Belfast Telegraph

No Budget relief for beleaguered small business sector

By John Friel

Government figures released at the end of last month revealed the North West continues to have the highest rates of unemployment in Northern Ireland.

According to the statistics, Northern Ireland’s average rate of unemployment is 5.7%, the figures rise to 6.1% for the Londonderry and Limavady Council areas while 6.0% of the population in Strabane are currently out of work.

Across Northern Ireland almost 44,000 people are now claiming Jobseekers Allowance, a rise of 20,000 claimants compared to last year.

These figures are startling and when taken into consideration with the findings of the most recent FSB member survey leave us in no doubt as to just how hard the global credit crunch is impacting on the SME sector in Northern Ireland.

The FSB survey of around 200 local small business owners revealed just 43% said things were going well or had not changed for them compared to the UK average of 58%, while 57% of those questioned in Northern Ireland felt their business was performing very badly in the ongoing global economic crisis compared to the UK average of 42%.

In light of these findings the FSB appealed to the Chancellor, Alistair Darling, and the Labour Government in the run up to the Budget to consider the introduction of measures that would help boost the SME sector during these difficult times.

These included the introduction of a corporate mediator who would act as an autonomous intermediary between the banks and business customers, negotiating resolution where disputes arise; solving financial problems for business owners and ensuring clear communication of support packages on offer to the business community. We had also hoped to see a healthy rise in income tax and national insurance thresholds to £10,000. This would have lifted those on the lowest incomes out of paying tax entirely, including many self employed small business owners, and would have reduced the number of people claiming tax credits.

However, our suggestions largely fell on deaf ears and while this Budget could have been an ideal opportunity for Government to show strong support for the SME sector, the needs of small business owners were ignored. The FSB cannot stress enough the vital role small business plays. Small and medium enterprises are the backbone of the economic system in Northern Ireland accounting for 98% of the business environment and providing employment for over half a million people here.

With this in mind it is of the utmost importance that our call for government to keep small firms at the top of their agenda is now recognised and not ignored as happened in this most recent Budget.

In fact some of the measures revealed in the Budget could well be damaging to the increase in cross border trade experienced by many of our members at present.

The current reduction in VAT has been a welcome boost to many border traders as shoppers from the south come north to take advantage of the 6.5% differential in prices across a range of goods as well as cheaper fuel and alcohol.

However, these new measures announced by Mr Darling will see guaranteed year-on-year fuel duty increases up to 2013 as well as sharp hikes in the cost of tobacco and alcohol that will diminish the current differential. This advantage will be further affected at the end of the year when the current lower VAT rate of 15% is revised.

The FSB believes that, following this disappointing Budget, the Government must introduce permanent measures to bolster and protect the entire economy during this uncertain period.

At local level we are still anticipating the potential introduction of Automatic Rates Relief in 2010.

With so little being done to support small business in the Budget it is now vital the Rates legislation is agreed upon and made operational by next April.

Rates relief could benefit many SME owners by providing them with some much needed additional funding for essential matters such as staff training and resources, concentration on innovation and help make them more competitive with larger businesses. The FSB further believe such a scheme would positively encourage more potential small and medium business owners to take the plunge and go into business for themselves.

John Friel, who is from Stabane, is regional chair of the Federation of Small Businesses Northern Ireland

Belfast Telegraph