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Everybody's Business
Oliver Moor

There are now more small businesses in Britain than ever before. The government, and particularly the Chancellor of the Exchequer, are keen to be seen to be "the party of business"; Gordon Brown has specifically stated that he wants to encourage a more entrepreneurial environment. Recruiters and career advisers are continually saying that the future of work will be for people to have "portfolio careers" and that the job for life is dead. Instead, more and more people will be working for themselves, on short-term contracts: implicit in that is that Britain will become a nation of small-business men and women.

Labour has taken many measures to ensure that business has flourished. Many business leaders feel that they are now the true party of business; Terence Conran, David Arculus and Russell Chambers have all come out in support of them and of their increasingly europhile agenda. In office, Labour has taken steps to increase business's ability to compete. By lowering corporation tax and by allowing the Bank Of England to set interest rates, the government has given businesses a stable environment in which to function. New small businesses are surviving the critical first two years in ever-increasing numbers.

There are, however, concerns, primarily amongst businesses which wish to trade in Europe. Manufacturing industry has undoubtedly suffered in a world in which the pound has been too high against the euro. Businesses, particularly in the Midlands and North have folded, and, although unemployment has fallen below one million for the first time in several decades, resentment in these quarters has been strong.

Resentment to government policy has also blossomed amongst the very smallest industries, by whom the Chancellor has been accused of positively discouraging entrepreneurship. IT contractors in particular are aggrieved. Gordon Brown has put in place a piece of tax legislation which goes almost unnoticed amongst the salaried majority, but which has caused uproar amongst the independent contracting sector. IR35, brought in to ensure that contractors (who are, in the government's view, effectively employees) pay employee's National Insurance contributions. The regulation has been the cause of bitter battles between independent workers (who view themselves as entrepreneurs) and the government (who view them as tax dodgers.)

Amongst this sector of the population Labour cannot expect much support, and it may in fact be an area in which the Conservative party may make some inroads, having promised to scrap IR35. The Liberal Democrats have promised the same, although neither party has stated what the replacement will be. A threatened "brain drain" by contractors has not, however, happened, and Labour appear to be willing to ride out the storm. The government has, however, recently hinted that the unpopular measure may be reviewed.

So what other measures are the major parties putting forward to encourage further business development? Labour will attempt to ensure that the "boom and bust" cycle is kept under control, although how much they are actually able to influence this in the face of a growing US recession is open to question. Labour's manifesto also highlights the fact that investment per worker is markedly lower than in other G8 economies, and steps will be taken to ensure that businesses are encouraged, through tax breaks, into spending more on training.

As is well known, the Tories are pledged to maintain the pound. They have also promised tax cuts, perhaps in response to CBI Director General Digby Jones's comments, that "the UK's reputation as a low-tax economy in which overseas investors want to invest is under serious threat". Customs And Excises, as well as the Inland Revenue, will also undergo a review. VAT regulations are to be simplified, with businesses allowed a six-weeks grace period to pay outstanding returns. The Conservatives have also stated that they will work to increase the effectiveness of the World Trade Organisation, which should benefit larger companies. They will also seek to renegotiate the Common Agricultural Policy, which may breathe some life into the struggling rural sector.

The Liberal Democrats have elected to help the cause of business by improving its efficiency. They have plans to scrap unnecessary business regulations and are also going to bring in a Business Tax Allowance, which will work in a similar way to a personal tax allowance and allow a small business 1500 tax free income. Larger companies will make up the shortfall; in addition, the LibDems strongly advocate an ethical business approach and would put legislation in place to enhance shareholders' rights.

As business becomes more and more free of tax regulation and seemingly petty rules, it will undoubtedly become more successful. People are more likely to become individual traders over the next few years, returning, perhaps, to almost "cottage industry" status, not seen on a large scale since pre-industrial revolution days. Along with this, however, must go the rights of individual workers within business -- and in their mad scramble to ensure that they are business-friendly, the three main parties are in risk of forgetting that. They do so at their peril.

© Oliver Moor

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