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Wednesday, 30 May, 2001, 13:25 GMT 14:25 UK
Red tape - who will cut the most?
Labour have launched their business manifesto claiming to be the party of business and the consumer.
Chancellor Gordon Brown insists that only a Labour government could promote economic growth. Labour pledged to keep inflation and and interest rates low and introduce a new workplace tax credit. Mr Brown promised to reduce the amount of bureaucracy and red tape that hinders business. The Conservatives have promised to reduce the tax burden for all business. William Hague claims he will create a de-regulation unit to reduce the amount of paperwork that businessmen have to complete. The Liberal Democrats have pledged to introduce a new Business Rates Allowance similar to to personal tax allowance. They have also promised to cut £200 million from the cost of the business rate. Which party offers the best deal for British business? Does red tape prevent businessmen from maximising their profit?
Bill, Bucks, UK
For all this red tape that has been introduced in business there has to be an equal amount of resources analysing and controlling its implementation. Or maybe not? In socialist states people ignore the red tape because the systems have collapsed. Are we more compliant than other countries when it comes to red tape? What happens if we don't comply? A year ago, I wanted to set up a start-up IT company. I took one look at the Labour Government's attitude to small business, and set up the company overseas instead. Labour will not get my vote, as they have become the tail being wagged by the anti-competition dog. Targeted welfare spending and means-testing, by definition, increase administration. Add to that the Europe factor of tripling the number of regulations every 5 years and there is no way, other than manipulating statistics, that New Labour can ever achieve an overall reduction in red tape.
Bob, Chippenham, UK
Labour and small business are words that shouldn't be in the same sentence! I'm an IT contractor and the only thing they have done for me is tax me more than 50% in future years. Anyone who thinks this will generate more tax revenue is seriously naive. Contractors will either go abroad, find an avoidance scheme (totally legal) or pay-up (small percentage) and the government will lose huge sums. Add on top of that the amount it has cost the government to implement IR35 (which they will not disclose) and it all adds up to a total mess.
Gordon Brown in encouraging the enterprise economy is doing a huge disservice to the young in UK. The UK's economic profile is different from US, Its product / business lifecycles are shorter due to technological obsolescence. People are better advised to go and work for the government where there is lifetime employment and inflation linked pension. Other than for a few, people are better advised to work at managing how taxes are used. The higher the taxes the more that can be employed. The beneficiaries of the social programs are those that administer it, not the recipients. When they put you in a box your asset base will on average be greater as a civil servant.
Malcolm McMahon, York, UK
I thought farmers where whingers, but small business owners are even worse. Can anybody whinging about red tape please first of all tell us how much money they drew from their company in the last financial year, and second, how much their business is worth? Then we can compare it against the average wage.
The UK economy is strong today because of the core principles of economics that were re-established by Thatcher, continued by Major and inherited by Blair. Creating/dismantling the cost of market entry has to be dynamic to respond to the changing demands of the economic environment. Red tape is usually the continuation of a rule whose purpose is long since past. It should be left to a standing committee of politicians and business people to continually review.
"William Hague claims he will create a de-regulation unit to reduce the amount of paperwork that businessmen have to complete". Yet another committee! Says it all doesn't it?
John B, UK
I think Labour should put the country's interests first and deeply encourage anyone who doesn't want to vote Labour to give the Liberal Democrats their vote instead of the Tories. The Liberal Democrats deserve a chance - maybe they're the best choice this time?
Although not pro-Labour, I think some of the pro-Tory comments below result from selective memory! There was as much 'bust' as 'boom' under the Conservatives, perhaps the 'bust' being much more hurtful in the long term. The economy may have been in an arguably good position when Blair took over, but there was also considerable national debt, high unemployment.
Please let's not return to short term economic naivety based in the guise of sound-bite, national pride, or out-dated traditional beliefs - business can't afford it!
Nige, Sheffield, UK
I tell you one business the Tory win would hurt. The Bookies!
It may be great fun for journalists and media people to play the game of pin down a politician on tax, but if we are to have a better National Health Service, education etc it has to be paid for from somewhere. The Tories try and pin high taxes on Labour but are the Tories not the party of high taxes? VAT, UBR, Poll Tax, Petrol Tax, Benefit in Kind Tax. You name they have taxed it. At least under Labour we get something however little for our taxes. Under the Tories we paid high taxes to pay for the Thatcher disaster.
Peter Kaye, Norwich, UK
I run a small business, and I am not so much pro-Labour
as anti-Tory.
The previous Conservative administrations had consistently
bad, if not outright daft, macro-economic policies.
