While the private equity and VC community have welcomed George Osborne’s 2011 Budget, many businesses say they fail to see great benefit from the government’s enterprise initiatives.
While the private equity and VC community have welcomed George Osborne’s 2011 Budget, many businesses say they fail to see great benefit from the government’s enterprise initiatives.
In his Budget address, Osborne vowed to ‘put fuel into the tank of the British economy’, highlighting a number of initiatives to drive growth.
Paul Webb, tax partner at accountancy RJP, says that while many measures will assist business overall in the UK, many announcements will fail to assist the small and medium-sized enterprises (SMEs) Osborne hoped to target.
Webb says, ‘While on the face of it, there are quite a few glowing announcements and people might say they have done quite a lot for business, when you actually get down to how much of an actual impact a lot of those changes are going are debatable.
‘Overall, they called the Budget fiscally neutral. You could look at it as giving with one hand and taking with another.’
However, RSM Tenon national tax policy director Andrew Hubbard points out that the changes to fuel duty will be particularly relevant to all businesses that rely heavily on transport.
Hubbard adds, ‘This is a positive indication that the Government recognises the important role that SMEs play in helping the country out of the current economic situation, and which will ultimately see the prevention of a double dip recession.’
Simon Wheeldon, CEO and co-founder of energy management provider CloudApps, adds that the Budget has ‘gone some way’ to providing more support to SMEs.
He continues, ‘It’s going to help us stay in the UK. Things around the apprenticeships and the science and research grants that he’s put in place and the corporate tax cuts, those elements are going to help organisations like ours blossom here.’
Richard Hoptroff, managing director of timekeeping electronics maker Hoptroff, described the Budget as ‘a bit of a mixed bag’.
He says, ‘We’re very much a business that exports intellectual property more than anything else so we’re really looking for ways we can be global and dynamic. A lot of the incentives being provided seem much more geared towards attracting foreign companies to the UK.’
Overall, the Association of Chartered Certified Accountants welcomes the doubling of entrepreneurs’ relief to £10 million, noting further increases must be mindful of where any market failure in equity investment is focused.
ACCA policy adviser Manos Schizas explains, ‘Our understanding is that informal investment by business angels has been falling for the past two years, although of course getting the right data is challenging. Either way this is bad news for the UK’s most promising enterprises. In this context the increase in [tax relief for the] Enterprise Investment Scheme to 30 per cent from 20 per cent is really very good news.’
On the other hand, John Jenkins, CEO GE Capital UK, says, ‘The Budget is not about to solve the central issue facing UK SMEs, which is the lack of funding available to support business growth.
‘It’s clear that many UK businesses are suffering from a strained relationship with their commercial lenders and are lacking the range of alternative forms of finance that are more widely available to their competitors in countries such as France and Germany.’
