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FEDERATION of SMALL BUSINESSES Focus on small business in Kent and Medway FSB calls for moratorium on interest rate swap repayments and questions whether big banks’ culture will ever change The FSB welcomes the FSA’s ruling that Interest Rate Swap Agreements (IRSAs) were mis-sold to small businesses. But in addition to the moratorium imposed on the sale of these swaps, the FSB also wants an immediate suspension of repayments on these products. The FSA and the Financial Conduct Authority must also now carry out a thorough market review to establish how the market should operate - if at all - for small businesses. It must also review the level of protection small firms are afforded under regulation as well as investigate whether other banks, other than the big four, have been involved in mis-selling interest rate swaps. Suspending repayments immediately would relieve and possibly rescue small firms that have been burdened with huge bills – in most cases for years. However, it will not resurrect the many small businesses that have already been destroyed by this appalling breach of trust: firms that turned to their banks for support and who were instead exploited. Britain’s hope of escaping recession relies largely on the optimism and entrepreneurial spirit of its small firms, who collectively produce more than half the country’s GDP. But that optimism is being shattered by the ever-lengthening series of scandals emerging from the banks they have been forced to deal with through lack of competition and regulation. At what point will big banks’ chief executives take responsibility for the litany of scandals their employees have been found guilty of and which are causing untold damage to small businesses and Britain’s economy? It is not enough that the guilty banks should simply be forced to repay the money they tricked out of their small business customers. The situation will not improve until and unless punitive measures are taken to stamp out these sharp practices and the fundamental attitude of the banks towards their small business customers changes. The top managers of these huge institutions must be held accountable. The scale of the mis-selling scandal is still not clear. Too many affected firms have still not come forward and live in fear that if they speak out, their loans will be foreclosed and their banks will force them out of businesses. This ruling by the FSA should give them the confidence to step forward and they must now do so.” FSB London calls on London Councils to fight for a “2012 Business Fund” to help businesses adversely affected by The London 2012 Games The FSB is calling on London Councils to argue for a 5% chunk of the £500million under spend from the Olympics budget to assist small businesses that will be adversely affected. Recent FSB survey work showed that 38 per cent of businesses felt that the London 2012 Games would have a negative effect on their business – compared to 13 per cent who feel it will bring a positive effect. With many businesses saying that transport and parking restrictions will have a detrimental effect, the FSB is urging local councils, through the over arching body, London Councils, to champion small businesses who are potential losers from the Games. The FSB is calling for a ‘2012 business fund’ to be administered by the Boroughs and the Greater London Authority, similar to the High Street Fund which supported many businesses in the aftermath of the London Riots. Sue Terpilowski, Greater London Policy Chairman, Federation of Small businesses, said: “London Councils should support the drive to access £25million of the £500million under spend as the transport restrictions, deemed necessary by LOCOG, are out of the control of business. What we don’t want to see is businesses struggling to survive as a result of loss of trade.” “Some local councils have offered business rate discounts to businesses which is welcome. However we should and must go further. We believe that a significant amount of businesses, particularly those situated within or on the cusp of the Olympic Boroughs, could lose a significant amount of passing trade. These are the businesses that need to be properly compensated if they can prove that their profits have been damaged as a result of the 2012 Games.” If that is the case then it seems obvious that we should be developing some form of class action here in Kent. The FSB has already highlighted the problems of the West Kingsdown businesses as their businesses will be “fenced in” with the closure of the A21 for several days outside Brands Hatch for the Paralympics. The fact that neither KCC or Sevenoaks District Council approached the matter in a conciliatory matter from the outset has demonstrated a fundamental lack of understanding of the impact on those businesses by the road closure, and a failing in the duty of care for those that they have been elected to represent. A Kent hotel company operating hotels in Folkestone and Canterbury bought two Interest Rate Swap Agreements (IRSA) from Barclays Capital in 2007-08. Since the BASE rates fell below 3.25%, they have penalised with these IRSA and have been paying a “kicker rate” which currently amounts to over £700,000. As a right of membership, FSB members have access to the following services: So fundamentally it’s about trust. Trust of an organisation that hitherto we have been virtually obliged to work with. New solutions are perhaps coming forward, but there needs to be a huge shift in approach to the whole concept of how a finance institution perceives, measures and handles the risk coupled with some healthy alternatives creating a genuinely competitive market. FSB Legal Protection Scheme Insurance for legal and professional fees, plus legal and taxation advice. Roger House Kent and Medway Regional Chairman Quantitive Easing FSB comment The point of quantitative easing is to get more money to businesses so they can invest and grow. But it is clear this money isn’t getting through. The banks say there is insufficient demand for loans. However, that is completely at odds with our own research showing fourin-10 small firms are refused credit. We hope the recently announced ‘funding for lending’ proposals will finally mean that more of this money starts to filter through into the real economy so that the small firms wanting to grow can get hold of it. As always, the key is implementation and until then the jury’s out. We therefore await for details on those proposals. FSB Focus on the Rural Economy The FSB issued a national report earlier this year as part of its sector focus studies. While rural businesses already make a significant contribution to the GDP, there is significant untapped potential to generate economic growth and employment. This potential is untapped as a result of the unique barriers faced by firms in rural locations. Rural businesses are very