The scope for serious damage in the future from
a Tory Government is probably limited by the independence
of the Bank of England, but policies of tax cuts when
the economy is strong, and tax increases during recessions
will still cause damage.
In addition, the idea of such a blatantly xenophobic party
in charge of economic and foreign policy is very disturbing.
I assume cooler heads would prevail within the Conservative
Party, but to even talk of renegotiating the EU treaties - if
not outright withdrawal - is crazy.
John Wadsworth, London Interest Rates have been stable in the U.K. since 1993. Brown has shown the good sense to follow Tory fiscal policies and Liberal monetary policies since coming to power. However Labour social policies and market regulation policies are bad for small start up companies.It is a strange form of Government that encourages its native talent to leave and then offer third world fast track visas to replace the gap.
All the arguments about which business supports which party are in the end a futile argument. The economy is the litmus test and that is in excellent shape thanks to Gordon Brown. At the end of the day it is the consumer with money in his/her pockets that keeps the economy afloat and thanks to there being under 1 million unemployed there are plenty of people around spending their money.
Graham, Scotland
Labour are best for business; 3-4 million unemployed, jobs for £2 per hour under the Tories. Under Labour, unemployment is down to 1 million and there is at least some protection for the working poor with a minimum wage.
Business owners both large and small are only interested in themselves, just read the comments from Mr Wentworth, who doesn't care for "silly little issues like health and safety". Thank God for a party who does care. As for IR35, it was about time something was done, but to be fair Labour has got it wrong. IT contractors were paying themselves the minimum wage possible to evade some tax and NI (and paying themselves in dividends to evade the rest of it) while benefiting from VAT free purchases for their business.
Mrs Thatcher understood.
Did somebody say Gordon Brown had done a good job getting rid of a lump of the national debt. Hasn't he just spread it around to us? As for all that money he got for the 3G mobile phone licences, how much has it cost small investors and pension funds with shares in BT.
Martyn, Swindon, UK
The Tories set medium business leaders like me free in the 80s and 90s without having to consider silly issues like health and safety, wage levels, taxes, red tape, "equal" opportunities (whatever that means) etc. We need some common sense back in government that allows businessmen the climate to work in that allows success and money making by hard workers like myself. I am seriously out of pocket on where I was in 1997 as a direct result of intrusive regulations and tax.
Labour does not appear to be the party of business. Business is about competitiveness, free speech and profitable exchange. Customers tell you what they think. But Labour supporters shouted down Hague in Northampton showing that Labour bullyboys harass and stifle free exchange. People are reticent of expressing their views on profits, affordable public services, and asylum for fear of being branded right wing, fatcats, and racist by these bullyboys. It's a sad state of affairs for a country, which depends so much on global business.
Much of the regulation impacting on small business would have arrived if the Tories had been elected in 1997, as most have been introduced through European directives by which Britain is bound by treaty. Given that more than 60% of exports go to the EC and we enjoy huge benefits as small businesses through the single market, we have to be prepared to accept the rules of the club!
Bob says that the EU accounts for 60% of our exports. He's right. It all goes on oil tankers to Rotterdam! Our trade with the EU is dominated by tourism pounds spent in Spain etc for a few weeks a year. A few weeks of holiday in the sun makes Europe a "feel good" environment. Regrettably the only experience that Labour politicians have of Europe is when holidaying. The business people within the Conservative party have seen the darker side of their restrictive business practices.
Labours' approach is bad for business.
Jim Hawthorne, London, UK
Obviously the best party for business and therefore for the UK as a whole is the Green Party. They would promote more local jobs, renationalise the railways and create 60,000 jobs in the new railway industry. It's not big business we need, but good local economies/ Multinationals have no place in local industry, and have to be more regulated and more controlled so that local economies can be allowed to flourish.
People who call taxes 'Stealth Taxes' are missing the point - they are consumption taxes. If you use more you pay more.
Petrol taxation doesn't hit the poorest as the Tories claim because the poorest can't afford cars. If you use more resources you should pay more.
Let me explain to Stuart from Bournemouth what the difference between a stealth tax and a consumption tax is:
When I set up a private pension fund, I was told that I would be taxed only on the money I took out when I retired. Ten years or so later, the government decided to start relieving me of some of the money that I put in over all those years as well.
Now that's what I call a stealth tax.
The Conservatives used to be associated with sound economic policies....this is no longer true. I find the prospect of more "Boom and Bust" and interest rates at 15% again truly frightening. Their policy towards Europe and the single currency could be deeply damaging. The economy seems stable and things generally going in the right direction so I will be voting Labour...I don't trust the Tories under Hague.
