Small Business Afraid Of Bankers 
Owners of small businesses are afraid of approaching their bank to ask for more money in case they have existing facilities withdrawn or deals renegotiated, according to the Bank of England’s regional Agents.

In the agents’ monthly summary of business conditions, they report that “fear of repricing or withdrawal of existing facilities continued to discourage many small businesses from approaching lenders altogether.”

The Agents also found that many companies are scaling back investment plans, with some putting off making any new investment altogether.

There are 12 regional Agents, who cover the whole of the UK, discussing business conditions with around 700 companies across all sectors. In addition to the monthly reports, the Agents make quantitative assessments of economic conditions as seen from their respective regions.

The Bank’s Monetary Policy Committee (MPC) uses the intelligence gleaned from the Agents to assist its understanding and assessment of current economic conditions.

As far as lending is concerned, some banks are trying to keep the playing field level; Lloyds TSB promises not to change the availability of overdrafts during the period of an agreement as long as accounts are kept “within agreed terms and limits.”

And the RBS pledges not to withdraw overdraft facilities for 12 months after one is agreed, although that is subject to the condition that the risks associated with lending to a company don’t increase.

The report also noted that small businesses also face a lengthy process when applying for loans, with “elevated” fees.

However, the report also said that credit conditions had continued to ease for large and medium-sized firms, particularly those in the manufacturing sector, which might reflect improvements in the health of corporate balance sheets. But “increased nervousness about the outlook had led some firms to ... switch their focus back to paying off outstanding debts.”

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Millions To Get Tax Rebates 
Her Majesty’s Revenue & Customs (HMRC) has announced that around six million taxpayers will be sent cheques averaging £400 for overpayment of tax dating back several years. And just over a million will get a bill for underpaid tax averaging £600.

The reconciliations follow widespread problems with the PAYE system that were picked up by a new computer system, which HMRC says will reduce the number of under or over payments from now on.

Around a million of the settlements are for the 2010-11 tax year but six million of them are outstanding queries, which are now being settled en masse. The rebates will include interest and it is estimated that they will cost the Government more than £2bn.

Those due for a rebate could start receiving cheques as early as this weekend, with everyone being paid by December 2012. And this time those who underpaid will be allowed to pay the extra tax they owe in installments.

A spokesman for HMRC said: “Money that is owed going back many years is now going to be automatically paid back as we get the tax system up to scratch. We are getting cases that were left unreconciled up to date as quickly as possible. Anyone owed money will be paid back with interest without the need to contact us.”

HMRC has faced a lot of criticism in recent years for tax issues including PAYE, tax credits and a backlog in answering letters and telephone calls, causing worry to millions of taxpayers.

In a similar exercise last year, HMRC Permanent Secretary Dave Hartnett was widely criticised for a lack of sympathy toward those facing an unexpected bill, after he said tax reconciliation was a routine measure.

He later apologised and insisted that HMRC did "not underestimate the distress caused to taxpayers".

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Small Business Confidence Wavers 
According to insolvency trade body R3, more small companies are experiencing decreased profits, with over 40 per cent of them saying that their margins took a hit in the last quarter and 20 per cent reporting that they regularly exceed their overdrafts.

The quarterly Business Distress Index revealed that more businesses were reporting decreased turnover, falling market share and cash flow difficulties and the number of liquidations is on the rise.

There are now almost eight per cent more companies being liquidated or given a winding up order over the last three months compared to the previous quarter and a 20 per cent rise on the same period last year.

And research by the Centre for Economic and Business Research (CEBR) suggests that more small businesses intend to lay off staff in the next three months.

Charles Davis, economist at CEBR, said: “Companies relying on discretionary expenditure are especially negative, with the leisure, sports and entertainment and hospitality sectors showing the largest drops in confidence of any.”

Almost 80 per cent of the businesses reported cost rises compared with a year ago, with a third reporting the increases were “significant”. Utility bills, raw materials, labour and rents all rose steeply, the firms reported.

There is also a national divide in optimism, with confidence in the West Midlands and South West falling fastest and a marked divide between optimism in the South East and the rest of the country.

John Walker, National Chairman of the Federation of Small Businesses, said the Chancellor should respond to the collapse in confidence by extending national insurance (NIC) tax breaks designed to encourage new firms to hire more staff and by cutting VAT.

“As businesses come to terms with the double whammy of falling revenues and rising costs, it is no wonder that they’re losing confidence, and unfortunately, as their overheads increase one way to control it is to lay off staff,” he said.

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Cable Frustrated By Treasury 
Business Minister Vince Cable is finding that his attempt to reduce at the regulatory burden on business is being frustrated by the Treasury’s apparent unwillingness to take part in his “red tape challenge”.

The red tape challenge was launched as an attempt to begin cutting the 21,000 regulations on the statute books for Britain’s businesses by asking the public to tell the government which red tape they wanted to see dropped.

Officials in the two departments are at loggerheads over the Treasury’s refusal to allow the business department to scrutinise the regulatory burden being caused by tax regulation. Spokespeople at the Treasury say that they are more than capable of dealing with tax issues through the Office of Tax Simplification (OTS).

“The Treasury is not in the red tape challenge because it is too important,” said one business department official. “But the department is a big barrier to cutting regulation because there are quite a lot of tax regulations.

“The Treasury thinks the OTS should do this, but you have to see red tape holistically. The Cabinet Office is pushing other departments to take part and the Treasury should be doing it too.”

The Office of Tax Simplification was launched in July 2010 to provide the Government with independent advice on simplifying the tax system and does appear to be seeking the views of business owners.

Throughout October, for example, it is holding a series of workshops across the country to discuss the recent small business review discussion papers. However, it has not published a paper on tax simplification since this Summer.

And however much the Treasury denies that it is not cooperating, the argument does nothing to promote the idea of a united government working to deliver a better environment in which business can grow.

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Pension Age Rise Delayed 
The state pension age for women was due to rise to 65 by 2018, before rising again for both men and women to 66 by April 2020. That left some 245,000 women facing a wait of between 19 months and 24 months. And the worst hit 33,000 women, all aged 57 now, had complained that the changes gave them an unfair two-year wait for their pension.

Faced with criticism from every quarter and extensive lobbying from pensions campaigners and women’s groups, Ministers have now agreed to delay the second rise in the pension age from the April to the October of 2020.

Work and Pensions Secretary Iain Duncan Smith agreeing that the existing plans were “on balance, unfair”, adding that the new 18-month cap “will free up a lot of women, I hope, from their concerns and worries.”

Echoing his comments, Lib Dem Pensions Minister Steve Webb said that the Government has “delivered on its promise “ to consider the impact of the pension changes on those “most adversely affected.”

Joanne Segars, Chief Executive of the National Association of Pension Funds (NAPF), said: "This takes some of the sting out of what was a very raw deal for many women. People need time to prepare their finances for the transition into retirement, and there is now a clearer ceiling on what to expect.”

It has been calculated that this move will cost the Government around £1bn. And it will spend £45bn extra on pensioners by 2025 because of the triple guarantee to uprate the basic state pension by the highest of earnings, prices or 2.5 per cent.

When the state pension age was set at 65 in1926 there were nine people of working age for every pensioner. There are now three people of working age for every pensioner and that is set to fall to nearer two by the end of this century.

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