Federation of Small Businesses

A member survey at the FSB (Federation of Small Businesses) has shown that recent VAT cuts, bank lending guarantees and pledges on payment practices have had little to no effect on trading.

The Government-backed Prompt Payment Code, launched last year, seems to have been largely ignored and small businesses are increasingly being used as an easy source of credit with around 36 per cent waiting longer to get paid for private sector work.

The Enterprise Finance Guarantee Scheme seems to have fallen on deaf ears as only eight per cent of small businesses said their banks were making it available to them!

And the VAT reduction to 15% has made no impact at all on 97% of small business polled.

John Wright, FSB National Chairman, said:

“These startling figures show there is still more to be done by Government and the banks to ensure businesses can survive in this economic climate. Small businesses are doing all they can to survive the recession but they need better support from the Government, the banks, and the public and private sector.

“The Government must use its meetings with the banks to monitor the guarantee scheme and assess why loans are still being refused, while both Government and bank branch managers must do more to promote these funds.

“The FSB was pleased to see the introduction of the Prompt Payment Code but we now need more action to tackle late payments. We would like to see Companies House given sufficient power to penalise late payers in the commercial world while the Government must do more to ensure the public sector does its bit to help the economy.

“The small business sector is a vital source of employment and turnover for the UK economy, especially during these tough times. But these figures show that there is still an avalanche of stumbling blocks stopping this vital sector from surviving and recovering.”