Rochdale businesses see negligible benefit of VAT cut

According to research from Tenon, the business adviser to entrepreneurs, nine out of ten business owners in the North West believe that the temporary cut in VAT has failed to make a positive impact on their businesses.

The survey, which questioned over 300 entrepreneurs, found that the cut has been particularly ineffective in the North West, with just 11 per cent seeing an advantage.

However, more than two thirds (69 per cent) of the North West entrepreneurs surveyed believe that National Insurance Contributions (NIC) hold the key to benefiting their businesses.

Tenon warns that the Government could face a backlash from struggling entrepreneurs as three in five believe that no initiatives introduced by the Government in the last 12 months have had a positive impact on their business.

The poll found that North West entrepreneurs would find the following initiatives beneficial to their businesses:

• A National Insurance Contributions holiday (69 per cent)
• A cut in the rate of corporation tax (58 per cent)
• Increased credit lines / more accessible bank funding (47 per cent)
• A relaxation of employment law (27 per cent)

Martin Kirby, regional managing director at Tenon North West, said: “Business owners haven’t felt the benefit of any recent Government initiatives, despite being the lifeblood of the British economy.

“Six months on from the temporary reduction in the standard rate of VAT and entrepreneurs have felt no positive impact. In fact, many are likely to have been burdened with additional administrative costs that could prove to do more harm than good by the end of the year.

“The Government needs to listen to the entrepreneurial community and start implementing those measures that will be of most help.

“A meaningful reduction in the rate of employer’s National Insurance Contributions or a ‘holiday’ would be of real benefit to British businesses. Employers would be incentivised to take on those looking for work, reducing unemployment figures and aiding the wider economy.”