THE Federation of Small Businesses has welcomed measures by the Chancellor to give small businesses a helping hand by extending finance to small firms and calling off a 1p rise in small companies Corporation Tax in his pre-budget report. Extending the £1

THE Federation of Small Businesses has welcomed measures by the Chancellor to give small businesses a helping hand by extending finance to small firms and calling off a 1p rise in small companies' Corporation Tax in his pre-budget report.

Extending the £1.3 billion Enterprise Finance Guarantee fund for businesses looking for new finance - a victory for the FSB last year - is a welcome step the FSB has called for and shows that the Government has been listening to small firms' finance needs, Huntingdonshire chairman Malcolm Lyons said this week.

However, at this difficult time, the Government should be making it as easy as possible for small firms to recruit new staff, and the FSB is disappointed that this budget was not focused on providing incentives or assistance to the smallest firms that want to take on more staff and so tackle the rising problem of unemployment.

Going ahead with the proposed 0.5 per cent increase in employers' National Insurance Contributions will not encourage job creation within the small firm sector, he added.

"Extending the Enterprise Finance Guarantee scheme, which we called for last year and has seen more than £600 million lent out to just over 6,000 businesses, is a welcome move, although we wanted to see the scheme extended indefinitely and promoted further to help small firms get much-needed access to finance," Mr Lyons said.

"The Government has missed a chance to tackle a difficult credit market by failing to create more options for access to finance, and more competition among high street banks. The Government should have addressed this challenge and looked at options such as a regional stock exchange to help small and fast growing businesses capture finance."

On tax he added: "Holding off the planned 1p rise in small companies' Corporation Tax will give small companies a real helping hand, giving them the chance to expand and invest, and to grow out of the recession with confidence.

"In the FSB-ICM 'Voice of Small Business' Annual Survey, 26 per cent said a cut on this business tax would improve their economic prospects. It will also save small firms more than £300 million over the next year and give them more of a chance to take on new staff.

"Lowering tax to 10 per cent on all profits derived from patents is good news for innovative businesses and will encourage entrepreneurialism."

But he was critical of the Chancellor's decision to raise National Insurance contributions by 0.5 per cent in 2011, which he described as "an attack on jobs and shows a real lack of vision from the Government on tackling the key challenge of rising unemployment.

"In a survey of FSB members this year, 44 per cent said a cut in payroll taxes would help them take on more staff, so this is extremely damaging for employment in the UK. While unemployment continues to rise, it is unaccountable that the Government hasn't considered a new approach, such as a National Insurance rebate for new jobs in small firms. This pre-budget report should have encouraged and rewarded job creation in 2010, rather than imposed this tax.