The Facts

This government has done nothing positive for small businesses. It is happy to pump billions into the public sector and the banks but all around the UK the private sector is left to flounder.

The Private Sector, which constitutes the wealth producing sector of the economy, employs approximately 21 million workers of which 12 million (58%), are employed by the 3.8 million small businesses in the UK. Small businesses contribute over 50% of Gross National Product (GDP) and collectively are therefore vitally important, being responsible for supporting the UK economy to an ever increasing extent. Popular Alliance view this Sector with far more respect than we do the self-serving Public Sector and therefore oppose the endless levels of restriction and counter productive motives that our present government ties around it, bleeding it dry.

The Problems

Despite the promises of successive Chancellors that public sector employment would be reduced, it has continued to grow (currently running at 1 in 4 of the total workforce) and since 1997 the private sector has paid an extra £20 billion per annum in tax, together with ever increasing amounts of National Insurance, Stamp Duty and Fuel Tax to support this mushrooming, wealth-consuming Public sector.

Popular Alliance will reverse this state of affairs as a matter of urgency (see policies on Taxation and Public Finance).

Business as a whole and small businesses in particular, are facing an ever increasing torrent of job destroying regulations, mostly from the unelected bureaucrats in Brussels, with the whole-hearted support of the inane politicians in the mainstream parties, most of whom have never made anything, resulting in the strangling of business expansion, the failure to create more jobs and falling productivity.

Recently the Confederation of British Industry (CBI) reported that from 1998 to 2005, the cost of implementing all new regulations imposed by the E.U. had totalled £37 billion, costing a typical company £13,464 per annum, this being a direct charge against business profits and in many instances not tax-deductable.  In 2007, this figure increased to a rate of £55 billion per annum, and is totally unsustainable in the long term. The Administrative Burdens Reduction Programme (ABRP) and the Standard Cost Model (SCM) was applied to measure the net administrative burden of regulation. This suggested that £13.7 billion was spent by businesses, through administering their Regulatory requirements and along with the additional Financial Services Authority and HM Customs and Excise costs, can be expected to rise by 10% year on year.

The Popular Alliance consider this to be an outrageous waste of money, an enormous burden that puts many businesses - out of business and renders many British companies uncompetitive when striving for contracts and sales overseas. In December 2006, Government departments, agencies and regulators released 19 simplification plans which set out a program of work containing over 500 measures which tackle unnecessary regulation. This is all well and good, but so far no obvious reductions have been achieved and the number of new departments opened to implement these reductions has made something of a mockery of the whole scheme, no doubt costing millions in the process. 

In this connection, the Organisation for Economic Co-operation and Development (O.E.C.D.) has stated that small firms (1-19 employees) incur more than three times higher regulatory costs per employee than medium sized firms (20-49 employees) and more than five times higher costs than larger firms (50-500 employees).

As pointed out by the Federation of Small Businesses, if each small firm in the E.U. was able to hire one more worker, there would be no unemployment across the whole continent. In fact, current E.U. policies have resulted in rising unemployment in Germany, 7.6%, in France 6% and in the U.K, listed at 5.4% in Aug 2008, though only 74.8% of those of employable age, are actually in employment. Through our Welfare Policy, Popular Alliance propose that a good number of those claiming sickness benefits are able to work perhaps 1-2 days per week, which could lower the burden on payouts by between 20-40% and provide businesses with some experienced staff through job-share schemes. Presently, someone claiming sickness benefit has no middle ground between working or not working and we consider this to be not only a huge burden on the tax payer, but also a massive reduction within the UK’s skills base that affects businesses greatly.

The Working Time Directive has had the effect of removing from many small business’ employees the freedom to choose the number of hours that may be worked, thus restricting remuneration. Throughout 2008 so far, the number of hours worked dropped by 6.3 million as more people were moved onto shorter or part time contracts. Much of this caused lower output in order to offset regulatory administration.

The Agency Workers' Directive is another piece of E.U. folly, which may soon be foisted upon already our hard pressed industry. The intention of this Directive is to give temporary workers full employment rights after only six weeks, thereby placing intolerable burdens on businesses seeking to recruit staff.

Popular Alliance would extend the qualifying period for temporary agency workers before they are granted full employment rights to 12 months.

Over the past nine years, more than 100 pieces of legislation have been enacted in connection with employment, which together with the torrent of E.U. Directives, has made employment difficult to obtain in the small business sector.

The bureaucrats and most politicians appear to be quite oblivious to the fact that their actions, having caused an economic downturn over the whole of the E.U., are akin to re-arranging the deck chairs on the Titanic as the ship sinks and one is forced to question whether they have taken leave of their senses - that is if they ever had any!! 

