Looking ahead to a general election

26 Jan 2010

The political parties have wasted no time hurling themselves at us since the New Year.

Like the aged aunt, with puckered lips and arms outstretched, the sight of an affection-seeking politician is not always an attractive proposition.

The truth is we have already been in a phoney general election beauty parade ever since Gordon Brown took office. He backtracked on an early election in 2007 and the heat has been on ever since.

We have seen the Tory leader, David Cameron, position his party as a friend of business. Announcing the party’s “Entrepreneurs Everywhere” drive, Mr Cameron said that there were too many barriers to the creation of businesses.

Under his government, council flat tenants would be among those encouraged to become entrepreneurs with plans to sweep away restrictions which stop them starting a business from their home.

Other plans for boosting entrepreneurship include an increase in the bankruptcy threshold to stop firms going out of business over small amounts, and cutting red tape to make it easier to start up a new company. This is hardly earth-shattering stuff.

Nevertheless, at least the major parties are showing signs of recognising the vital importance of businesses at a General Election. It is PSP’s passionate belief that encouraging businesses should be at the heart of the General Election.

Make no mistake, recovering from this enervating recession is the most significant economic challenge Britain has faced since 1945. The business and economic climate remains treacherous. 130,000 firms are at risk of insolvency and public borrowing is set to hit a record high of £175 billion.

The country’s triple A credit rating is at risk because of that public debt which means that countries may stop buying the bonds which fund our debt mountain.

The cause of small firms’ matters enormously to Lancashire and the UK. They are the backbone of the economy, driving wealth and job creation.

Without a fit and firing sector the country will fail to recover from the recession with any speed. Business underpins our ability as families, as communities and as a nation to function. It is that crucial.

Without thriving businesses, everything else suffers – not so much a domino effect as a motorway pile up: job and wealth creation; skills training for young people; raising of tax; and therefore effective public services, donations to charities, media advertising and so on.

We have no choice, the political parties must promote existing firms and new entrepreneurs.

What we’d like to see for the public sector:
• Radically re-design the way public services are delivered, including making use of new and proven technologies, as well as increasing competition. This could achieve £63 billionn of savings by 2015-16.
• Improve management of workforces in the public sector by adopting good practices from elsewhere, including better management of staff sickness and temporarily capping the public sector pay bill. This could yield £27 billion.
• Allow the private sector to provide non-core activities, such as back-room functions. This could save £30 billion.
• Cutting waste from within Government could save a minimum of £16 billion. The pooling of Local Authorities’ budgets to avoid duplication of services could yield further savings.

What we’d like to see for the private sector:
• Stop corporation tax. The planned increase in corporation tax in April 2010 should be scrapped. Other tax increases should also be reconsidered, such as landfill tax, and air passenger duty.
• Remove the planned National Insurance Contributions rise for 2011. Increases to National Minimum Wage should be frozen.
• Business rates – Small business rates relief should be made automatic to all eligible firms. Too much relief remains unclaimed because firms do not know about it. Automatic relief would slash the bureaucratic burden on firms.
• Empty Property Rate Relief - In April last year, the Government abolished rate relief on empty properties. This means full business rates have to be paid on properties that have been empty for three months, as opposed to 50%. This should be reversed back to 50%.
• Upward Rent Review Clauses that allow landlords to raise rents automatically should be abandoned.
• Additional pressure should be exerted on banks to make credit more freely available to viable companies.

Len Collinson, Private Sector Partners.