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Rising costs and fears of tax hikes hitting confidence of small
businesses ahead of Budget
‘emergency’ Budget less than 2 weeks away, and rising costs fears
over potentially damaging tax hikes are denting the confidence of
small businesses, according to the latest Economy Watch survey from
the Forum of Private Business.
The Forum is warning that the struggling small business sector –
widely regarded as the catalyst for economic recovery and growth –
must not suffer unduly as a result of the difficult steps necessary
to re-balance the economy. In all, 37% of business owners
surveyed in May 2010 said the cost of doing business – excluding tax
– has increased. 24% said the tax burden has increased and 28%
believe that existing levels of taxation are too high.
According to the monthly report, confidence has been dented by fears
that tax increases in the Budget could hit small businesses hard.
Government is expected to reveal a raft of tax measures aimed at
reducing the UK’s huge deficit, alongside significant public
spending cuts. They include possible changes to capital gains
tax and an increase in VAT, a rise in employers’ national insurance
contributions for some staff – although the 1% increase originally
planned has been partially scrapped – and changes to corporation
tax. Despite a mooted cut in the higher rate of corporation
tax there has been no indication of a reduction in the lower rate
paid by small firms.
“All eyes are on the 22 June budget for the kind of policies
needed to help small businesses grow. We know that public spending will be
cut to help get the deficit down, but there will be knock on effects
to public sector contract opportunities and business support
measures, so it is important that the coalition government gets it
right - particularly in the area of tax.
Running a business and controlling costs can be difficult. The
Government’s emphasis must be on helping entrepreneurs to run their
businesses more effectively, and fostering confidence as well as
re-balancing the economy.” said the Forum’s Head
of Policy Matt Goodman.
Other economic indicators revealed by the survey include:-
Orders, turnover and profitability
Orders have fallen for 21% of the businesses surveyed, turnover is
down for 28% and profitability – including the impact of rising
costs - for 37%.
These issues have become more problematic for businesses in most
industry sectors, compared to last month’s figures, with the
exception of manufacturers. The majority of these businesses
reported relatively healthy order books and turnover.
Access to finance
In previous months, better financial performance was the main reason
given for improvements in accessing finance. However, May’s figures
show little change in the availability of finance, with 75% of firms
reporting no change compared to April.
Just 3% said access to finance has improved – the same as the
previous month – but a similar number (4%) reported a deterioration,
compared to 13% in April.
Despite being profitable, some businesses have been denied
overdrafts. Others have had their overdrafts reduced. In all,
49% of business owners with existing external finance arrangements
are confident that they will be able to access working capital and
45% that they can access growth finance.
Cost of finance
Access to finance is increasingly tied to the cost of finance. A
number of businesses view increasing bank charges and fees as
factors excluding them from accessing external finance.
With the Bank of England interest rate still at 0.5%, the latest
Economy Watch data shows average rates on overdrafts at 5.8% in May,
consistent with recent months, compared to the 6.5% recorded in the
Forum’s ‘Economic Downturn’ panel in September 2009. The cost
of secured loans remains at 4.4% and, at 11.8%, is significantly
higher for unsecured lending. In September 2009 the average rate for
both types of lending combined was 6.8%.
In April slightly more respondents (85%) deemed finance to be
‘affordable’ or ‘very affordable’, compared to 78% the previous
month. In both March and April just 10% said finance was
‘unaffordable’ or ‘very unaffordable’. The affordability
question was not asked in May because the results have been fairly
consistent but, according to some members surveyed, there been
slight increases in the cost of overdrafts and loans. Others
reported increasing charges and banking fees.
Late payment and cash flow
Almost one in five (18%) firms experienced increases in late
payments in May, but the levels of outstanding payment is
decelerating. In addition, 20% reported that ‘other cash flow
difficulties’ are rising.
Business priorities and needs
Priorities include increasing sales and turnover (47%), being able
to operate in a stable business environment (35%) and reducing costs
Other factors entrepreneurs believe would help their businesses grow
include improved business and consumer confidence (29%) –
particularly given the uncertainty surrounding the imminent budget –
stabilising the economy (20%), internal business development (18%)
and specific industry incentives (11%).
Similar to recent months, 16% of respondents anticipate needing
support while 69% intend to be self-sufficient and 15% are uncertain
– indicating the importance of a stable business environment.
Few business owners detailed the precise nature of the support they
require, but of those that did 67% called for help with training,
the same number with recruitment, 50% need finance for training, the
same percentage require working capital, 50% assistance with legal
compliance and 38% want support on meeting tax requirements.
In all, 28% have no plans to invest in their businesses in the
coming month, 21% intend to invest in sales and marketing, 27% in
training, 21% in machinery and equipment, 17% anticipate investing
in upgrading property and the same number in product and process
Employment and skills training
Total employee numbers have dropped by 4% over the past year and
around 8% of businesses have reduced their working hours. Some of
these changes relate to agency staff or contractors but many have
been full-time staff.
Respondents’ vacancies have dropped since April. However, so have
the number of redundancies. Many small businesses appear to be
reluctant to take on new staff until after the Budget. 32% of
the small businesses surveyed believe they are operating with a
skills gap. In all, 29% of respondents believe there is a
shortage of employees with specialist skills, 24% identify a lack of
generic technical or vocational skills and 19% of businesses
perceive that there is a shortage of sales skills.
