Mike Hancock News
MP urges Chancellor to back small businesses and give average households a £1,000 tax cut
Ahead of the pre-budget report next week Mike Hancock MP for Portsmouth South who is also the Councillor on Portsmouth City Council responsible for Economic Development and Regeneration is demanding that the Chancellor backs small businesses in his report. The MP has set up an online petition which he is urging local businesses and people to support and he has also written to the Chancellor with his ideas.
A key demand from the MP is a £1 billion Small Business Survival Fund. He also wants banks to do more to help small businesses and give a boost to consumer confidence through significant tax cuts. Mike Hancock is also urging the Portsmouth City Council to look urgently at how the Council can help local businesses and local people and he is working himself as a councillor on this.
Mike Hancock said “The Government has pumped billions into the banks, it should be able to find £1 billion to support small businesses. They will be the engine room of future growth. If we help them now, we will reap the rewards in future growth.”
The MP also wants consumer confidence boosted by £1,000 a year tax cut for average earners and more help for housing costs for those that become unemployed.
Mike said: “It is important that we restore consumer confidence – especially in the run up to Christmas so that consumers start spending again with local businesses. For over eighteen months, I and my Lib Dem colleagues have been saying that average earners should get a £1,000 tax cut. Until now both Gordon Brown and Alistair Darling have ignored us. But it has been clear to me from what local people were saying that people were feeling real pressure on their household budgets with ballooning fuel and food prices. The Lib Dems would pay for our tax cuts by closing tax loopholes for the very rich. It is unfair that the top fifth of earners pay less in tax as a percentage of their income then the top fifth. The Labour Government wants to pay for tax cuts by borrowing – this only stores up trouble for the future. The Conservatives have not yet outlined any significant income tax cuts.”
In a costed programme, the Lib Dems would cut income tax by 4p in the pound and reform local council finance so that the richer pay more than they do now. A Local Income Tax would see everyone paying the same percentage in income tax after their personal allowance – whereas at the moment the tax bands put a cap on the maximum paid. Richer people get more tax relief on pension payments than less well off – closing loopholes like this would pay for the Lib Dem tax plans.
Mike Hancock also wants more help for those that become unemployed with their mortgage interest payments. At the moment people have to wait half a year – 26 weeks – before they get help through the benefits system with their mortgage interest costs. The Government have announced that people will only have to wait 13 weeks but this change will not come into effect until April. The MP is arguing that the Government should bring forward this reform to start immediately.
Mike said: “This will bring immediate relief to those that have recently become unemployed and reduce the pressure from their mortgage companies and help support the housing market.”
Rt Hon Alistair Darling MP
Chancellor of the Exchequer
HM Treasury
1, Horseguards Road
LONDON
SW1A 2HQ
OUR REF: MA/PRE-BUDGET REPORT/
19 November 2008
Dear Chancellor
I understand that you will be presenting your pre-budget report next week. Given the difficult economic circumstances, this will of course be even more crucial than previous budgets and pre-budget reports. I am therefore writing to you on two issues.
The first is the issue of small businesses. These are crucial to the economy and will be the engine room of future growth for the economy. Many local businesses, especially small and medium sized ones (SMEs) have been in touch with me recently with ideas on how you could help them in the pre-budget report – especially along the lines proposed by the Federation of Small Businesses (FSB). In particular they want you to establish a £1 billion Small Business Survival Fund. As you will be aware the FSB is saying that one in three small businesses are unable to obtain finance and they have seen the cost of finance rise dramatically. £1 billion is just 0.2% of £500 billion that you have given the banks but such a fund will be crucial to the SME sector.
You have also said that the rate of Corporation Tax will go up from 21% to 22% from next April. So secondly they want, this proposed increase scrapped.
Thirdly many small and medium sized businesses in Portsmouth are telling me that their banks are not treating them fairly at the moment. As you are no doubt aware the difficulties the small businesses was raised by the Lib Dem party leader, Nick Clegg at Prime Ministers questions today. And talking to other MPs, they all seem to have similar stories to tell of the problems that banks are causing small businesses in their constituencies – and these are often businesses that have banked with same bank for a long time and haven’t broken their banking covenants.
I hope therefore that you will make sure, banks do still continue to lend to small businesses and are fair to SMEs, particularly given the very large amount of taxpayers money pumped into the banks and re-iterate to them once again how important this is.
Small businesses employ some 13 million people in the UK and a large part of potential future growth for our economy will come from small and medium sized businesses.
It is also important for all businesses but particularly SMEs as well as the economy as a whole that people become more confident financially and there are two particular issues that I hope you will address to help this in the pre-budget report.
The first aspect of this is tax cuts. Until a few weeks ago you and the Prime Minister were criticising tax cuts and the Liberal Democrats for proposing them. Although it has been clear now to me for over 12 months from what people were telling me in Portsmouth that people were having severe pressure on their household budgets with higher food and fuel prices. It is disappointing that you and the Prime Minister when he was Chancellor did not support in previous budgets our proposals to make the tax system fairer and cut taxes for average and below average earners significantly.
I gather that you are now coming around to supporting tax cuts. However, as I understand it, you are saying that tax cuts should be financed by borrowing. I believe that this only stores up trouble for the years ahead as some Government ministers have admitted. I believe that it is unacceptable that the lowest fifth of earners pay a high percentage of their income in tax than the highest fifth. I hope therefore that you will look at making the tax system fairer – closing tax loopholes for the very wealthy while giving a tax cut of £1,000 a year for those on average and below average incomes. Lower earners are more likely to spend their money with local businesses rather than imported luxuries etc. So this will give the economy a boost.
The second issue is supporting the housing market and those in difficulties with mortgage arrears. I am pleased to say that you have adopted to a degree many of things that I and my Lib Dem colleagues have proposed – although there is still scope to go further.
There is a particular aspect especially that I believe you should take further action on – that concerns help with the mortgage interest payments for those that become unemployed. You have proposed that people who become unemployed will only have to wait 13 weeks instead of 26 weeks to get this help. This is of course welcome. However this change is only due to come into force in April. I hope you will now look to implement it immediately. So those that have unfortunately become unemployed in recent months do not face the threat of repossession in the run up to Christmas. It will also give the housing market increased confidence generally.
I hope therefore that you will consider your pre-budget report carefully and consider implementing the proposals that I have outlined in your pre-budget report. This will be crucial to the future economic well-being of the country and consider the plight of many small businesses and families in Portsmouth and across the country and give them the help that they need.
Best wishes
Yours sincerely
MIKE HANCOCK CBE MP
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