Government economy initiatives not working – FSB

Posted on 9 Feb 2009 by The Manufacturer

The Federation of Small Businesses (FSB) has launched a scathing attack on government’s attempts at fiscal stimulation, after 97 per cent of its surveyed members said the drop in VAT has had “no effect at all”.

In addition, only eight per cent of firms said the money from the recently announced Enterprise Finance Guarantee had been made available to them while 53 per cent doubted whether the government initiatives are enough to compel banks to begin lending again.

The figures also reveal that the Prompt Payment Code, a voluntary initiative unveiled in December last year which seeks to ensure faster payments to small businesses in supply chains, has had limited positive effect thus far; 36 per cent of small businesses said that in the current economic climate they are being used as a credit facility and are waiting longer to have their bills settled for private sector work. A fifth said they are waiting longer for the money from public sector work, despite government assurances that measures would be taken to ensure speedy resolves.

John Wright, FSB national chairman, said: “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 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.”