often based at a considerable distance from the markets they serve. If we are to reduce the effect of this barrier by providing efficient transport links, putting in place a fast and efficient digital infrastructure and deploying effective policies for growth, we can unlock the huge potential rural economies have to offer. Government needs to put in place policies that ensures rural firms are FSB Kent and Medway Region Contact: Allington Library Castle Road Allington Maidstone ME16 OPZ Tele: 0845 463 5315 Fax: 01622 761126 Email: [email protected] Web: www.fsb.org.uk/151 served by their local authorities. This includes local authorities being innovative and flexible for example in the promotion of the benefits of farm diversification and tourism. It is also crucial for both central and local government to finally deliver a planning system that is responsible to small businesses’ needs and allow them to play their part in creating vibrant rural communities. While planning reform is vital, the report recently published by the FSB looks at how we might address the key barrier of distance to market. It examines the ways in which we by improving transport links and providing adequate digital infrastructure, we can realise the true potential of the rural economy. THE KEY RECOMMENDATIONS INCLUDE 1. CREATING SUCCESSFUL RURAL ECONOMIES •C OMMUNITY SERVICES: Recognising the value of the Post Office Network in supporting businesses and communities. The FSB calls for the publication of a credible plan that creates a sustainable model and protects the current size of the network. We believe the creation of a post Office Bank is one solution. • The FSB also calls for full national public consultation before Post Office Ltd proceeds with the proposed rollout of the Locals model. • RURAL RATE RELIEF: The Department for Communities and Local Government should encourage local authorities to make greater use of the discretionary element of rural rate relief. • Local authorities need to be placed under a duty to identify eligible small businesses, to make this fully automatic and ensure all are awarded Small Business rate relief (SBRR). • Councils should make greater use of the wide range of reliefs they are able to offer to small rural firms. •T OURISM: Given the inclusion of aviation into the EU’s Emission Trading Scheme, consideration should be given to a reduction or removal of air passenger Duty to encourage more international tourists to these shores. • Local authorities should dedicate resources to stimulate business growth in local rural economies by taking advantage of the forthcoming localisation of business rates review. • F ARM DIVERSIFICATION: Local authorities should provide tailored guidance on appropriate types of farm diversification suitable for their localities and what farmers need to do to give them the best chance of submitting a successful planning application. •T here should be an assumption in favour of permitted development for small agricultural buildings and larger agricultural buildings should be subject to prior notification rather than full planning control. 2. ENCOURAGING SUSTAINABLE DEVELOPMENT • The development of local plans by councils must reflect the positive stance, of the National Planning Policy Framework towards business growth in rural areas. • Local authorities should ensure the sequential test is not applied to small scale rural development applications. • Local authorities should only require proportionate information in support of planning applications, provide jargon free guidance to applicants and adopt a ‘projobs’ approach. • Local authorities should ensure local business communities have a key role KEY BENEFITS OF FSB MEMBERSHIP in neighbourhood planning, and that their needs are fully reflected in local development policies. • Government and local councils should quickly implement the key recommendations of the Portas review in local high streets, such as making local parking policies more reflective to the needs of shoppers, to ensure our market towns and villages remain vibrant, viable business communities. • Local Enterprise Partnerships (LEPs) should work strategically together. • Local authorities and LEPs should undertake a strategic review of redundant building stock within their areas in order to promote adaptive re-use of such premises for business or residential purposes. • Government should be proactive in promoting the ‘Home on the farm’ scheme across England. 3.IMPROVING ACCESS TO MARKETS • ROADS: The Government, The Highways Agency and the local authorities must recognise the damage that poor road infrastructure creates on businesses and the economy as a whole and commit to more investment in the repair, maintenance and upgrading of UK roads. • Government should re-examine its decision not to legislate for local authorities to have the ability to introduce mandatory, competitively priced, bus-only multioperator ticketing schemes for bus services. • After 24 months the Government should review whether its response to the Competition Commission’s report on local bus services has delivered the changes needed to improve rural bus networks. • The FSB calls for the delivery of high speed broadband (20Mbps) to 98% of the rural economies by 2015. • Government should urgently proceed with the spectrum auction to allow small rural businesses to benefit from a full range of 4G services. FSB Care Exclusive member benefits for serious health conditions. FSB Business Banking Exclusive free business banking designed for small businesses offering a number of unique features. FSB Merchant Service Exclusive card acceptance service available to FSB members at competitive, discounted rates. FSB Insurance Service Hassle-free insurance and advice. FSB Telecom Significant savings on fixed and mobile call charges. FSB Diamond Account 7 day notice business deposit account. The interest rate tracks Base Rate. A great alternative to your current account. FSB Factors Perferential rates on business factoring for FSB members. FSB Independent Financial Services Personal financial planning, life insurance, group pensions and more. FSB Medical Private medical care, travel, personal accident, dental, income and cash plan for FSB members. Also Vehicle Breakdown Recovery Club for cars, vans, taxis and motorcycles. FSB Credit Card Platinum card specially designed for FSB members. FSB Finance for Business Individually tailored finance to meet the needs of small businesses. FSB Fuel Card Accurate fuel management and control with FSB discounted fuel card. FSB Online Directory Promote your business, access new customer, search for products and services, easily update your details. FSB Supporting Services: FSB Mobile Card Payment Terminals Fully managed solution to merchants requiring Mobile Electronic Point of Sale (MEPOS) on a short, mid or long term basis or purchase. HOW TO JOIN? www.fsb.org.uk/info Call 0808 2020 888