GOVERNMENT polices are too timid to do enough to boost the economy or persuade firms to create jobs, according to the Federation of Small Businesses (FSB).
It threw down the gauntlet as the Conservative Party conference in Manchester began.
The FSB said that many of the current policies are suited to the days when unemployment was lower and high street spending was higher, rather than today’s more difficult times.
It said efforts to cut red tape and those designed to help small firms employ staff were welcome but did not go far enough.
The FSB said the Government must be bolder in order to tackle the challenges the current economic environment presents.
FSB chairman John Walker said: “If unemployment was lower and consumer spending higher, Government policies to grow the economy might work.
“But they are out of touch with reality. With economic growth sluggish at best, spending on the high street low and unemployment high, the Government needs to ratchet up its growth agenda and send a clear signal to the business community that it will support them.
“Small firms lack confidence about their future prospects, but they also hold the key to recovery.
Kick-starting demand and further incentivising job creation would give small firms a fighting chance to return to growth.
“But as it stands, Government policies are merely scratching the surface.”
Research by the FSB shows that a number of issues are putting off small businesses from employing more staff.
The list was topped by insufficient work and uncertainty over contracts cited by almost four our of 10 (37%), the state of the economy by a third (33%), cash-flow by 31% and access to finance, as well as the cost of credit by 16%.
The FSB said the current unemployment statistics, with 2.51 million people out of work – many of which have been jobless for more than a year – mean it is vital small firms have real incentives to create jobs.
It said that extending existing schemes could make a major difference, such as introducing work trials from the first day that someone signs on for JobSeekers Allowance, which the FSB estimates would create around 46,000 jobs.
In addition, it is calling for the Government to extend the National Insurance Contributions holiday to existing businesses with three members of staff that take on up to four, and to reduce VAT to 5% in the tourism and construction sectors for one year.
And the FSB also wants Government help for small businesses to employ apprentices and interns. Less bureaucracy and the re-introduction of the Graduate Internship Scheme would both help, it said.