The chancellor has revealed the Autumn Statement, and we know what the year 2013 will bring for Britain’s growing businesses. Is it what business leaders hoped for? Not so much.
Let’s look at the key points for businesses taken from the Autumn Statement and the first reactions from the UK’s business leaders.
One per cent cut in corporation tax
Tax incentives for large corporates to trade directly with SMEs was one thing on your wish list – instead, with a one per cent cut in corporation tax, the UK has earned the price for lowest rate in any western economy. Good news for SMEs?
“Like a business turned down for bank lending, George [Osborne] can only work with what he’s got,” Pimlico Plumbers founder Charlie Mullins defends the chancellor. “What he delivered was a statement that will encourage business and therefore help individuals.
“Cutting corporation tax and introducing a ten-fold rise to plant and equipment tax relief demonstrates that Britain is a good place to do business. These measure will encourage businesses to expand and created jobs, which helps the wider economy.”
Others see the government as naïve to believe that a token of small business tax relief extension will satisfy the UK’s SMEs.
Mark Pearson, founder and chairman of MyVoucherCodes.co.uk, is sceptical: “What a pleasant surprise, the government actually giving a small piece of good news to businesses. Yes, the one per cent cut in corporation tax is a nice step towards helping businesses in the UK grow, but is it impressive? Not really. It’s a small step in the right direction, but if they truly want to help businesses grow, they need to guarantee more consistent access to funding instead of re-hashing old policies.”
However, “news of a proposed general anti-avoidance rule to come in the next year will make it harder for wealthy individuals to evade tax,” David Bennett, tax partner at Moore and Smalley, pointed out.
£1bn capital for Vince Cable’s business bank
Expectations were high that the Autumn Statement would turn the maze of government lending schemes into one effective address: the business bank. But, still only addressed as a concept in its infancy, with little practical detail on plans or a timeline, the scheme will take time to bear fruit and only have a minor impact for now. The funding landscape remains rocky for business.
“The increase investment in investment into the Regional Growth Fund and creation of a £1bn business bank will help create jobs, although we won’t see the results of these measures on the economy until four of five years down the line,” said Steve Stuart, partner at Brabners Stuart.
“I am disappointed that despite all these encouraging noises, the myriad of schemes open to SMEs for finance are still overly complicated. Never have I known the landscape for finance available to SMEs to be as complicated as it currently is.”
Proposals to make the banks lend more money to businesses will be popular, but whether it will actually result in better access to funding remains to be seen.
“While the chancellor highlighted a few high-level successes of the Funding for Lending Scheme (FLS), we should ask: ‘is the capital truly getting to the right people?’ The answer is no,” said Nasir Zubairi, director of product marketing at The Currency Cloud. “The devil is in the detail; it is big business loans that are behind the drawdown in the FLS facility, not loans to small businesses that need it most.”
“Despite the government’s efforts, small business lending and support is falling flat because banks choose how they channel access to cheap capital, and it won’t be in the direction of the SME. It was never going to be easy and the government’s hands are well and truly tied here if they insist on hedging their bets on a weak banking distribution channel.”
Fuel duty rise cancelled
The planned 3p fuel duty rise that led many business owners to mount the barricades was cancelled for good. That’s great news, surely, for businesses who rely heavily on cars to get to and from work, or are dependent on fuel for haulage and transport.
Charlie Mullins welcomes the news: “It’s been a long time in coming that governments stop using fuel duty postponements as budget sweeteners and instead set a longer term strategy. Fuel is a contentious issue for many businesses – we already spend £1m a year on fuel for our fleet and any rise in petrol prices hit our business hard, as we have no alternative – you can’t expect a plumber to carry his tools on the tube!”
Other, however, such as director of SumUp UK, Florian Richter were a bit more sceptical: “While the plans to freeze fuel prices will be welcomed by those business people who make their livelihoods from – and on – the roads, it is really a stay-of-execution – not a pardon – for most small merchants,” he fears.
Share this story