Forum of Private Business responds to the Chancellor’s Autumn Statement
Phil Orford, chief executive of the Forum of Private Business has responded to the Autumn Statement from the Chancellor, George Osborne by stating: “We welcome the announcement of 50% income tax relief and a one-year capital gains holiday for those investing in start ups under the Seed Enterprise Investment Scheme (SEIS), but the Government should have acted to encourage private lenders too. Small firms need a range of funding options, and equity finance is certainly one of these, but lending at interest remains their preferred route by far.
“Combined with these tax breaks, the Government’s new credit easing scheme and an extended Enterprise Finance Guarantee (EFG), providing incentives for new lenders to compete with the high-street banks would be more likely to boost competition in small business borrowing markets, driving up levels of service and bringing down costs. It is a shame this has not happened.”
In its submission to the Chancellor ahead of the Autumn Statement, the Forum called for tax incentives for private lenders similar to the 30% tax relief available for equity investors under the Enterprise Investment Scheme (EIS).
The Government also announced several measures on tax – specifically fuel duty and business rates.
Orford added: “I think we have seen some tentative steps towards easing fuel duty and business rates, but we need to go much further and introduce real tax reforms in order to help them to grow and create jobs.
“The Government is extending the rate relief holiday by six months and allowing businesses to defer 60% of the RPI-linked business rate increase in 2012-13. This will help but it is not the freeze we asked for.
“Further, scrapping January’s 3p fuel duty rise completely and reducing the increase scheduled for August is good news but we wanted all fuel duty increases scheduled for 2012 to be postponed.”
He concluded: “There were a range of other announcements that we already knew a lot about, such as welcome reforms to employment law, including delaying implementing pension auto-enrolment and proposals to give business owners more freedom to make staffing decisions with less fear of being taken to a tribunal, and much-needed infrastructure investments.
“Education and skills was also high on the agenda. This will be a crucial area for growth – when firms are in a position to recruit in earnest again they will need a much stronger talent pool of skilled, young workers.
“We have also seen procurement proposals and incentives for mid-caps, but very little for micro businesses, which make up the majority of small firms in the UK and require special attention. Given their importance to plans for economic growth, this was an omission.
“Overall, small business finance – freeing firms’ cash flow by removing the cost barriers they face and improving levels of affordable commercial funding – remains the immediate priority. The Chancellor has taken some steps in the right direction but he could have made much bolder strides to get Britain trading by providing more support for the smallest businesses.”