Red tape itself is a problem. However, we've got to recognise that business depends on its wider social and economic context. In this way it seems entirely reasonable to ask business people to take some responsibility and pay a small price for the opportunities to become rich.
Andy, London
The Tories are the party of big business only, i.e. the big donors and awarders of post-politics directorships. They did nothing for small business in 18 years of government. Labour have done little too, but no-one ever thought they would. In reality politicians are irrelevant. The issue is reigning in the bullies at the Inland Revenue and Customs & Excise from targeting easy prey small businesses whilst letting big (and politically influential) businesses get away with murder. However, no governments have the guts to take on revenue generating departments.
What I'd really like from politicians is the end of the myth that the private sector is so superior. There is as much incompetence and waste in the private sector as in the public, and considerably more corruption.
The incessant complaints about red tape make it clear that the only government that is good for business is No Government!
I was staggered to see that one of these people complained that the only way they could afford to run their business was to employ others to do the work. Isn't that prime evidence of a thriving enterprise?
I find it very reassuring to have a government that attempts to regulate the incompetent sharks running many small businesses. I have no doubt that such people would be happier under a Tory administration. That is why I, and the more successful UK businesses, will be supporting Labour.
Historically the Tories have been better for big business and Labour have been better for small businesses. That doesn't seem to have changed much, with the single exception of IR35, which is potty.
Which party is best for business? It depends how you define business. If you mean the entire chain from business managers through employees to suppliers and customers, then it has to be Labour. If you mean the few fat cats at the top, then it has to be the Tories.
Of course, you will also get the "But I Don't Want To Pay Any Tax" IT consultant types who will whinge until they're blue in the face about IR35, but they are just bitter about being "found out".
The chap who said IT types were tax evaders who have been "found out" is talking from a position of total ignorance. Does he think that it is fair that people under IR35 are unique in terms of being taxed simultaneously as both employer AND employee? This means that their NI rate is well over 20% of their earnings and that the total tax rate is more than 50% of their gross earnings. Not even the fattest of fatcats has to pay tax rates like this. Despite being taxed as an employee they enjoy precisely none of the rights and benefits that permanent or even part-time employees take for granted. All holiday/sick leave is unpaid and they can be dismissed at any time without compensation. Many of the IT consultants have worked hard over the previous years to establish and build up a business, only to find that IR35 has destroyed the profitability of that business at a stroke. If only the government could be "found out".
Susie Mahmood, Swindon, UK
What's best for business isn't necessarily the best for the rest of us, and vice versa. The fact that 140 predominantly large businesses (which, lets be honest, tend not to have the interests of their host countries at heart) have supported the Tories is neither surprising or significant. Perhaps it's because Labour has shown so effectively that they can run the economy successfully, and invest in our public services for the benefit of us all they're very worried that the Tories may never get in again - and therefore THEY may never be able to do what they like again!
So is Labour seriously claiming that it is the party for small business? Don't make me laugh!
I work in IT, supporting small to medium sized businesses and daily come across frustrated users trying to run hugely complicated payroll systems.
I always thought that leading by example was worthwhile. Next time Gordon Brown tinkers with the business system let him and his cabinet put on a demonstration on how it should operate before foisting it on others. Labour has certainly got rid of red tape, the only problem is they have replaced it with red rope and seem to be eagerly waiting for the arrival of the chains.
Martyn Williams, London, UK All those who pontificate about 'red tape' strangling business should look at a report just produced by Forbes (hardly a left wing magazine). Their survey concludes that the UK is the fifth best place in the world to start a business. Not bad, I'd have thought!
How Labour can claim to be the party of business when they've milked billions from business by way of 'windfall' taxes,
and tied businesses up in bureaucratic nightmares like the working time directive, maternity/paternity leave and
working families tax credit is totally beyond me.
At least under the Tories there was boom-and-bust; under Labour it's bust-and-bust!
Pritham, Brussels, Belgium This government is lucky - they inherited a thriving economy.
What they have done since is to place burdens (taxation, bureaucracy, uncertainty) on small businesses. They have been able to get away with it because the economy has remained buoyant.
So what has Labour done? Just ask the question "is there a specific government action that has helped small business?" I can't think of a single one.
