By Claire West
The new Conservative / Liberal Democrat coalition needs to work for the benefit of the economy and financial prosperity of the UK, says ACCA (the Association of Chartered Certified Accountants) today in a new a new report entitled “A blueprint for sustainable recovery”.
The 33 new priorities look at tax, small businesses and financial regulation, as well the public sector and sustainability.
Helen Brand, chief executive of ACCA, says: “The challenges facing the UK economy as the new Government and Parliament begin their work are significant and require a bold, sustainable response from the very beginning of the Parliament. This is a chance to recalibrate. New thinking is called for in these extraordinary times.”
“Not only are we emerging from the financial crisis with an unprecedented deficit, but we have an onerous regulatory burden, an increasingly complex and uncompetitive tax system, a pensions system in need of reform, and a Small and Medium-sized Enterprise (SME) sector calling out for support. In the immediate future, policymakers must also deal with the serious issues of financial sector governance and regulation, and mitigate the potential negative impact on public services of the efficiencies required to aid financial recovery.”
Drilling down into three specific policy areas from the full report, ACCA would like to see the following:
oCorporate tax legislation should be largely removed from the Finance Bill to provide more possibilities for thorough examination of important clauses.
oThere should be consistent consultation with business on taxation issues; at all stages of the process, industry must be invited to provide advice, and remain fully apprised of possible changes.
oHMRC should ensure that the recommendations of the Varney Review are fully implemented, particularly in terms of taking the business perspective into account in everything it does — giving earlier clarity and reducing complexity and administrative burdens for business.
Small and Medium Sized Business (SMEs)
oThe Government should devise a medium-term strategy for business support, making sure the services offered are visible and accessible to SMEs — not through failed intermediaries but through their preferred advisers. However, if it is to provide more targeted support with fewer public resources on the ground, the Government must embrace the diversity of the SME sector and invest in enriching its evidence base.
oGovernment intervention is required to improve SMEs’ understanding of and access to different means of finance as the sector rebalances away from bank debt. Successful equity finance initiatives should be built upon, with support for both individual investors and high-growth businesses in search of funds.
oThe ‘Think Small First’ principle must headline the Better Regulation agenda; the Government needs to better understand SMEs’ perceptions of regulation, the compliance resources available to them and the determinants of compliance behaviour. These insights should guide its impact assessments not only in the UK, but also in Europe. Furthermore, the Government needs to give small employers a chance to catch up with new employment regulation and consider further consolidation where possible.
Financial Regulation and Policy
o‘Too big to fail’ institutions are anathema to good regulation. The Government should take concrete steps to overcome this phenomenon through a Glass-Steagall-type measure — depositors will not be adequately protected until retail and investment banking are effectively separated.
oFailings in corporate governance need to be firmly and thoroughly broached, with risk management mechanisms at the centre of any review. Further steps are required to ingrain ethical business standards at all institutional levels, in order to protect the long-term interests of shareholders.
Helen Brand concludes: “If implemented, we believe these measures would improve the UK economy’s performance and prospects over the long term in a sustainable way, both in terms of the environment but also for small and large businesses, for the public and private sectors and for other stakeholders impacted by taxation and other legislation.”