Further, 14% believe there to be a dearth of ‘employment
attributes’, 12% customer service skills and 10% that there is a
lack of administrative skills. Selected by 47%, on-the-job
training is still seen as the main solution to skills gap, followed
by specialist external training (33%). Local colleges are also
popular (26%). Online training is seen as an option for 23% of
respondents, but 22% selected outsourcing to a consultant or
freelancer as a solution to meeting their skills requirements.
YEAR OF DANCE CONTINUES ACROSS MERSEYSIDE
Dance Initiative (MDI) is proud to announce an exceptional line up
of dance artists and companies for the second half of the LEAP year
of dance, continuing the celebration of 18 years of the LEAP
Contemporary Dance Festival across the Merseyside region.
For 2010, LEAP expanded its normal March festival into a year-long
programme of dance with the launch of the Merseyside Dance Promoters
Network (MDPN) earlier this year. The aim of to MDPN is to maximise
dance opportunities across the Merseyside area for 2010 and beyond.
The first 6 months of the LEAP year of dance have seen an
incomparable spectacle of dance taking place across the region
including the first ever Liverpool performance from Matthew Bourne’s
New Adventures as well as electrifying performances from Wayne
McGregor | Random Dance and Candoco Dance Company. The months of
January - June have also seen an unprecedented amount of local dance
companies such as Movema, Taciturn, House of Suarez and China Pearl
in the regions theatres and around the city at events such as
International Day of Dance and City Steps. The second half of the
year is shaping up to be just as special so don’t even think about
putting your dancing shoes away!
Between the months of July and December, the LEAP 2010 year of dance
steps up a gear, featuring many international highlights including
the Chicago based Joel Hall Dancers, who return to Merseyside after
a 20 year break, with their unique style of jazz dance. The evening
will feature works including award winning In the Shadow of Nina
Simone and El Gato Negro, using the music of Nina Simone and a House
Mix and featuring other music by artists including CeCe Penniston.
Joel Hall is the recipient of numerous awards and honours including
a Lifetime Achievement Award from the Jazz Dance World Congress.
Continuing the international theme; former Riverdance star Colin
Dunne comes to the city, supported by Culture Ireland and in
collaboration with the Liverpool Irish Festival. MDI are very
excited to introduce New York based Kyle Abraham to Liverpool
audiences, a major rising star in the contemporary dance world with
his award winning mix of contemporary dance, ballet and hip hop have
catapulted him to international fame and critical acclaim. Kyle
comes to Liverpool as part of the ManMade triple bill performance,
with renowned choreographer Gary Clarke and Liverpool’s own Darren
Suarez, who come together for one night only especially for the
Other highlights of the season include Club Fisk from Denmark who
will give you the biggest laugh of the festival with their comic
piece of dance genius ‘Forestillinger’. Phoenix Dance Theatre bring
the World Premiere performance of their brand new show Declarations,
featuring 4 exciting pieces of dance, to the Liverpool Playhouse.
For those of you who want to push the boat out, “RUNWAY” - The
Justice Vogue Ball is an event like no other in the LEAP calendar.
Get ready to experience a fantastical showcase of high fashion,
performance and dance, featuring some of Europe’s finest Voguers,
Whackers, and House-Dancers - all battling it out for prizes and
supremacy. Towards the end of the year, we celebrate collaboration
with DaDaFest International10 and Homotopia in Guillermo Gomez Pena
and Roberto Sifuentes’ politically charged piece Corpo Illicito.
MDI are proud to continue contributing to Liverpool’s Year of Health
and Wellbeing by encouraging the people of Merseyside to get
connected, take notice, be active, keep learning and give. The
organisation is also delighted to continue their association with
Liverpool City Council through Culture Liverpool who have funded 10
new commissions to support LEAP Year of Dance. Many of the 10 for
2010 commissioned artists feature throughout LEAP 2010 Year of Dance
across a variety of events and include works by Taciturn, House of
Suarez, Movema, Tmesis and Mattomica.
The second half of this LEAP year is going to be breathtaking, so
try not to miss a step of this wonderful year of dance, brought to
you by MDI and MDPN.
Environment victory for Southport MEP
NEW cars are
set to be greener after a Southport Euro-MP persuaded the EU to
maintain a crack down on harmful air-conditioning. And Liberal
Democrat Chris Davies is praising EU rules that have led to the
creation of a welcome new chemical product.
A European law agreed 4 years ago says that all new types of car
must from next January use a coolant in air conditioning systems
that will not contribute to the problem of global warming. At
present the systems in all cars use a chemical that is 1,500 times
more likely to cause climate change than carbon dioxide.
Car makers tried to push back the deadline, arguing that suitable
alternative products would not be available in time. But a
lobbying campaign led by Davies persuaded the European Commission to
Now chemical companies have developed a new product, HFC1234, that
can be used without any changes being made in the design of air
The MEP described the result as good for car drivers and good for
the environment. "EU regulations get criticised a lot,
but they can also create new market opportunities and drive forward
innovation. It is only through technological progress like
this that we can overcome the threats that mankind faces on the
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