Budget 2002: "Contractors find no joy in budget"

Gordon Brown's budget has received a frosty reception from most industry bodies, including the FSB and CBI. The Professional Contractors Group also expressed disappointment that the Chancellor's Budget failed to address the major concerns affecting small businesses and predicted that many would be unable to continue to operate in this climate of uncertainty.

The PCG said the Budget had done little or nothing to help their members who were finding it increasingly difficult to run a business in the UK.

Jane Akshar, Chairman of the PCG, said: "The Chancellor has spoken about enterprise and fairness - but hundreds of thousands of small businesses who contract their knowledge and services to clients are trying to operate in an environment which is neither fair, nor encourages enterprise or innovation.

"What he gives with one hand - he takes away with another. This is a schizophrenic attitude to small businesses. The Chancellor has reduced the corporation tax rates for small businesses, while leaving many of them uncertain whether they will pay tax under those rules or under the punitive IR35 regime . Specific tax breaks for small businesses are meaningless while there is legislation which prevents many small businesses from operating as such.

"What is certain is that the one per cent increase in national insurance rates for employers, employees and the self employed will hit all small businesses including our members very hard. In addition the concept of the upper earnings limit for employees has now been breached because the additional one per cent contribution for employees will not be subject to the upper earnings limit and will apply to all salary.

"We've heard no practical initiatives today which will help small businesses in the knowledge-based economy. They make little difference to entrepreneurs who have closed their businesses because the Government has created an environment were they can no longer operate."

CBI Director-General Digby Jones said:

"The Chancellor has given with one hand but taken with the other. Companies will be delighted by measures to boost innovation and entrepreneurship. But there will be deep dismay at the net increase of some £2.5 billion in the cost of doing business in Britain."

"We are worried that he is now imposing a business tax burden that impacts directly on the cost of employing people at a time when UK competitiveness is being put to the test. An increase in employers' NIC's impacts on every business of every size regardless of whether or not they are making profits."

FSB Policy Chairman, John Walker criticised the 'give with one hand, take with the other' approach to taxes on small businesses and commented:

"The devil could be in the detail and we will wait to see the full budget statement, including the Finance Bill itself, before making detailed comments."

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