Small business Q&A: Minister Nigel Griffiths

Mr Griffiths has been MP for Edinburgh South since 1987

The government says it is keen to provide greater support for the small business sector.

In particular, it wants to improve the entrepreneurial culture in the UK.

In the second part of an e-mail Q&A with BBC News Online readers, the Minister for Small Business, Nigel Griffiths, answers questions on red tape, tax, insurance, employee rights and other issues.

This week's answers from Nigel Griffiths

Previous answers from Nigel Griffiths

Mr Griffiths has been Small Business Minister since 2001 and says he regularly meets small business owners to listen to their suggestions.

Do you agree that the government is doing enough to support entrepreneurs? Are you having problems with too much red tape? Does the UK have an entrepreneurial culture?

---

QUESTION
Iain, UK
Minister Nigel Griffiths claims the government is keen to provide greater support for the small business sector by improving the entrepreneurial culture in the UK.

What then does he have to say about attacks on small business made via IR35 and S660 which see small businesses facing huge rises in tax liability and reductions in profits?

Does he not agree that this legislation targets the very "entrepreneurial culture" the government claims to support?

Why is this government doing all it can to kill off small business, particularly in the IT sector? M. Marshall, UK

ANSWER
Nigel Griffiths
The independent Economist Intelligence Unit (EIU) has ranked 60 countries on their attractiveness for start-up businesses. It gives them points for favourable tax regimes as well as other pro-business measures. The UK is joint second after the Netherlands, and ahead of the US. Clearly the EIU's study takes full account of IR35 and S660.

QUESTION
M. Marshall, UK
Why is this government doing all it can to kill off small business, particularly in the IT sector? In fact it seems positively anxious to drive those employed in that field either into large multinational corporate organisations (who are not recruiting anyway), or more likely on to the unemployment register.

IR35 was the start, now, with the aim of appeasing the multinationals and under the guise of the WTO, it is preparing to open up the country for unrestricted access by IT organisations from India and other non-EU countries.

We don't need loans. We need support in international negotiations, we need encouragement through sensible and equitable tax legislation and we need to see some real joined-up thinking from a very disjointed government.

ANSWER
Nigel Griffiths
The creation of 1.5 million small businesses since 1997 is hardly "killing them off". Almost 30 million people are in work in Britain today, more than at any time in our history, and we have more highly skilled people in work than ever.

People with appropriate IT skills are in high demand, and it is right that companies are allowed to meet immediate skill shortages from international countries.

Frankly it is a disgrace that we had to wait until the 21st century to give millions of workers rights to sick pay, paid holidays and pensions Nigel Griffiths Small Business Minister

QUESTION
James, Bristol
I am now coming up to my 10th year of working for myself. I have often thought about expanding and employing staff and wasn't sure which way to go.

Well, since Labour came into power, that decision was made for me and the answer is NO! Why do employees have loads of rights, but not the employer? For example, if you employ a graduate, why is the employer not advised that there is a student loan to be deducted from salary, in effect a £3,000 fine?

ANSWER
Nigel Griffiths
I believe in a fair balance of rights between employers and employees, and frankly it is a disgrace that we had to wait until the 21st century to give millions of workers rights to sick pay, paid holidays and pensions. Your £3,000 figure is a maximum penalty for failure by employers committing fraud or negligence.

QUESTION
Malcolm Holt, Scotland
What steps is the government taking to help small businesses to compete with offshore service companies which often operate in an environment with low taxes and low labour costs?

I want people to have confidence to start and run businesses, and to expand them Nigel Griffiths Small Business Minister

ANSWER
Nigel Griffiths
We aim for a tax system which gives the UK a competitive edge and a high standard of public services.

UK small businesses benefit from the most favourable VAT threshold in the EU and companies can take advantage of 100% write-offs for IT equipment connected to the internet and a range of other measures.

QUESTION
Andrew Powell, England
There has been much press recently regarding the question of liability insurance for small businesses. Why is it either a) not obtainable or b) not an affordable cost?

This has resulted in many businesses trading illegally or winding up. The question seems to be swept under the carpet quite frequently and the government seems intent on saying there isn't an issue. Bear in mind that I work within the industry of placing cover for such businesses before you answer.