Craig Beaumont, London, UK Labour is no friend to small businesses. My company specialises in the provision of IT services throughout the South East of England but has been badly impacted on by the implementation of IR35 regulations. The net effect of this tax has been to remove the safety net from, not only my company, but many thousands of small IT consultancies throughout the UK. This is a tax that has been brought about at the insistence of some very large software houses who obviously made the 'smart' business decision to cripple as much of their competition as they possibly could and decided that the Labour party should help them achieve this 'target'.
Jamie Murray, Sydney, Australia
The suggestion that Labour are good for business is a joke. Since coming to power Labour have down everything in their power to stifle the growth of small businesses with excessive red tape and stealth taxes that inhibit their growth. The only businesses that are thriving under Labour are those big businesses that contribute to Labour party funds and provide Labour MP's with supplementary incomes.
Labour has clearly proven itself to be the party for business over the past four years with a list of achievements that the Tories should envy, not criticise.
There are the benefits to business from getting over 250,000 more people into the labour market.
Isn't it strange that a Labour Government claims to be the party of business. I thought that the Labour Party was founded to protect the interests of the people who have to work for a living. The fat cats will always be able to look after themselves.
Martyn, London, England
Looking to the future, I don't think any party will be very good for UK business unless they bite the bullet and get a carbon tax up and running. Tony Blair's pledge of £100m for renewable energy development is a good start, but I wonder if he has the guts to bring in policies that will switch us to sustainable development proper. Only then will we avert the global warming that has already sent shivers down the spines of many a global reinsurance person. Theirs is just one industry beginning to suffer. Many more businesses have already been badly affected by floods and all the other nightmares of a chaotic climate.
For now, I'll give Labour the benefit of the doubt. At least they could never be as bad as the Tories!
The Labour administration is no better than the mafia. The mafia skim 10% off the top whilst Gordon Brown comes round and skims off 50%. Furthermore, close to a quarter of my working day is spent managing the red tape created by Labour ideology. How can a small business grow with these burdens? Gordon Brown must be orbiting a different planet if he thinks he has played a positive role in the success of the economy. Low inflation is down to the Bank of England and wealth is created by the business community. Gordon Brown does no more than appear in the Balance Sheet under "liabilities".
The most important action undertaken by the Labour Government to stabilise the economy was to make the Bank of England independent and let them set interest rates. All the parties are stating their intentions to get involved in running people's affairs but the way forward seems to be to give more choice and freedom to individuals, businesses and other organisations.
Surprising that when many concede that granting independence to the Bank of England was the best thing that this government has done, they all forget that Labour criticised this as a Lib Dem policy up until 1997. Lib Dems were shocked to see Gordon Brown nick their policy and claim the credit when they had been ridiculed on the matter by both parties before. There is a 'third way'. But it isn't 'New' Labour.
The Conservatives are saying that under Labour the tax on petrol will rise due to it being linked to Europe-wide fuel tax harmonisation. Wasn't it the Tories last September saying that the British pay the most tax on their petrol throughout the whole of Europe - surely then tax harmonisation will reduce the price of petrol. It seems that the Tories will say anything on tax just to get votes with no apparent idea of what they are talking about!
David Jones, London
To hear Gordon Brown's comments about Labour being "the party for business" makes every IT professional laugh out loud!
Labour have shown their ignorance about the IT industry, and has set Britain back 20 years in competitive terms, with the introduction of IR35. This measure has been brought about by pressure from the big service houses to squeeze the small, entrepreneurial companies out of the UK.
To cap it all, the next initiative is to sweep in thousands of immigrants to fill the shortage of qualified IT posts that are suddenly cropping up. A coincidence, do you think ?
I'll vote for whichever party promises MORE regulation for business, not less. As business gets more and more powerful, we need a government who stands up to the fat cats and insists they meet certain standards for environmental pollution, for health and safety, for the way they treat workers and so on.
Neil Jones, Reading UK
Taking a long-term view - it's best for business to have an economy that has a well-educated workforce.
The only party to pledge Bank of England independence at the last Election were the Lib Dems. I think the de-politicisation of the economy has a lot to do with its present vigour. Labour have been responsible enough to avoid a pre-election give-away, although their interfering and over-regulation is to the detriment of business.
Labour is strangling small businesses with red tape. As for being responsible for giving us these low interest rates - what a lot of tosh! The interest rates are a direct result of the economic meltdown being experienced in the US. I doubt these business leaders will be so forthcoming if the situation in the UK follows suit and Gordon Brown pushes forward with his spending plans.
The opportunist pledge by the Tory party to cut 6p/litre off fuel prices illustrated that the capitalist party has no idea how the free market economy works. We are currently paying these fuel prices. If duty is reduced, the oil companies would simply increase prices to a level that the market can take, and the country would be several Billion pound worse off, resulting in cuts in essential services.
