David Prosser: Helping the market to pick winners is not so simple

 

Outlook Still on the theme of robbing Peter to pay Paul, one can't help but notice that the £975m cost of next year's fuel duty concessions is, according to the Treasury's balance sheet, identical to the gains being made from cancelling child tax credit increases. The poorest families are, in other words, subsidising all drivers.

All budgets have winners and losers, of course, but this autumn statement, more than most Treasury pronouncements, is an exercise in moving money around – the macro-economic effects will be very limited.

Still, this is an interventionist statement from a Conservative Chancellor who would, in ordinary times, presumably prefer to leave these matters to the free market. A good example of that is the package Mr Osborne unveiled to encourage investment in the smallest businesses: the seed enterprise investment scheme and more incentives for business angels.

The reliefs on the former are certainly generous (so much so they may, even discourage investments in the existing enterprise investment scheme over the next 12 months). However, the Treasury costs that relief at a maximum of £50m a year, which suggests it doesn't expect huge take-up.

The history of this sort of initiative is somewhat chequered, with a tendency to write the rules too loosely, paying investors more than theydeserve for risking their capital, or too tightly, in which case take-up isminuscule. Venture capital trusts, for example, launched in 1995, have been tinkered with ever since (there were more changes to the rules yesterday) in order to strike the right balance.

Offering tax incentives to investors who back start-ups is an attempt to stack the risk versus return equation in favour of entrepreneurs. It is a noble intent, particularly given Britain's all-too-regular failure to reward enterprise. But it is very difficult to get right.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her in Latakia
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report