Small firms and the self-employed will be watching with interest to see how much fibre is in today’s budget or whether it will be lots of froth and topping. In short, they will be watching to see if it will deliver some real measurable change and improvement or just more aspirational rhetoric.
On the political agenda is the issue of business rates. Back in 2013 Labour correctly identified the crippling nature of business rates and how it often operated as a high street tax on businesses. The business rates system, which dates back to 1601 is calculated on the rental property that a company uses and, of course, offers an immediate advantage to online retailers who are often working from smaller and low valued properties. It is a tax not linked to business turnover or profit.
Ed Miliband said that Labour would cut business rates for small firms and then freeze. Back in 2013 it was predicted that this would save 1.5 million small firms £450 over a two year period.
Fast forward to this week and the coalition have now promised ‘a wide ranging review of business rates’, which will conveniently report back at the 2016 budget. In contrast, Labour promises to act now and will cut and then freeze the rates and ensure that firms benefit immediately. I would hope that a proper review of the system could continue under a Labour government, but be implemented fairly so that the whole country benefits, not just those places with directly-elected mayors.
Elsewhere the budget needs to work to ensure that small firms and those starting out for themselves are given the support they need. This can be in the form of supporting the entrepreneurs’ relief scheme, but also crucially by recognising the value and importance that the self-employed and freelance workforce play in the economy. Clearly there is a need to crack down on zero-hours contracts that are prohibitive, but also to support through a reformed view those working freelance and self-employed. This could be to help deliver rights for the self-employed on issues like late payments and the right to be provided a contract for the work they do. Also, as suggested by the recent LFIG report, The Freelancing Agenda, it could help freelancers and self-employed by creating a new company structure like a ‘freelancer limited company’. This would act to target tax avoidance, but provide an engine for growth for this workforce and as a mechanism to help tackle forced self-employment as well as providing recognition to the freelance workforce.
So the question is: will the budget deliver or promise changes that will reflect on how business operates in the 21st century? Whether as online firms or in the high street and will it treat those both fairly?
Will it also recognise the legitimacy of the growing army of freelance workers and the self-employed as being a driving force in our economy treating them fairly for tax and for welfare and support issues, or will it focus solely on larger and more traditional forms of employment and commerce?
It is a challenge not just for the budget. And despite the rhetoric about parts being ‘radical’, the chances are it will be conservative in substance, long on promise but short on actual delivery.
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Philip Ross is a member of the Labour Finance and Industry Group and a co-author of The Freelancing Agenda
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