In the face of the above kamikaze directives, Popular Alliance is totally convinced of the necessity of leaving the E.U. as quickly as possible, in order to protect the economic and financial wellbeing of the nation. (see our European Union Policy)

Other matters which affect business and employment are the National Minimum Wage and the reform of payroll systems.  In connection with the former, Popular Alliance is not opposed to the NMW in principle but is concerned that since its introduction in 1999, it has been increased by 35%, and recognises that further increases on this scale are likely to threaten existing levels of employment. Also, a good number of the EU migrant workers who have come to Britain in the last 2-3 years, are working for lower than minimum wages, especially in industries such as restaurants, where they are being paid lowly and have to rely upon tips to bring their wages closer to the minimum wage. This newly arrived workforce may contribute towards getting the job done in one way, but our Government is blind to note the effects of such moves upon finances in many other areas.

Popular Alliance's policy is that future increases in the NMW should be linked to inflation.

Energy costs have risen year on year and this has accelerated enormously in the last 18 months as the oil markets have wreaked havoc across the globe, placing a huge financial burden on business and driving many manufacturing companies out of business.  In a volatile energy market there is no guarantee that costs will not rise even further, especially if the Middle East conflict continues to de-stabilise the region, whilst the privatised and state EU-owned energy companies see the opportunity to raise prices even further. Recent moves by Russia into Georgia also threatened the one oil line to Europe that does not pass directly through Russian territory. Long term business plans cannot operate under such unstable constraints.

Popular Alliance has far reaching alternative energy production plans to bring back stability for both business and our homes. (See our Energy Policy)

Despite increases in taxation, expected improvements have not been seen in the transport infrastructure. After eleven years in power, the present government has totally failed to make a start on the integrated transport system our country so urgently needs. This failure is a barrier to business and a constraint on productivity, growth and investment. The loss to the economy is estimated to be £1.5 billion per year (see our Transport policy). Also, referring back to our EU Policy, an uneven percentage of UK business taxation has been handed to the EU, to help improve the traffic infrastructure in many lesser EU countries, which results in creating more competition for our own businesses – the EU is bleeding them dry through both regulation and what amounts to blatant theft (see our EU Policy).

Other Popular Alliance solutions

Popular Alliance would

(a) reform and simplify the Payroll Tax System as in its present form it is costing business in the region of £2 billion per annum.  PAYE and N.I. would be simplified and the administration of student loans, maternity and paternity pay transferred to the Student Loan Company and the Inland Revenue and Customs respectively.

(b) repeal the Health and Safety Act and replace it with sensible, legal guidance, which would not be open to corporate and employee abuse and endless profit-draining administration.

(c) set the level of business rates in proportion to the level of profit generated by each business, enabling small businesses to become more sustainable.

(d) provide more facilities for further education, to ensure that the qualifications obtained by young people are suitable for, and understood by employers, and would encourage more co-operation between industry and colleges (see our Education policy).

(e) provide more assistance in reducing energy and environmental costs (see our Energy policy).  

(f) re-introduce empty property rate relief.

(g) reverse the planned increase for National Insurance Contributions in 2011. 

(h) create Enterprise Zones, where businesses in specific areas benefit from a simplified planning regime and exemption from a number of taxes. This will help create local jobs because business friendly conditions will provide an essential boost to local economies.  

(i)  introduce the Temporary Short Time Working Compensation Scheme, previously used between 1979 and 1984, which encourages short-time working rather than redundancy. 

(j) divert monies paid into the EU (and then returned in up to 60% lesser amounts for Business Development Projects), to be invested directly into our own businesses and its required infrastructure. At present a £1m EU investment into a UK business venture costs the UK tax payer closer to £3m, with the EU keeping a totally unnecessary and undeserved commission fee.

Due to the current economic conditions we believe that a number of small businesses with turnovers up to £500,000 per annum require some extra help.

This would need to be assessed and a certificate granted if the business is deemed as viable in the medium term and under pressure in the short term.  This would allow:

(a) A subsidised rent for up to 2 years.

(b) Utility bills to be charged at the lowest tariffs and in cases where a business owner (eg: a pub tenant / landlord) resides at the business address, a split bill should be charged for residential energy use to be charged at residential levels.

(c) Employer NI contributions to be frozen for 2 years.

(d) Reduction in corporation tax to 25%.

If you have any comments or wish to contribute ideas and suggestions for our Business & Industry Policy, then please email This e-mail address is being protected from spam bots, you need JavaScript enabled to view it