Federation of Small Businesses calls for action to “get the economy moving” with plans built around small businesses
Following last week’s Spring Budget, the Chancellor has been urged by the Federation of Small Businesses (FSB) to “urgently” pull together “pro-small business plans” for economic growth in light of the “gloom” surrounding the economy..
In its response to last week’s event, the FSB’s Policy Chair, Tina McKenzie, said economic growth figures put forward by the Chancellor were “a stark reminder of the urgent need to get the economy moving”.
The best route to achieving this goal is with “credible, pro-small business plans”, McKenzie said. She called on “every Government department… [and] every cabinet minister” to come up with “proper plans to back small business growth”.
Small business confidence rocked by tax hikes in recent years
In her response to the Spring Budget, the FSB Policy Chair also highlighted low levels of confidence across the small business sector. According to its polling, confidence is at its lowest “since the first year of the pandemic”.
McKenzie said this metric “needs to be turned around, and fast”, suggesting the best way to do so would be to “actually lower the tax burden” facing small businesses at the next full Budget.
The FSB Policy Chair also outlined some key areas of concern for small firms. One of the biggest issues is the current business rates regime, which Labour had promised to review when in opposition.
However, since forming a Government, the party has not yet set out its plans. As a result, McKenzie has called on the party to begin “delivering on the promises made”, including the pledge to “transform the outdated business rates system and make it fit for purpose in a modern economy”.
This, in turn, would free up funds for small firms “to invest in their businesses, rather than having money swallowed up in high taxes”.
Costs of employment increasing – just when more workers needed
Among those taxes is employer’s national insurance. From 6th April 2025, the main rate is increasing from 13.8% to 15%.
At the same time, the threshold over which the tax must be paid on employee earnings is decreasing, dragging more businesses into paying higher rates of tax as a result, “adding to the overall tax burden” facing small independents.
While acknowledging the current “pressure on the Government’s finances”, McKenzie said many small businesses are “worried” about the upcoming increase, because “their bill for employing people will […] be higher”.
As such, McKenzie said it was crucial for the Government to “listen to the feedback from businesses” on the upcoming Employment Rights Bill to ensure the final legislation does not “act as a deterrent to job-creation”.
Ending on a positive note, the FSB Policy Chair said there was “no doubt that the Government can deliver a better environment for small businesses, including as taxpayers”. She highlighted one area where the government was showing improvement: in “opening up contracts […] to more smaller suppliers”.
This approach – currently adopted for defence procurement – can be extended across “each and every government department” to deliver “greater competition and better value for taxpayers, as well as keeping more the cash from taxpayer-funded contracts in local economies across the UK”, McKenzie concluded.
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