IF David Frost, director-general of the British Chambers of Commerce, has a
single message for the government, it is this: Britain’s small businesses
are fed up with being taken for granted.
Having spent six years in the job and the past few weeks touring the country
talking to the owners of Britain’s small firms, Frost knows better than most
what he is talking about.
“Politicians take the success of businesses too much for granted. They believe
that, because the last 10 years have been really good for businesses, they
can just tax them more and more,” he said. “But businesses are saying it is
extremely competitive out there and that if the government continues to
burden them with regulations and taxation, it will ultimately harm them and
this will result in less investment and fewer jobs.”
Frost, who was chief executive of several regional chambers of commerce before
becoming director-general of the national body, plans to spend this year
tackling the government on several issues of concern to small and
medium-sized firms.
His main task is to emphasise that the raft of forthcoming tax rises will hurt
the sector.
He said: “We have to make clear that the proposals to increase taxes will lead
to a loss of competitiveness, and that will lead to a loss of wealth
creation.”
Proposed tax rises likely to have a negative impact on Britain’s small firms
include the introduction of obligatory employer contributions to personal
pensions; a business supplementary rate levied by local councils; and a
workplace parking levy payable by employers.
Frost said: “Local authorities have had a very tight settlement from central
government and are being encouraged to seek money from the business
community.
“We are also seeing the idea of a workplace parking levy in areas such as
Nottingham, so employers will be hit by a bill for their employees parking
their cars where they work.
“We are seeing road-pricing and congestion-charging being talked about in a
number of parts of the country.
“So what business is seeing across the horizon is the possibility of a number
of extra tax increases that will further hamper their growth prospects.”
Frost is, however, an optimist at heart and he believes small firms have the
power to make their voices heard, particularly if they make the effort to
become part of a business community at a local level.
This is something that the British Chambers of Commerce encourages through its
56 accredited local chambers.
Indeed, to reinforce its belief that developing local business communities
holds the key to future prosperity, tomorrow the British Chambers of
Commerce will unveil a new initiative, The Ultimate Business Network,
together with a new logo for the organisation.
The aim is to create a nation-wide online networking system, so that an
enterprise in Aberdeen, for example, can bid for work from a chamber member
in Norfolk. Access to the tender system will be free to all members of a
local chamber of commerce.
“Chambers of commerce were established in the 18th century to help businesses
adapt to the enormous technological and social changes that were occurring,”
said Frost. “Globalisation has meant we are again in a time of enormous
upheaval, but one also of opportunity. Just as competitors are no longer
from neigh-bouring towns and cities but from across the UK and the globe, so
are the opportunities.”
He added: “Individual chambers of commerce in their towns, cities and regions
are the leading business networking organisations. We are committed to
ensuring that firms make the most of the national chamber network.”
One big concern facing Britain’s small businesses, Frost said, was the lack of
skills of young people entering the work-force. They were so poor, he said,
that he had found firms across the country increasingly employing migrants
from eastern Europe to fill jobs rather than local unemployed people.
“Virtually every company I speak to, from Aberdeen to Brighton, is employing
east European workers and that will unquestionably continue in 2008,” said
Frost. “Everyone gives the same two reasons – that they have much better
skills and a much better attitude towards work than local people. One
business owner said he had forgotten how much work one person could do in a
day.
“Business owners are saying the education system here has to be improved but
also that the benefits system needs to be reformed to encourage people into
work. It cannot be the answer just to bring in more east European migrants
while we have more than half a million 18 to 24-year-olds unemployed.”
One issue that the British Chambers of Commerce, along with other business
organisations, is currently incensed about is the chancellor’s proposal to
scrap business-asset taper relief on capital-gains tax, a move that would
raise the effective rate of tax paid on the sale of a business from 10% to
18%. He said the proposed changes attacked the very heart of the
small-business owner’s approach.
“The previous regime has worked extraordinarily well in creating and growing
businesses. The small firms I represent believe strongly in a Presbyterian
work ethic, in the idea of building something up over a long period of time
and deferring taking money out until some future time when they want to sell
the business.
“Does the government any longer believe in that – or are we just a barter
economy where we just seem to be trading things?”
The good news is that Britain’s small and medium-sized enterprises claim to be
in a healthy state at present, he said, and even though a survey of British
Chambers of Commerce members showed 75% believed the economy would be worse
in 2008 than in 2007, they were keen not to overstate the case and talk
themselves into recession.
“What struck me was the high level of confidence that was out there,” said
Frost.
Government as a whole in the UK already has the problem of having too much money, so that it has to devise ever more wasteful schemes for using it up. The last thing we need is further transfers from the productive sector into government consumption.
Frank Upton, Solihull,
Much aligned to his description of small and medium enterprises are organistaions like mine which is a charity using a social eneterprise model to provide affordable childcare and education to children of families who earn low wages. In addition to the unfairness in tax system, poor quality staff and congestion charges etc, we have additional challenges to full sustainability and opprtunities to expand and deliver more services by Government policies which introduced statutory competitiors through ill thought out initiatives. Finally, as an organisation with 200 staff we are also inhibited by the constrictions of employment law. We want to be fair and equitable but the balance is completely skewed against the fairest of employers .
June O Sullivan, London,