I know that even Labour agrees the tax burden is too high, says small business champion Craig Beaumont

Craig Beaumont has been spending a lot of time in Downing Street recently.

‘I was in with the Chancellor asking about the Budget and with the Prime Minister,’ says the executive director of the Federation of Small Businesses (FSB), the UK’s leading membership group for entrepreneurs.

‘Even Labour agrees that the tax burden’s too high,’ he reveals.

‘In 2028 it will be the highest since 1948 under Stafford Cripps, and he was one of the least successful chancellors we have ever had. We need a path to get out from it. They shouldn't be looking for ways to increase taxes everywhere.’

John Healey has been sending encouraging messages for small firms from Number 11 that he’s planning a Budget on Wednesday for ‘white van man’ and ‘the hairdresser on the High Street.’

But what are the chances?

‘Well, he has been talking a lot about sole traders, and that makes me optimistic for this group.’

Beaumont, a former Downing Street adviser, says his members ‘have never really felt that a Labour government understands them.’

‘The FSB was set up in 1974 because of that, as a trade union for the self-employed. 

‘I find it extraordinary, that so much of British politics is about employment and working for someone else, there should be more about working for yourself.’

He has never run his own business, though that is his ambition. The fact he has no personal experience of entrepreneurship is not, he feels, a problem when it comes to advocating for the FSB’s 200,000 members.

‘What I bring is the skill of lobbying,’ says Beaumont, who has a reputation as a tenacious and persuasive advocate.

Top of his list in the run-up to the Budget is increasing Small Business Rate Relief from the current £12,000 threshold to £25,000.

That, he says, would remove at least 250,000 more small firms from paying rates.

‘Business rates are a horrible pernicious tax,’ he asserts.

Yes, but how much would his proposal cost?

‘We are talking quite chunky money, but less than a billion.’

Second on his wish-list is an increase in the Employment Allowance. This enables firms to reduce their annual employers’ National Insurance bill by up to £10,500 a year and is of most benefit to small firms.

‘Employment costs are putting off many small firms from hiring. Uprating the Employment Allowance, then indexing it in line with the National Living Wage, would be a lifeline for small businesses looking to take on more members of staff, particularly younger ones.’

Beaumont says there are ‘200,000 missing jobs in the economy,’ purely down to the rise in employers’ National Insurance ushered in by Rachel Reeves in her 2024 Budget.

‘To get those back, you need to ease the cost of employment.

‘Raising employment allowance would cost about £450 million so again, not insurmountable money.’

Every politician, he says, is obsessed with the problem of NEETs – young people not in education, employment or training.

But, he asks rhetorically: ‘Where is the equivalent for older people?’

‘There are nearly a million young people who are NEETs, but you've got 1.5million people aged 50- 64, who are economically inactive due to health.

‘If you are able to tackle NEETs, why hasn't the issue of older people falling out of the workforce got the same political buy-in?

‘In our meetings with government we say: “Don't forget the other end of the workforce”.

‘It makes no sense to only focus on the young and you cannot keep heaping taxes on people in the middle.’

Many mature employees are setting up their own firms, he adds.

‘We see a natural flow of older people becoming entrepreneurs. Maybe you have a redundancy package or a pension lump sum and you have resources, skills and contacts. So off you go.’

The area he is ‘keeping a careful eye on’ in the Budget is Business Asset Disposal Relief (BADR) which reduces the rate of capital gains tax (CGT) an entrepreneur has to pay when they sell or close down.

At present, CGT is charged at 18 per cent for gains within the basic rate tax band and 24 per cent above that. Healey has signalled he will not raise the main rates, but Beaumont remains concerned that the BADR rate is too high.

‘The rate was 10 per cent, then it went up to 14 per cent and now 18 per cent. We would like that 18 per cent to be cancelled.’

‘Business asset disposal relief is a lower rate for people who have saved all their lives through their company for their old age. It’s their pension plan.

‘If it’s a limited company there will have already been corporation tax so it is double taxation. It is retrospective, it is a change in the rules that is really unfair.’

Budget aside, he highlights the plight of small firms that have had their Facebook pages shut down by owner Meta after being wrongly flagged for violations.

‘There's no consumer desk, no-one to talk to, nothing.’

The FSB is working out the size of the problem.

‘Meta and the platforms - they just don't care,’ says Beaumont. ‘We spotted it about six months ago, and it's starting to grow.’

‘There's also a new issue about charging for links in posts over two per month. They are making it more expensive to be an online business. We are asking the Competition and Markets Authority to look at this.’

Another bugbear is the recent reforms at Companies House, whereby millions of directors have to verify their identity. 

This – as the Mail on Sunday has reported - has created mayhem, with many finding it impossible to navigate the system.

Beaumont describes the situation as ‘terrible’.

‘Yes, something has to be done to stop a thousand fake companies being registered at one address. But the fee to register has doubled from £50 to £100. 

And there is now a requirement to submit a full set of profit and loss accounts to Companies House, different from the ones to HMRC at a different time. It is ridiculous.’

‘They are trying to take verification to the next level but it will gum up the works. Why can’t Companies House and HMRC talk?

‘This is extraordinary and will affect a million directors.

‘We are talking very actively to government about pausing and getting it right - and that is code for stop.’

On the positive side, he says a package to clamp down on late payments is in the works. It will cap business-to-business payment terms at 60 days.

‘We are trying to make it unacceptable morally to pay small business late.’

Small businesses certainly need all the help they can get. The FSB’s July survey showed the lowest share of firms expecting to grow since 2014.

Is it fair to call that a crisis of growth?

'I would say it's unprecedented. I wouldn't go so far as to say crisis, but I would say this shows we've got a problem, and we need to fix it. This survey is about sentiment, it's not a prediction, it's how they feel, so the good thing is it means we can change it.

‘Andy Burnham's all about hope. But we need to be something to be hopeful for.’

Beaumont calls for bone clinics

The FSB is backing the campaign to end the postcode lottery on osteoporosis, a serious bone disease affecting one-in-two women over fifty and one-in-five men.

Beaumont says preventable fractures are a heavy cost on small firms and the economy as a whole.

‘We looked at the impact on employees, small business owners and the self-employed.

‘It has led £159million of productivity lost to the economy in a year.’

‘There could be as many as 1.5million workdays lost due to osteoporosis.’

The Mail on Sunday campaign is calling on government to roll out Fracture Liaison Services (FLS) across the whole of the UK so the disease can be diagnosed sooner.

These bone clinics, which screen for osteoporosis and offer treatment are only present in 50 per cent of NHS trusts currently.