FORCING banks to behave and solving the problem of rising unemployment should be at the top of the Government s to-do list in the most crucial Budget in decades, said the Federation of Small Businesses (FSB). The FSB is calling for automatic rate relief f

FORCING banks to behave and solving the problem of rising unemployment should be at the top of the Government's to-do list in the most crucial Budget in decades, said the Federation of Small Businesses (FSB).

The FSB is calling for automatic rate relief for small firms, an increase in the thresholds before income tax and National Insurance contributions are payable and an independent corporate mediator to work with banks and their business customers to be put in place in Chancellor Alistair Darling's Budget on April 22.

In a recent survey of FSB members, a third of small firms said their bank was less helpful now than before the credit crunch began - precisely at a time when help is most needed. The FSB sees resolving the stand-off between banks and their business customers through this mediator as a clear priority.

The federation's proposed corporate mediator would act as an autonomous intermediary between the banks and business customers, negotiating resolution where disputes arise; solving financial problems for business owners and ensuring clear communication of support packages on offer to the business community.

The FSB has also proposed the introduction of a Post Bank set up in the Post Office network as an alternative to regular banks.

It says a rise in income tax and National Insurance thresholds to £10,000 in 2009 would both put money back into the pocket of employees and cut the cost of employing staff for business.

This would lift those on the lowest incomes out of paying tax entirely, including many self employed small businesses owners, and reduce the number of people claiming tax credits.

Business rates are the third highest expenditure for small firms after rent and wages, yet every year more than £400million goes unclaimed by businesses eligible for up to £1,200 off their rates bills. The FSB wants the Government to make this rate relief automatic, as in Wales and Northern Ireland.

FSB Huntingdonshire chairman Malcolm Lyons said: "The Chancellor is about to announce possibly the most crucial budget in decades and he has got to get it right. The Government must take decisive action to inject life into the economy and resolve the big problems faced by small businesses: the double whammy of irregular cash flow and a lack of finance from the banks.

"Tackling rising unemployment is also going to be vital. Wage subsidies for employers and employees moving towards short-time working, coupled with raising personal tax thresholds to £10,000, will put money back into the pockets of staff and the businesses that hire them.