THE clamour to cut VAT rates is growing among small firms.

A survey by Liverpool-based Bibby Financial Services reveals a 25% rise in North West companies calling for a return to a 17.5% VAT level, before the Government announced its decision to raise it to 20% this January.

And small firms lobby group, the Federation of Small Businesses (FSB), has echoed the plea with a call for “targeted and time specific VAT cuts . . . to restore growth in key sectors”.

The Bibby research shows that 45% of small firms in the North West want a return to 17.5% as a matter of urgency.

Spokesman Dave Golding said: “It is clear from our research that small and medium- sized businesses are feeling somewhat marginalised by the Government and would like to see David Cameron and his ministers do more to address their specific needs.”

The FSB goes further and wants the Government to follow the lead of other European countries and cut VAT in the construction and tourism sectors to 5% for a year to help boost the economy.

It says evidence from EU countries shows any lost revenue to the Exchequer due to VAT cuts will be met by earnings from additional demand, jobs and the wider economic activity.

Latest FSB figures show confidence among small firms is now lower than at the start of the year.

FSB development manager Neil Dutton said: “Confidence is key to getting Merseyside’s small businesses back on track and this survey is worrying. The economy is still in a fragile state and these figures clearly show that the Government’s growth strategy is just not working.”

Liverpool Chamber of Commerce chief executive Jack Stopforth added his support for VAT reform, saying: “I always felt the hike in VAT was ill-judged. It is all about trying to recreate, or generate, consumer confidence at a time when people aren’t spending.

“A return to previous VAT levels would be a welcome development.”