Setting up a business will be made easier under proposals published in the coalition agreement, which aims to make the UK one of the fastest countries in the world to start an enterprise.
The agreement, which was announced today, also pledges to find “a practical way to make small business rate relief automatic”. As well as helping large businesses through its proposal to slash corporation tax, the new administration signalled its intent to support small companies by proposing that 25% of government contracts should be awarded to small and medium-sized businesses.
The new government also wants to end to a little-known ban on social tenants starting businesses in their own homes. Meanwhile, the unemployed are to be encouraged to start businesses under a Work for Yourself scheme.
Recurring theme
The Conservative-Lib Dem coalition says it wants to reduce the number of forms needed to register a new business and move towards a ‘one-click’ registration model.
The FSB welcomes proposals to make small business rate relief automatic – something which the FSB has long been calling for – for a review of small business taxation including IR35, the Government’s intention to look at the creation of a Post Bank and the new Work for Yourself scheme designed to help the unemployed start up new businesses
John Walker, FSB chairman
Cutting red tape is a recurring theme in the document. The new administration promises to introduce a “one in, one out system”, whereby no new regulation is brought in without other regulation being cut by a greater amount.
Other plans to scale back bureaucracy include ending the “culture of ‘tick-box’ regulation by targeting inspections on high-risk organisations through co-regulation and improving professional standards; imposing ‘sunset clauses’ on regulations and regulators to ensure that the need for each regulation is regularly reviewed; and giving the public the opportunity to challenge the worst regulations.
The Federation of Small Businesses (FSB) broadly welcomed the proposals, in particular the commitment to tackling the deficit, the decision to make small business relief automatic and for reducing red tape.
John Walker, National Chairman of the FSB, says: “The Federation of Small Businesses (FSB) welcomes the Coalition Government’s commitment to tackle the deficit immediately. Research by the FSB shows that more than 90% per cent of small firms want the Government to outline robust plans to reduce the UK’s budget deficit.
“The FSB also welcomes proposals to make small business rate relief automatic – something which the FSB has long been calling for – for a review of small business taxation including IR35, the Government’s intention to look at the creation of a Post Bank and the new Work for Yourself scheme designed to help the unemployed start up new businesses, a measure that is an extension to the Enterprise Allowance Scheme for which the FSB has also been calling. These measures will go some way to helping small firms get on with the job at hand and help strengthen economic recovery. Now we need to see them put into action.”
Other proposals included in the coalition agreement include:
- Consider acting on the Dyson Review’s recommendation to make the UK the leading hi-tech exporter in Europe by refocusing research and development tax credit on hi-tech companies, small firms and start-ups
- Ending the so-called ‘gold-plating’ of EU rules, whereby the UK government appends further regulations to EU rules, thus placing UK businesses at a competitive disadvantage
- Replacing regional development authorities with 'local enterprise partnerships', joint bodies between local authorities and businesses
- Boosting the competitiveness of the UK tourism industry, although how this will be achieved is not outlined
- Reviewing employment laws, emphasising the need to balance “fairness” with “flexibility” and “competitiveness”
- Take competition issues into account over new retail developments, although whether the new government will be more obstructive to large retailers is unclear
- In recognition of public anger about foreign takeovers of great British brands such as Cadbury, there will be a review of the powers of M&A regulators
- Reinstating an operating and financial review to ensure that directors’ social and environmental duties have to be covered in company reporting, and investigating further ways of improving corporate accountability and transparency
The coalition agreement also contains proposals to overhaul the banking system. Including a levy on banks, a bonus capping scheme and a commission to investigate the viability of separating retail and investment divisions, the banking reforms represent a triumph for the Lib Dems and in particular its Business Secretary Vince Cable.
