Small businesses are the lifeblood of our economy and, at present, they’re not getting the support they need and deserve from government. Just as the majority of people’s living standards have been hit by a cost of living crisis, Britain’s small businesses have also been hit.
Many businesses are still struggling to get credit and people aren’t spending like they used to so profits remain very low. At the same time, high inflation has fuelled a rise in business rates of nearly £2,000 this Parliament. Despite having long called for reforms to the system of business rates, more than one in ten small businesses say they spend the same on business rates as they do on rent.
It goes without saying that such high costs and a lack of governmental support (particularly for micro-businesses and start-ups) is driving small businesses to the wall. This is especially pronounced in retail: there are now 40,000 empty shops in the UK. John Allan, the National Chairman of the Federation of Small Business has described the rates as “now a barrier to growth, to opportunity and to investment.”
Just as the Tories’ have no answer the families’ cost of living crisis whilst giving tax breaks to the privileged few at the top, their attitude to business is help for those at the very top (multinationals and large corporations), but next to nothing for the small businesses who make Britain what it is — in fact, the government is spending a giant £10 billion in tax cuts for the top 2% of businesses in the country.
I was really pleased that, last week at the conference, Labour announced that instead of going ahead with the tax cut for the businesses who are already the most successful, we would use that money to cut business rates for small businesses in 2015, then freeze rates for 2016. This cut to rates received the immediate backing of the Federation of Small Business and would benefit properties with an annual rental value of less than £50,000, meaning a saving of nearly £450 for 1.5 million properties.
Cameron has responded to this with the cry that Labour are “anti-business”. Rubbish. What’s more pro-business than wanting to help the millions of entrepreneurs who are struggling on a daily basis to keep their small businesses afloat? Contrary to what Cameron and Osborne would have you believe, ditching the corporation tax break for the biggest businesses would not damage the competitiveness of the UK in the global race: our corporation tax is already among the lowest in the G20.
When times are tough and there isn’t much money to go around, government’s spending decisions become about priorities. So, who should a government prioritise for a tax cut in times like these? Millions of small businessmen and women or the top 2% of businesses who have already received £10 billion worth of tax cuts this Parliament? To me the answer is obvious.
If we want to see an economic recovery that benefits the majority, not just a privileged few, the government should stop prioritising the businesses at the top over the struggling small businessmen and women who are the real engine of the British economy.