The inclusion of AIM and PLUS-quoted shares in ISAs is the chief demand from small and mid-cap firms in the lead up to the next Budget.
The government is not doing enough to increase confidence among investors for small and mid-cap companies, new research shows.
Ahead of the government’s March Budget announcement, the QCA/BDO Small & Mid-Cap Sentiment Index shows that companies in the sector would like to see new measures implemented in the hope that investor appetite will increase and growth will be expedited.
The Index reveals that 85 per cent of companies surveyed believe the inclusion of AIM and PLUS-quoted shares in ISAs would have a positive impact on business. Additionally, 28 per cent see it as the single biggest change that would benefit them.
The move is said by the Quoted Companies Alliance (QCA) and accountancy firm BDO to provide incentives to shareholders, encouraging them to adopt a longer-term approach to investment, in turn boosting trade and investment in small and mid-cap shares.
Tim Ward, CEO of the QCA, says new measures should be designed to ‘lubricate and fuel’ the financing plans of companies in the sector. He believes that the government must stop consulting and start to deliver.
Scott Knight, partner at BDO, comments, ‘The forthcoming Chancellor’s Budget is an opportunity for reform to help small and mid-cap companies.
‘But the early signs are that policymakers are engaged in rhetoric – asking questions and not listening to the answers.’
Knight adds that this issue leaves small and mid-cap companies ‘hamstrung’ by a one-size-fits-all approach that hinders their growth prospects and hampers investment.
Further findings from the survey shows that 79 per cent of companies and 85 per cent of advisers to the group feel that eliminating stamp duty would have a positive impact on business by stimulating investment in the sector and supporting growth.
The problems associated with regulation and red tape is another issue that small and mid-cap companies believe the government is not doing enough to combat. Some 76 per cent of those questioned expect to see an increase in red tape over the next year.
Ward says that including AIM and PLUS-quoted company shares in ISAs, abolishing stamp duty and reforming capital gains tax relief are all measures that are easy to implement and ‘overwhelmingly’ supported.
He adds, ‘They tie in to the much vaunted need for long-term investment and recognise the importance and potential of small and mid-cap companies as the driver of economic growth.’