Let me explain.
2 weeks ago I was interviewed (not just me) for a Radio 4 show which was aimed at asking the businesses of Greater Manchester what the government need to do to support business in the North West.
I raised a point about the new initiative on employer NI – which says that start up businesses who employ up to 10 staff can do so without any employers NI (up to a limit of 5k per employee) for a 12 month period.
My point was that the scheme was good in theory but not in practice as the reality is that the VAST amount of new start ups do NOT take on staff in their first 12 months in business.
Furthermore I added, the growth in jobs the government wishes to see can ONLY come from the private sector and only by bringing back the confidence of SME’s to hire again. Businesses like mine which got leaner during the recession but are now in a position to grow again are likely to grow at a higher rate if there was an incentive to do so, rather than the current disincentive of Employers NI – which is of NO benefit at all to business owners.
The point was lost on the interviewer who put my question to Vince on the Radio – as she changed the fundamental meaning of my question and so I had a second chance last night, to put the question to Vince again.
Last night was the highly successful annual dinner of Greater Manchester Chamber – which was made memorable by a number of things, including an appearance and set from John Bishop who had some of the audience rolling in the aisles (or was that the wine?), and a short speech by Vince Cable which actually wasn’t boring – always a bonus when listening to politicians. Though it was not as entertaining as last years speech by Lord Adonis – who should consider a career in stand up. No seriously – he was intentionally funny!
But back to Vince Cable.
Vince strikes me as a very genuine man – who actually listens to what is said and has some sound financial understanding of what is needed to stop the rot and grow the economy again.
He listened to my point – that the NI relief should be aimed at all SME’s not just start ups. He had the grace to admit the take up of the scheme had not been over whelming, – no surprise to those of us who actually run small businesses and remember the difficulties and risks faced in the early years of running your own business. And he made the point that perhaps the Chancellor might consider the cost to be too high to implement for all SME’s.
I would like both Vince and George Osbourne to recognize that by creating a job – the small business owner has immediately created a revenue flow of 35% of that persons salary straight into the revenues coffers – money that it would NOT have – had some brave small business person not decided to put their neck on the block and take the risk of employing someone.
Therefore – the incentive to hire can only increase the amount of new hires – which will increase the coffers of the revenue. After all 35% may be less than 49% (employee tax and NI + employer NI) but 49% of nothing is still nothing. Personally I think 35% of something is a better deal!
Better totake a long term view – which is – in Year 1 we (HMRC) will get 35% and then from year 2 onwards we get the additional 14%. Yes that’s right folks – for every person we business owners employ we have to pay 14% on top of their salary to the government – for what? Just for the privilege of employing them I guess! Lucky us!
The thing that pleased me the most was that Vince stated that the point I made was very valid and a good point, and that he would take it back and discuss it with the Chancellor. And I believe he will.
Whether anything will come of it we will have to wait and see – but at least there is one politician who is prepared to be honest – and to listen and more importantly to hear.
Thanks Vince – come again anytime!