By Maximilian Clarke
Family firms generate revenues of £1.1 trillion a year and provide 9.2 million jobs in the UK equal to two out of every five private sector jobs- almost one in three of total UK jobs, a report shows.
The Institute for Family Business (IFB) has today (Monday) released a detailed report into the family business sector entitled ‘The UK Family Business Sector: Working to grow the UK economy’, which includes a foreword from Dr Vince Cable MP, Secretary of State for Business, Innovation and Skills.
The report suggests that family businesses contribute an estimated £81.7 billion in tax receipts to the UK Exchequer, which amounted to 14% of total Government revenues in 2010.
The IFB, a membership association representing the family business sector, is today calling on the Government to boost enterprising family firms by:
· Removing discrimination in the tax system that penalises family firms;
· Cutting red tape and bureaucracy around employment legislation;
· and working with family firms to plan for the future and secure jobs.
The current tax system penalises entrepreneurial families by preventing owners obtaining taxation relief when investing in family start-ups. Restrictions in the Enterprise Investment Scheme (EIS) mean that family members investing in a new family business would receive only half the return on that investment compared with a non-family run start-up that qualified for EIS relief. Over a third of IFB members said they would invest more in family start-ups if the law were changed. As a result of changes to these regulations, the IFB estimates that up to 20,000 new jobs could be created.
One of family businesses’ chief concerns is with employment legislation, particularly on the regulatory burden around tribunals and dismissals. Reducing regulation and red tape would save businesses money and could create new jobs. The IFB also looks forward to the results of the Government’s recent consultation on employment red tape.
In order to allow successful family firms to be passed down to the next generation, the IFB is calling for the Government to work with the family business sector to support owners with succession planning. The most successful family businesses plan ahead for generations to come, often putting long-term stewardship ahead of short-term business goals. By working with and supporting the family business sector, the Government could help secure hundreds of thousands of jobs for the long-term.
“The IFB wants to create a better environment for family businesses to thrive in the UK economy,” says Director General of the IFB, Grant Gordon.
“Family businesses are unique. They offer the economy the benefit of a long-term perspective, and a desire to create successful businesses that are passed down through generations. We want the Government to make changes that will promote family business entrepreneurship and make a significant difference to the UK economy.
“Times are tough, and we’re not asking for special treatment, just a level playing field that means family firms can go on running successful businesses which provide jobs to millions of people in the UK.”
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