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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