Entrepreneurs accept need for cuts - but want more growth incentives

It's all well and good telling the private sector to create jobs, but small firms might need a bit more help.

by Emma Haslett
Last Updated: 04 Nov 2010
So was this a good Spending Review for small firms? Gloomy reports had warned in advance that some 50,000 SMEs could go to the wall as a result of the Coalition chopping back the public sector - and although it'll be a while before we know whether that's true, departmental cuts of 20% (ish) are bound to cause some casualties. The bigger issue, though, is that the Government needs the private sector to create new jobs as these 500,000 civil servants join the dole queues - and that will to a large extent have to be driven by SMEs. But entrepreneurs are worried that the Government hasn't done enough to promote the growth this requires - or provide suitable incentives to recruit...

There’s no doubt it’s going to be tough, says the Federation of Small Businesses – thanks to the ‘missing link’ in the Spending Review between the cuts and encouraging growth. ‘The Government needs to create growth, increasing the tax base and creating more businesses’, said the organisation yesterday. Jessica DeLuca Moore, who runs online beauty retailer Cult Beauty, agrees: ‘If there are any initiatives in place to help private sector growth, they’ve been quite well hidden. But the Government has got to encourage it.’

DeLuca Moore also laments the loss of the Train to Gain programme, which she says would have helped her business ‘at a higher level than we could be able to afford. But, she accepts: 'We’ve all got to make sacrifices. We’ve all got to bear the brunt’.

That said, the creation of 75,000 new apprenticeships at least provides some incentive to take on new employees. That went down well with entrepreneurs, who are still suffering from a shortage of workers with specialist skills. Charlie Mullins, who runs Pimlico Plumbers, says he’s surprised the Government hasn’t taken the opportunity to use what would have been jobseekers’ allowance to pay apprentices. ‘That’s what will solve the shortage of apprentices and bring in the skilled workers we need,’ he says.

But overall, the general feeling among small business owners seems to be that the cuts were necessary. In a quarterly referendum by the Forum of Private Business, 78% of its members had called for the deficit to be tackled ‘as a matter of urgency’. Mullins goes further: ‘Obviously I feel sad that some of the cuts have happened, but as far as I see it, we have two choices – either we do what we’re doing, or the country goes bankrupt’. But can the Coalition keep them onside? Steering clear of stealth taxes and providing more incentives to recruit (like the NI holiday) would be a good start...

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