Prisk, fisked.

Mark Prisk MP today wrote an article on ConHome about how the government is intending to ‘help’ small businesses, this it turns out comes after focus grouping on linkedin, and no doubt in other places… but in the words of Ronald Reagan: The nine most terrifying words in the English language are “I’m from the government and I’m here to help.” and it would seem that Mr Prisk’s words haven’t gone down well.

The comments are viscous, and rightly so – the ideas put forward entirely miss the reasons why British businesses despise interference and non-action by Government; time and time again they’re missing the point that what small businesses want is the freedom to expand and grow without being taxed to death in the dangerous first few years of a business.

You can read the whole post here: Mark Prisk MP: How the Coalition Government will help small businesses to thrive and grow – if you are a business owner, please do comment, I think Mr Prisk needs to feel the full force of the feeling that I know almost every small business owner feels on this subject.

We don’t want ‘mentors’ and grants to get the unemployed to start businesses, we want intelligent management of the economy that allows entrepreneurialism to flourish. In a repost of my comments from the article I responded to yet another new plan for ‘help’ by pointing out that it’s a ludicrous situation that small businesses are being taxed to death in their first 5 years to support “saved” banks which then refuse to lend back to small businesses because it’s ‘too risky’ – until that is sorted, the situation for SMEs is not going to get much better. But with wider scope, the whole SME area needs to be looked into: as it is the engine of growth for UK trade and employment and it’s really being strangled I’m afraid.

Let’s look at a few key areas:

  • Business rates are through the roof and councils are pushing harder to make businesses pay for individual services (recycling, rubbish and so on) on top of the rates (set by Government) . Rates in central london can add a third extra to the rent for a small office before you’ve even started thinking about paying for anything else
  • Employer tax contributions are hurting small businesses – taxing small businesses to employ people: that is what the government is doing, and it hurts SMEs when they’re considering taking on new staff. A tax on jobs is a stupid idea and it should be removed forthwith.
  • Tax red tape – HMRC are slow in the extreme, tax questions take months to resolve, bills arrive late (damaging cash flow management) and the new system for PAYE is a mess… Small businesses are wasting hours every month dealing with a confusing and confused system and millions on professional advice that a simpler system would cut through immediately.
  • LTDs of whatever size are being clobbered for corporation tax right from the start – taxes for businesses should be proportionate to size and turnover. Not levied generally across the whole business world.
  • Our banking culture now doesn’t support entrepreneurism – the government can do what it likes but if it doesn’t provide a kick to the banks to stop penalising those who take risks leaving mainstream employment to set up businesses then we’re always going to lag behind: many SME owners I know have the same story to tell – that of previous ventures, (some many many years long gone) being dragged up by banks using privileged information in applications for credit linking ‘LTDs’ to private accounts and ignoring the whole point of limited liability just because they can link your accounts privately within their own systems.
  • Rather than throwing money at the unemployed to start businesses, there should be a pot available to all to support new business
  • There is no useful crisis service for small businesses, unlike big business most SMEs that get into trouble shut the doors or have the doors shut for them by bailiffs using Mediaeval laws of distraint on goods that ignore due process and result in the complete seizure of the flow of cash into the business.

Basically. Help us, Don’t kill us with taxes, and Let us get on our feet before you start trying to rip your pound of flesh from us.

I do hope Mr Prisk returns to his article, reads the comments, considers talking to the contributors and thinks again about ways his government can help the small businesses that keep our economy fluid, bring invention to Britain and keep us as world leaders in many niche fields.

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2 Responses to Prisk, fisked.

  1. I run two retail businesses in the west end, my rates come to over one third of my ground rent, I pay another grand for rubbish, I top up the tax of my 8 employees every month by legal requirement and that is before I even think about paying for stock, paying myself or anything else.

    On everything I make my LTD pays corporation tax, then when I take money out I pay tax again for taking money out of my business, and when I spend the (little) money I make I get taxed on that again. I love what I do, but the cost of doing it is increasing every year but we can’t pass those costs on as the market won’t support it.

    The government need to get their fingers out of the till – let us grow our businesses and recognise how much we already pay before asking us to pay yet more!

  2. Good post Neil, you won’t get any arguments from me on any of your points. The most productive part of my business life was in the 70s, when Labour were throwing money at you to take people on and it worked. We expanded to 40 employees very quickly and most were retained, at least the decent workers were and many were promoted.

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