding an equity schemes.
* Automatic Business Rates relief
The FSB urges the Government to make small business rate relief automatic, in order to reduce bureaucracy.