ANSWER
Nigel Griffiths
Although insurance is provided by the private sector, I have been working closely with the Federation of Small Businesses, the British Chambers of Commence and other small business representatives on this matter. The Office of Fair Trading investigated the practices and found no evidence of a widespread lack of availability of insurance cover but is keeping it under continual review.

QUESTION
Gordon Lloyd-West, UK (Isle of Man)
I am both a small business entrepreneur and an advisor to other businesses. I constantly run into severe problems of stress in small business owner/managers which affects both their health and the well-being of their businesses.

Whilst there is government legislation to deal with employees' stress, there is no help or support for the "boss". Surely we are missing one of the key reasons for small business failure by not extending a helping hand to this group?

Small businesses don't have time to look around for information, so why doesn't the government target businesses to keep them informed about the assistance available? Simon Micklewright, England

ANSWER
Nigel Griffiths
This is a very thoughtful question. I want people to have confidence to start and run businesses, and to expand them. Coping with stress is critical to this. For far too long, the plight of miners and other workers with lung disease was denied and ignored. I am proud of what this government has done to reverse this. I don't want any other group to feel that their health problems are being ignored.

QUESTION
Stephen Burford, UK
Why hasn't the government reduced tax thresholds for Sole traders and Partnerships to bring them into line with Limited Companies despite lobbying by the National Federation of Small Businesses?

ANSWER
Nigel Griffiths
I spoke at the Federation of Small Businesses last Annual Conference and have regular meetings with their office bearers, so I am aware of the background to this issue. The advantages of partnerships and sole traders include:

• Accounts do not need to be filed at Companies House
• No audit requirement needed
• No formation costs incurred
• No sharing of profits (or flexible profit-sharing arrangements for partnerships).

Against this, incorporated companies have the following burdens:

• The company must prepare full accounts in Companies Act format
• The accounts must be filed at Companies House and are therefore available to the public
• Shareholder lists can also be obtained from Companies House, so ownership of the company is known
• There is a shorter seven-month deadline for filing accounts at Companies House
• Accounts are fully audited, with associated expense.
  

QUESTION
Simon Micklewright, England
I've run my own IT company for two and a half years, employing five people. The only time I hear from national or local government it is about tax, company statistics or an employment survey.

I didn't even know the government had a loan guarantee scheme. Small businesses don't have time to look around for information, so why doesn't the government target businesses to keep them informed about the assistance available?

ANSWER
Nigel Griffiths
An excellent point. We don't have the budget of a McDonalds to publicise our excellent network of business advisors in the Business Link organisations, but you can go to www.businesslink.org and get advice on a wide range of pro-business schemes, such as the loans scheme you mention, and which we have expanded this year to take in even more sectors.

Once you're hooked into the Business Link service, you can ask to be updated with appropriate information to your business.

QUESTION
Christian, England
I'm trying to start a new business within the childcare industry. The community is crying out for high-quality day nursery care, but planning restrictions are preventing me from opening.

The problem relates to the number of children my nursery will accommodate and the expected rise in traffic flow. Day nurseries have to achieve a certain occupancy rate in order to be economically viable. Why does the local government fail to recognise the vital link between some of its policies - in this case, a desperate push for childcare places and excessive planning legislation?

ANSWER
Nigel Griffiths
Local government has to balance the demands of the public for vital services like yours with their demands for less congested and safer roads. Planning legislation is far from perfect and the government is aiming to bring in legislation so that planning laws are fit for the 21st century.

QUESTION
Nick Foot, England
I have been running a small business with a £300k to £500k turnover for 15 years and the biggest problems that I can see - apart from the general levels of red tape - are the amount of tax that the government takes (rates, national insurance, insurance premium tax, VAT which impacts cashflow, etc) even when you are losing money at the time. Why can't more of the taxes be on profits? Then businesses could weather the lulls better.

ANSWER
Nigel Griffiths
This is the first time anyone in business has asked me to increase taxes on profits.

Gordon Brown has set tax rates which are among the most favourable to businesses in Europe. These include the best VAT threshold in the whole of the EU and a range of tax deductions to reduce the tax bill of small businesses. I have seen no plans to increase taxes on profits.

Return to the top