What business really wants to hear is confidence from no change - for the Chancellor to say that there are no changes, we haven’t moved on and that nothing radical has changed to the public outlook.
Top of the wish list for business in the Budget is business solutions, growth and to jump start the recovery and generate jobs. But whilst many business leaders are firmly behind George Osborne’s deficit busting plans, these 5 points consider the direction the Chancellor should consider.
1. Increased help for small businesses:
The Chancellor will imminently confirm that top banks have signed up to the government’s National Loan Guarantee Scheme which will boost lending to small business.
But whilst it is a step in the right direction it won’t solve the problems faced by businesses trying to access finance.
The National Loan Guarantee Scheme will make some loans more affordable. But it will not help the smaller, younger, and high-growth firms that have trouble getting credit in the first place.
Since credit easing will be accessed via the banks, lenders will need to work harder to encourage firms, many of whom have been turned down for loans in the past, to consider applying for credit. Banks will need to ensure that their staff are able to fully explain these new loans, and that those business owners that aren’t eligible for the scheme, are advised of suitable alternatives.
More radical action is needed. Over the medium-term, a brand-new, fully-fledged state-backed SME bank, which could eventually be returned to the private sector, should be created as a matter of urgency.
2. Less red tape: Clearly another positive area to aid business recovery would be to cut red tape. UK companies need to be able to position themselves to be able to compete competitively for contracts, strengthening their supply chain and removing obstacles that may weaken their case.
By automating more government processes and a better integration with business software will allow businesses to get goods and services to market within a shorter timeframe and this needs to be encouraged.
3. Tax cuts: Likewise business wants to see an investment in people. If there is one measure that business really would welcome, that would help the economy because it would generate jobs and grow organisations is a National Insurance contributions holiday because that would make job creation less expensive.
At the moment National Insurance is just a tax on jobs which could be put to better use to reinvest funds into learning and training, making staff more effective and business more productive.
What business wants to see is that the credit rating is maintained and to get access to lower interest rates.
4. 50p tax rate: Scrapping of the 50p tax rate is expected but is a thorny topic for government who are accused in being more interested in cutting taxes for the rich. However it has been said that if the Chancellor cuts the rate from 50 to 45p, will the gain in business confidence really outweigh the political downside? Is the 5p cut really enough of a signal to foreign investors to come and do business in Britain? If Mr Osborne is going to take the risk, he might as well go the whole hog and abolish the rate entirely so that more rich people stay in Britain – as the argument goes – and pay more tax the long run.
5. Revolution in planning rules: One of the most heavily affected industries of recent years is construction and current planning rules are holding back economic development in Britain. As an industry fallen victim to mass un-employment, a shake-up in planning rules will make it a lot easier for building to take place in this country that will allow businesses to expand and people to have decent homes and children to be able to afford a home when they grow up.
Tags: Budget, Chancellor, George Osborne, Exchequer, National Loan Guarantee Scheme, small businesses, credit easing, banks, tax cuts, red tape, 50p tax rate, planning rules, britain, 2012
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The British Chambers of Commerce (BCC) is today (Monday) urging George Osborne to deliver a Budget for business, which allows firms to drive growth, invest and create jobs.
This view is echoed by IRIS Exchequer customers. Some 30 per cent of businesses think that reducing administrative burdens would encourage them to grow, while more than a quarter (27 per cent), feel that tax breaks would provide the best incentive for expansion, revealed from our recent study of 150 companies on the IRIS Exchequer Roadshow surveying our accounting software customers.
A further 30 per cent say the uncertain economic climate will continue to be the greatest challenge for businesses in 2012, followed by operational costs (23 per cent) and staying competitive (18 per cent), with 12 per cent feeling that customer retention would be a challenge for them in the next 12 months.
If business is to prosper then George Osborne has to pull out all the stops to create an environment in which they can thrive, create jobs, and export our goods and services abroad
Just days ahead of its Annual Conference, however the BCC believes the Chancellor should stick to Plan A, but use the wiggle room he has within the current spending envelope to bring forward substantive changes that will stave off stagnation and weak growth.
The BCC suggests that there is sufficient latitude within the fiscal rules to implement three specific initiatives to support business growth, at a maximum cost to the Exchequer of £4.2bn.
Scrap the upcoming business rate rise which is anathema to growth
· In April 2012, the 5.6% up-rating of business rates will severely aggravate already uncertain business cashflow and impose hefty new costs without offering any real improvement in business conditions.
· In addition, the BCC is calling for the restoration of the Empty Property Rate Relief (EPRR) to £18,000. The current threshold for EPRR creates perverse business incentives, deterring investment.
Cost: £2.2bn Introduce a time-limited £1bn capital allowance scheme for medium-sized companies
· A ‘when its gone, it’s gone’ capital allowance scheme would provide an incentive to firms who have put large investment projects on hold
· Providing a two-year window for medium-sized companies to make crucial investments would create a real incentive for businesses to take advantage of the opportunity.
Cost: £1bn Incentivise employers to take on young people
· The BCC is calling for the Chancellor to double the amount of money available for employer wage subsidies and funded placements under the new Youth Contract (from £1bn to £2bn), or consider changes to employer National Insurance Contributions for young people.
· This would provide a cost-effective way to prevent the alienation of young people, and assist businesses with the development of the skills base required to drive future growth. Furthermore, the BCC records its continued commitment to work with the government to investigate new ways to fund business start-up for young people.
Cost: £1bn In addition, the BCC is recommending the following low-cost or no cost changes to the business environment to allow companies to grow, export and take on staff.
· Implement an effective credit easing programme, and consider the creation of a fully-fledged SME bank, which would be backed by the state at first and later returned to the private sector. This would go a long way to improving the follow of credit to viable businesses.
· A speeded-up National Infrastructure Plan and delivery of the mechanisms promised in the Autumn Statement to increase private investment in infrastructure projects.
· An aviation strategy that delivers both capacity for the South East and growth opportunities for Britain’s regional airports.
· Delivery of radical reforms to the planning system in the National Planning Policy Framework to help businesses expand, invest and grow.
· Help for SMEs trading internationally, through improved access to mentored outbound missions, smarter use of inbound missions and greater financial support for promotional activity and tradeshow attendance.
· Real de-regulation that makes a difference to businesses on the ground. This should include the reform of dismissal rules, such as relaxing the collective redundancy rules and introducing a new no-fault dismissal route.
Without concerted action in these areas, the potential for businesses to grow will be limited, and so will the economic recovery.
Tags: Budget 2012, BritishChambers of Commerce, George Osborne, IRIS Excheque, accounting software, business
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