smallbusiness.co.uk: Helping your business think big

Government policies to help grow the economy are out of touch with reality, says the Federation of Small Businesses (FSB).

Ahead of the Conservative Party Conference, the lobbying group warns that few government policies go far enough to tackle the problems faced by small businesses.

Cutting back on red tape and providing initiatives to help small firms employ have been welcome moves to help small firms grow, but they do not go far enough, says the organisation.

The FSB calls on the government to be bolder if they are to tackle the challenges faced in this tough economic environment.

Small businesses continue to be stifled by challenges that affected them during the recession and FSB research has showed that insufficient work and uncertainty over contracts (37 per cent), the state of the economy (33 per cent), cash flow (31 per cent) and access to finance, as well as the cost of credit (16 per cent) are preventing them from employing.

The FSB calls for the extension of work trials to the first day someone signs on for JobSeekers Allowance to help create an extra 46,000 jobs.

It also looks to an extension of the National Insurance Contributions holiday to existing businesses with three members of staff that take on up to four.

Cutting VAT to five per cent in the tourism and construction sectors for one year is another suggestion from the group.

FSB national chairman John Walker says, ‘If unemployment was lower and consumer spending higher, government policies to grow the economy might work. But they are out of touch with reality. With economic growth sluggish at best, spending on the high street low and unemployment high, the government needs to ratchet up its growth agenda and send a clear signal to the business community that it will support them.

‘Small firms lack confidence about their future prospects but they also hold the key to recovery. Kick-starting demand and further incentivising job creation would give small firms a fighting chance to return to growth. But as it stands, government policies are merely scratching the surface.’