Member

Turning to incentives to grow businesses, I fear that the Government’s almost complete lack of business knowledge shows through. I acknowledge that cliff edges or thresholds can affect business behaviour, and that can affect growth. The most egregious example is probably the VAT threshold of £90,000, which actively discourages very small businesses from even bothering to grow. At a much higher level, we can see threshold effects in bank capital which positively discourage smaller banks from wanting to grow to be medium-sized banks. However, I am far from clear that there would be a significant threshold impact if we exempted small and micro businesses from Part 1, with all its bureaucracy and regulation. The vast majority of the businesses employing those 8.3 million people will be operating nowhere near the threshold of 50 employees. Most of them—almost all of them—could double or treble in size without hitting the threshold. The very small number that might be drawing up plans to take them past the 50-employee mark would of course factor in extra regulatory costs, such as complying with this employment Bill. However, if this Bill were the factor that stopped a business from growing through the 50-employee threshold, the chances are that the business plan itself would be a weak one.