A NORTH Yorkshire lobby group has warned the Chancellor of the Exchequer, Gordon Brown, not to lumber small business owners with the burden of administering the policy of paying welfare benefits through the pay packet.

The Federation of Small Businesses (FSB), which has more than 2,000 members in North Yorkshire, said owners of small firms should not be charged with responsibility for operating reforms to the welfare state, an idea revealed by Chancellor Brown. Martin Minett, treasurer of the North Yorkshire FSB, said: "This would mean another administrative burden placed upon small business owners who are already unpaid tax collectors on behalf of the Government for income tax, NICs and VAT, and who also fund such benefits as sick pay, maternity pay and redundancy pay."

He warned that close involvement with employees' personal lives imposed on their privacy.

"Employers will also face an increase in the costs of employment. The delicate cashflow situation that small businesses face will be exacerbated by these plans unless the State provides the money in advance," he said.

And, he added, that the proposal to transfer the administration of yet more benefits on to the employer had come when the Government was looking to the small business sector to create jobs.

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