THE UK Government is being urged to tackle an “unprecedented” slump in confidence among small businesses amid warnings that thousands are struggling to stay afloat.

The Federation of Small Businesses (FSB) said Chancellor Sajid Javid should bring forward “radical interventions” in next month’s Budget to address slowing economic growth.

The group called for a major reduction in business rates bills for small firms, saying thousands were being hit by “spiralling” operating costs.

The FSB recommended that the Retail Discount – which allows small retailers with rateable values of up to £51,000 to claim a 33% discount on their rates bills – be increased to at least 50%, made permanent and extended to small firms operating in other sectors, including manufacturing.

It is also calling for the threshold for Small Business Rates Relief to be increased from £12,000 to at least £30,000. The threshold has remained largely static in recent years, despite the rateable values that determine rates bills surging in many parts of the country, particularly on high streets in large towns and cities.

The tax set to generate £25 billion for the Government in the current financial year, up more than £200 million compared to last year.

FSB chairman Mike Cherry said: “Small businesses have been left hamstrung by uncertainty for the past three years. We need to see the Chancellor step up to the mark next month with measures that will reinject optimism into the small business community and enable growth. Otherwise, we’re in for a very bleak winter.

“Business rates reform must be a priority. This unfair, regressive tax – which hits firms before they’ve made their first pound in turnover, let alone profit – continues to threaten the futures of small firms all over the country.

“We’ve secured important business rates mitigations in the past, but now is the time for a significant reduction in small business bills.

“Fundamentally, the business rates tax serves as a disincentive to invest. You spend money on bettering your property – by installing solar panels, or improving workplaces, for example – and the next thing you know your rates bill has shot up.

It’s ludicrous.”

With Javid due to deliver his autumn Budget on November 6, FSB’s submission also highlights the increased strain that rising employment costs are putting on small firms.

Following April’s increase in minimum wage rates and employer pension contributions, the number of people in employment fell by 56,000 last quarter. The latest Small Business Index shows hiring intentions among small firms are at a two-and-a-half year low and falling.

Cherry added: “While the helicopter view of our employment market shows it has held-up relatively well over the past few years – as firms increased headcounts rather than invested for the long-term – small employers are now under significant costs pressures, with little help from government when it comes to tackling low pay.

“The £16 billion annual cost of the Government’s commitment to increase the National Living Wage by close to 30% over just five years will be met entirely by employers.

“Eligible employees will receive a £4000 pay increase, £1800 of which will be handed to the Treasury. There needs to be some give and take here.”