The real vote-winning issues

So 84% of finance directors do not expect the main political parties to address the needs of business in the forthcoming general election campaign, according to last week’s Accountancy Age/Reed Finance Big Question survey. In a way they shouldn’t be surprised: companies can’t vote so why should politicians take an interest?

That said, to paraphrase Tony Blair, it would be pretty foolish ignore the contribution business has made to the economic success of the UK over the past eight years.

And while none of us expect too much cuddling-up to corporates in the debates of the next three weeks, whichever party prevails on 5 May will have to deliver for the business community.

Ahead of the starting gun being fired on the election campaign, Accountancy Age and Microsoft brought together a panel of finance directors and other business experts to thrash out the issues that matter most to (predominantly smaller) companies in 2005.

The findings suggest that, while headline economic growth may have been healthy over the last couple of years, businesses’ core concerns have not gone away.

‘The main issues are tax, national insurance contributions and red tape,’ says Andrew Mowlah head of research for the Forum of Private Business. ‘Two years ago, the chancellor raised employers’ NI by 1%, and this is a bottom-line cost.

Employment regulations are a massive problem for SMEs. We recently surveyed our members and found that businesses are spending more than 10 hours a week on red tape.

‘When you compare this with emerging economies such as China and India, you can see it’s a real threat to our ability to compete.’

But for most smaller companies it is not all red tape that is the real problem. Most recognise the need to comply ð all of us appreciate the importance of food standards in restaurants, for instance. But when it comes to hiring staff, many businesses are buckling under the strain of compliance.

‘Half our costs are labour costs,’ complains Keith Wilson, financial director of contract catering company Baxter Storey. ‘There’s a shortage of skills and we are continually bombarded with red tape. It handicaps our ability to respond quickly.’

But Adam Edmondson, director of Tectura, an IT provider, says it isn’t just a case of form-filling ð the costs of recruitment are prohibitively high.

‘In the technology sector, recruitment is extremely expensive,’ he says. ‘The cost of recruitment in the UK is extraordinarily high -ð we pay about 15% for the absolute lowest level of service, and that’s just an emailed list of CVs.

‘To get a better level of service we have to pay around 20% to 25%. If you look at other countries we operate in, 15% gets us a good level of service.

‘I was at a recent meeting with a group of about 12 or 15 companies, all owner-managed, with between 15 and 30 staff. Without exception, they said that the single biggest barrier to growth is staff ð- not that there isn’t enough business, but the high cost and the difficulty of finding staff so they could grow.’

That’s a problem you will hear from businesses large and small, and firms too. But with a particular eye on employment compliance costs, Victoria Johnson, small business policy adviser for ACCA, wants to see the next government do more to support small businesses.

‘We have a list of recommendations,’ she says, pointing to ACCA’s recently released small business manifesto. ‘We’ve found that in a big business it costs say £5 to administer red tape, but in a small business with less than 10 people it costs £300.’

But not all FDs agree that the onus is on the government to deliver change. Wilson says: ‘Red tape is here and you have to accept it. So you’ve got to find ways to reduce the burden on staff, to bring down the cost and deal with it efficiently. The technology to do it is not there yet.’

And, according to Jonathan Hughes, director of Microsoft’s business solutions partner group, the IT industry is ready to deliver.

‘There are changes going on within the IT industry,’ he says. ‘In the past, its resources have been focused on the development of hardware, software and service for large enterprises, because that’s where the money was.

‘But in the last five years these organisations have become saturated with technology. Now the big IT companies are looking at SMEs.’

There were encouraging noises in the last Budget ð- but the message is that the next government really needs to do more.

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