Mike Hancock News
Shock findings of MP's survey show recession gripping the city
The dramatic initial findings of a survey by Portsmouth South MP, Mike Hancock of businesses in the city shows that the budget on Wednesday will have a lot to do if it is to help local firms. Over 1 in 6 businesses replying (17%) report that their businesses are currently running at a loss and over 9 in 10 (92%) say that either their turnover or profits have decreased in the past 12 months. 9 in 10 (89%) also predict that their business will see either a further reduction in profit or turnover in the next 12 months. Only 5% report an increase in profits in the last 12 months, and only 4% think their profits will increase in the next 12 months.
The survey has found that the cut in VAT, a key plank of the pre-budget report has been a damp squib in helping businesses in the city despite costing the Government a lot of money in lost tax revenues. Three-quarters of city firms (76%) say it has had no impact. 2% report an increase in demand due to the VAT cut but no increase in profits and 3% an increase in profits. (The rest (19%) didn’t give an opinion).
Employment is coming under great pressure due to the recession. Over a third of city firms replying (36%) have either laid people off or have plans to do so. 11% have reduced the hours of their staff, 22% are putting off plans to increase their workforce. Only 5% of firms are employing more people while the rest (26%) are reporting that recession has not had a significant impact on employment. However a quarter (24%) report that they have problems getting staff with the right skills and qualifications with some saying that getting people with even basic skills is difficult.
Local businesses also don’t feel that the bail out of the banks by the Government has helped them. Over 78% felt that it had made no or little difference, 6% felt it had helped but 12% felt it had hurt – the remaining 4% didn’t express an opinion. While banking facilities for the vast majority had not changed – a sizeable minority 22% had had their bank charges increased and 14% of respondents had had a business loan or overdraft facility refused.
Most businesses think that more should be done by the Government on business taxes. 92% of local businesses think the Government’s changes to business taxation to date – the VAT cut and postponing the rise in the small firms rate of corporation tax are sufficient.
If those running the city’s businesses were standing at the dispatch box to give the budget rather than the Chancellor, they would plump for a cut in income tax for average earners to give more money for people to spend (82%), cut business red-tape (78%) and put greater pressure on banks to lend to businesses (74%). Only a third would opt for a further VAT cut. (Respondents could opt for as many options as they wanted or give their own ideas).
The Lib Dems are arguing for an increase in the personal allowance before which people start to pay income tax to £10,000. This is equivalent to 4p off the basic rate of tax and will mean average earners paying £700 a year less in income tax. This will be paid for by clamping down on tax loopholes by the super-rich and tax avoidance (currently estimated by the TUC to be running at £26 billion).
Mike Hancock said: “These survey findings show that not only have the past 12 months been tough for local businesses but the next 12 months will be as well. I am particularly concerned about businesses having to make people redundant as the recession and its effects drag on. It is clear that despite the bailout of the banks by the Government, many are still treating businesses badly. The Prime Minister and Chancellor must do more to get banks to start lending again to businesses.
“It is also worrying that a sizeable number of firms are reporting a lack of skills among potential employees. The Government needs to address training as an urgent priority if we are to compete globally.”
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