If the economy is strong it is only due to the Conservative financial legacy and Labour adhering to Tory spending plans. As for being the party of business, well, ask a wider section of the business community rather than the narrow section of ennobled, or those who think they might be by Labour, who signed the letter to the Times. Small businesses are being choked by business rates and taxes.
Labour is a disaster when it comes to small business.I would love to expand and create more employment but the extra hours I would need to work sorting out the red tape just makes it pointless.Labour's claim that they are the party for business is pure spin - come and ask the real businessmen and get the truth.
Oman,Sandwell, UK
Labour the party of business? You are joking aren't you. They have doubled employment costs with their social legislation and regulation. They are only interested in business where it funds their party.
For a Government that claims to be pro-business why has it driven most of the competitiveness out of our financial services market?
During the late 80's and early 90's I watched my father's small business almost collapse during the Tories' boom and bust years. It took years to claw it back. He has been better off under Labour and as a small businessman myself the only way I'd vote Tory is if William Hague followed me to the polling booth and held a gun to my head.
Labour have obviously not read the article in the Daily Mail (Monday 7th May) when Ruth Lea from the British Chamber of Commerce attacked Labour's £15 billion burden on business. That doesn't sound like an endorsement to me, although it may not suit Labour spin.
David Morris, Bracknell, UK
As an expat, I can only judge from afar. That said, the economy looks in good shape and the Bank of England seems to have the freedom it needs to keep things under control. Without any obvious alternative from the opposition parties, I can't really see how businesses can vote for anyone but Labour on this issue.
Labour is a disaster. I will keep this short as I have to go back to completing all the red tape this idiotic, naive Government has imposed on small businesses like mine (15 staff).
Ian Burton, London
As someone running their own business, I need economic stability more than anything else. Thank God we've at last got a chancellor who can deliver this.
What business needs is a free market unfettered by
bureaucracy. Labour's policies on indirect taxation
and the bureaucratic nightmare of the EU are directly
opposed to the interests of business.
However, I'm not sure the Tories are much better.
However, no UK government can have much effect
whilst we remain entangled with the EU. For this
reason, I suggest that the only party whose policies
have anything positive to offer to business - and to
the electorate at large - is the UK Independence
Party.
I agree entirely with Matt W. My dad's one-man business is subject to IR35 which removes any advantages to being a small enterprise. Labour is damaging small companies by taxing them for all they are worth, and will kill the economy if re-elected. And call me cynical but I cannot believe those 50 signatories (probably the only 50 they could find!) did not come without a price. Cut the con, Tony, and admit you're a socialist!
The populist economics of the Conservatives would be a disaster for business. If followed through, not only would they create an inflationary boom, but they would throw the Government into deficit, destroying the good work Brown has done on the national debt.
You'd find that any savings you make in tax will end up being paid in interest payments, and wouldn't you rather see your money go on the NHS than into the pockets of financial institutions?
The Labour party leave much to be desired in many areas - red tape is a significant problem for small business - but the contrast is between a prudent, slightly nannying incumbent, and an irresponsible, immature challenger.
Mark Williams, UK
Labour has not done an excellent job of maintaining low inflation and low interest rates, the Bank of England has.
Labour stuck to the Tory spending plan for their first two years, so we should all be thanking them for our current economic success!
This Government is desperately trying to close down small businesses as they do not want people to be working for themselves. To say that they are the party of business, and are trying to stimulate entrepreneurs, is so laughable I find it difficult to believe they had the nerve to actually come out and say it.
For a real sign of the strength of the UK economy look no further than the fact that we CAN now reduce interest rates flexibly to counter fluctuations in the business cycle. In the bad old days of stagflation that was often not possible. We would not be there without the huge debt repayments and independent Bank of England which are among Gordon Brown's greatest achievements.
RWS, UK
For those 50 who support Labour, I wonder how many don't? It's just the kind of spin Labour would do - claiming the whole support of business from a pledge of just 50.
One of the most important aspects for business in this country is the availability of capital for investment and growth. Low interest rates mean that the holders of capital have to look to risk investments to grow their funds as putting their funds into interest yielding accounts will not deliver the sort of returns they are looking for. I am concerned that if the Tories are elected, they would stimulate an artificial mini boom which would inevitably result in higher interest rates and a consequent shrinking of available capital for business investment. Labour have done an excellent job in maintaining low inflation and low interest rates and seem committed to doing the same going forward.
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