Help us keep our current staff, say small businesses

Should the Budget change tax laws to make it easier for small firms to retain existing staff?

Last Updated: 31 Aug 2010

That’s the view of the Forum for Private Business: the lobbying group is calling for a change to the Working Tax Credits Scheme, which would mean that staff in small firms that are working shorter hours would get an extra payment. The idea is this would make it easier for small employers to reduce their staff’s hours, rather than making them redundant – and since the state would have to pick up the tab if they end up on the dole, the FPB argues, it might even be cheaper for the Exchequer…

The Government has recently announced plans to subsidise firms who take on the long-term unemployed, but the FPB thinks we should also be worrying about those still in work. The Working Tax Credit scheme was set up to supplement the wages of low-income workers, but for over-25s, it only kicks in if you’re working more than 30 hours a week. The FPB argues that by widening this, employers will have more of an incentive to keep people on the payroll. The scheme shouldn’t be too expensive to implement since the administrative structures are already in place – and will allegedly pay for itself if 20% of these people keep their jobs as a result.

It’s part of a wide-ranging package of measures that the FPB wants to see on Wednesday. As well as the usual stuff about keeping a closer eye on the banks, it also wants the Government to – inter alia – cut small business corporation tax, freeze the minimum wage and statutory redundancy pay, scrap the increases in fuel duty, NI and business rates and make it easier for small firms to win public sector contracts (a long-held beef). But with the Chancellor likely to need tens of billions in extra revenue to plug the deficit gap, we’ll believe all this when we see it...

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