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Tuesday, 21 October 2008

David Cameron and Small Businesses. Nationalised banks.

Dave seems to be getting the message that SME's are natural voters for the Conservatives!

This last week he has demanded 6 month VAT payment holiday for struggling small companies. This seems a good idea on the surface but it would have a big impact on

A) The Exchequer - cashflow for the UK Government will be pushed out by thousands of SME's not paying VAT for 6 months (at a time when Gordon has said all Government and Councils should pay SME's in 10 days) or is this a cunning plan!?

B) The HMRC collection offices - these are the guys and gals who collect the tax and have to agree to any time to pay programme (click the link to our TTP guide page). Many of these offices are short staffed, so such a scheme being announced could cause these offices chaos.

Dave also said yesterday that companies employing fewer than 5 people could also see a reduction in NIC payments. Great, so many SME's will get 1% off this payment. He said this will allow them to pay higher interest charges (tut tut those naughty banks!).

Again a good idea but fraught with problems. Will it make SME's think twice about growing? I suppose not for a few hundred quid a year. Will it actually cost them time and therefore negate savings?

May I suggest instead of tinkering with tiny tax and NIC rates, a much more sensible idea to help new companies and fast growth companies is ZERO CORPORATION TAX for two years.

Plus if the Tories get back in power they should reinstate the 10% Capital Gains tax for entrepreneurs, after Gordon /Ali pushed it to 18%.

Entrepreneurs are much better at creating real jobs, so encourage them!

I suppose the good news is the SME's now look like being on the political agenda and being recognised as an important constituent in the next election.


Please let me know if you are experiencing any pressure from banks to reduce facilities.

When I was on leave last week the Government started to nationalise RBS, HBOS, LTSB and Barclays - this is an amazing turn of events almost unprecedented in modern times.

And I read that they want the banks to lend to SME's at the same levels as before. So how will they go about that then? Sit on lending and investment committees? Sit on risk and underwriting panels? Make lending decisions when they have little or no competence in setting and running budgets even when they have guaranteed income from taxation (unlike SME's)?

Well this will be interesting!

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