20 May 2010 Last updated at 19:06 ET

Small firms welcome government's business policies

By Will Smale Business reporter, BBC News

Small firms hope the polices will make the UK firmly open for business

A very warm welcome, but the devil will be in the detail - and the implementation.

That is how small companies and small firm experts have reacted to the coalition government's policies that affect the small business sector.

Outlined as part of the general priorities of the new Conservative-Liberal Democrat administration, there are a wealth of proposals that - at least on paper - will make life easier for small firms.

The policies range from a commitment to reduce regulation, increase workplace flexibility, make it easier for people to set up new firms and boost the opportunities for small businesses to bid for public sector contracts.

On a more fiscal note, the new government is to carry out a review of all small business taxation, and has pledged to make small business rate relief automatic in England, reduce corporate tax in general, and increase employers' National Insurance contribution thresholds.

'Major boost'

"These are enormously beneficial policies," said Brian Morgan, director of the University of Wales Institute Cardiff's Creative Leadership and Enterprise Centre.

KEY POINTS FOR SMALL FIRMS

• Cut regulations
• Review of all small business taxation
• Make small business rate relief automatic in England
• Reform corporate tax system to make rates simpler and lower
• Increase in employer National Insurance thresholds
• Review of employment and workplace laws to boost flexibility
• Make it easier for people to set up new firms
• End ban on social tenants starting firms in own homes
• Promote small business public sector procurement
• Improve competitiveness of UK tourism industry
• Capital gains tax exemptions for entrepreneurial business activities
• Creation of Local Enterprise Partnerships to replace Regional Development Agencies
• Not to 'gold plate' or add to existing EU regulation

"The plan to reduce unnecessary regulation is excellent, and something that I have been saying for years is absolutely vital.

"If only half of these polices are implemented, it will give enterprise and wealth creation in Wales and the UK as a whole a major, major boost."

Louisa Sheppy, owner of Somerset-based traditional cider company Sheppy's Cider, said she most welcomed the commitment to cut red tape and small business taxation.

"Any small business would welcome a reduction in the regulations that make our lives more complicated and prevent us from getting on with our daily work," she said.

"And lower taxes would mean us having more money to invest back into the business."

Agreeing that we'll all have to wait and see if all the policies are implemented, she also welcomed the government's pledge to ban the sale of below cost alcohol.

"This doesn't directly affect small producers like us, as we can never hope to compete with the big players on cost - nor would we want to," she said.

"But for the drinks industry in general, it is never appropriate to sell alcoholic drinks below cost price - we have to always be decent and respectable."

'Pro-business'

Serial entrepreneur Doug Richard, a former panel member on the BBC's Dragons' Den business TV show, sid he was particularly pleased with the commitment to speed up the time it takes to fill in and process the necessary forms to start up a new company.

Mr Richard says we'll have to see if all the policies are implemented

"This sends out a very clear signal that the new government wants to be as pro-business as possible, this is a very meaningful goal," said Mr Richard, who runs business support organisation School for Startups.

"Hopefully the new government recognises that small firms can grow both productivity and new job creation much faster than large companies."

However, Mr Richard cautioned that a lot of the government's policies "are promote and review, not act".

"They are statements of good intention, so we'll have to wait and see," he added.

"But as the government is in its honeymoon period, I think we should take them in the spirit in which they are intended."

Less regulations

Arnab Basu, chief executive of Durham-based hi-tech small firm Kromek - which makes 3D X-ray machines - said he most welcomed the pledge to not "gold plate" or add to Europe-wide regulations.

Mr Basu says less additional UK regulations would be a big help

"I've very encouraged to see the government outlining a more flexible approach to EU-wide regulation, so that UK firms are not disadvantaged, he said.

"As a country, we need to be more flexible to apply our own discretion."

Mr Basu also said he was pleased with the policies the former Labour government had put in place to make investing in hi-tech firms as tax efficient as possible, and hoped the new government would continue and extend this.

"I'm looking forward to seeing how things pan out under the new administration," added Mr Basu, who is the current Ernst & Young UK young entrepreneur of the year.

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Russell Lawson, a spokesman for the Federation of Small Businesses, also hailed the commitment not to "gold plate" EU regulations, saying the UK has long had "a tendency to over-implement European legislation".

He also welcomed the plans to reduce regulation and cut the tax burden on small firms.

"A cut in national insurance contributions would encourage small businesses to take on more staff and grow their firms," he said.

"Small firms can help strengthen economic recovery if they are given a chance to grow and flourish."