Proposed new legislation set out in the Queen’s Speech has received a muted reception from the business community.
Broadly welcomed were plans in the Banking Reform Bill that will allow the government to intervene directly in failing banks and to give the Bank of England a role in overseeing interbank lending.
Also welcomed was the government’s intention to put the banking code on a statutory footing.
Reaction was more guarded over the Children, Skills and Learning Bill which will see an additional 4.5 million working parents of children up to the age of 16 given the right to request flexible working.
John Cridland, the CBI’s deputy director general, said: “We understand the reasons for this, but we think that the decision to implement this policy in April rather than later in the year is a mistake. It will place an extra administrative burden on companies at a difficult time, when they are already struggling to cope with the economic downturn.”
The Bill will also give employees the right to request training. Mr Cridland said that “the proposals must ensure employers only accept requests for business relevant training, to help build a stronger skills base and a more competitive economy".
However, measures in the Bill to establish apprenticeships on a statutory basis were well received, although the British Chambers of Commerce (BCC) warned that “apprenticeships should be employer led, offer real progression routes for apprentices, whether that be onto development in the workplace, or further and higher education, and be rigorous enough to enjoy parity of esteem with other learning routes”.
Questions were raised about the effects of the Equality Bill on the process of tendering for public contracts, in particular the use of procurement as a means of improving equality.
John Cridland of the CBI said that “the focus should be on achieving outcomes both in terms of equality and public services, rather than prescribing the individual practices of the private provider”, adding that “clear, simple and consistent guidance is needed for businesses to bid for public contracts effectively”.
The BCC expressed concern that while the original intention of the Bill was to simplify procurement, it “could end up being a bureaucratic nightmare for small businesses”.
The greatest worry, however, centred on the Business Rate Supplements Bill.
The Bill, if passed, would allow local authorities to charge additional rates of up to 2 pence in the pound on business properties with a rateable value of more than £50,000 in order to fund infrastructure projects.
The BCC said: “As companies are struggling to survive, it cannot be right that they face the possible combination of local authorities establishing new Business Rate Supplements. If, however, local authorities are to be given the flexibility to introduce a supplement, any proposal must be an infrastructure project that business believes is necessary, with a clear project plan, ring-fenced, additional funds, ongoing business oversight of the initiative and a mandatory business vote.”
Stephen Robertson, the director general of the British Retail Consortium, argued that the government had failed to include essential safeguards in the legislation, specifically a compulsory business vote before the introduction of every local business rates supplement and a clear framework to hold local authorities to account in developing and implementing BRS proposals.
He said: “At a time when retailers are being hit by rising costs and falling sales, this Bill gives local authorities the power to clobber businesses with a hefty new stealth tax.”
The Bill does, however, place a legal duty on authorities to consult on the imposition of supplementary rates and will also allow businesses to vote on any proposals where the supplement funds more than one third of a project.
Nick Palin, the director of finance at the Forum of Private Business, said: “The FPB is disappointed that, despite vocal opposition, the government intends to press ahead with this legislation. It is deeply unpopular.
“Our members believe they already pay more than enough in taxes. These supplementary business rates would be imposed at a time when small firms could be coming out of a recession. They would present a considerable barrier to growth.”
Commenting on the Speech, John Wright, national chairman of the Federation of Small Businesses, said: “[It] is a mixed bag for small businesses this year. Reforms to the financial sector are very welcome, following a very difficult year for small businesses which have seen costs on overdrafts rise and loans being defaulted.
“But measures to extend flexible working for parents will be an extra burden for small businesses at an already difficult time. The FSB is also concerned that small firms will struggle to pay extra business rate charges in what will be a very difficult year.”
Date:4 December 2008
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