Will Butler-Adams is the perfect example of a successful small businessman. A mechanical engineer, he's the chief executive of Brompton Bikes, maker of the bicycles that fold up so you can take them with you wherever you go. Over the last 10 years Mr Butler-Adams, still in his early thirties, has taken Brompton around the world, and now sells 33,000 bikes a year to around 33 countries, from Brazil to China.
It's a stunning success, with the number of workers rising from 27 to around 120. Brompton's factory, on a crumbling industrial estate in Brentford, west London, has become a mecca for politicians such as Vince Cable and Nick Clegg who have visited the site to showcase the best of British design and industry.
But what do Mr Butler-Adams and other entrepreneurs like him want from them, or more precisely from George Osborne when he stands up today to present this most political of Budgets? What can the Chancellor do to encourage them to invest more in their own businesses and, more pertinently, to take new risks?
Mr Butler-Adams is clear about what he wants – not just for Brompton, which is investing all the time in new products, like the electric bicycle – but for the wider economy. It is measures that will encourage a massive injection of new money into the economy, stimulate more SMEs, and improve the supply side of the economy to make it easier to hire and to invest.
Financing small business relies on different sources at different stages of their development. At the first stage its seed capital typically comes from the three F's: friends, families and fools. As companies grow, they turn to bank lending to finance working capital, and the wider equity investment community for long-term capital.
But the economy is still weighted towards debt as companies can off-set interest-rate charges against tax but not equity. By contrast, investing in publicly listed companies is taxed at least four times over: through stamp duty, dividends, corporation tax and then personal taxation. It's a ludicrous and curious imbalance that Mr Osborne should address if he is serious about making this a Budget for growth – and one for "working people", as his advisers have been trailing it.
That's why the National Loan Guarantee Scheme, underwritten by the Government and backed by four of the high-street banks to provide cheaper loans to SMEs announced yesterday, is neither a magic or silver bullet. It could lead to another explosive build-up of borrowings, as the Institute of Economic of Affairs is already warning. Indeed, the IEA's economist, Philip Booth, fears that if the credit easing remains small, the scheme will do little good, and if it gets large, will increase even more the risks within the banking system which is still perilously fragile. Far better, surely, if the Government were to force the banks to cap interest charges to SMEs?
Promoting too much debt was also criticised by Stephen Welton, head of the Business Growth Fund, when he said that while companies need a mix of debt and equity, long-term capital has always been the best way to fund a growing business. He also made the point that entrepreneurs should not be asking how much they can borrow, but how they can fund new investment.
Getting that mix right is Mr Osborne's first challenge. His second is to encourage the UK's biggest companies, which have at least £75bn cash squirrelled away on their balance sheets, to start spending again for the long term. Many business leaders remain stubbornly uninterested in investing in new plant or jobs because they claim government keeps changing the goalposts, whether it be through new regulations, punitive tax regimes or soaring energy prices which make planning ahead difficult. What you hear most from big companies is that they want stability so that they can invest for the next decade or so. It's about confidence, as much as any concrete measures. But there are reforms which would bring such stability, such as introducing a 100 per cent relief on capital allowances. There's another advantage: it's a reform which everyone agrees on – for once the EEF, the engineering trade body, and the TUC, are on the same side.
Cutting national insurance for all employees would be the best carrot of all, but he's unlikely to be that bold. Instead, he is expected to introduce NI tax holidays for small companies with up to 20 workers or for those employing the young. But if Mr Osborne doesn't make life easier for companies such as Brompton – and the next generation of start-ups – then it will be the Coalition, as well as the Chancellor, that will get need a bulk order of fold-up bikes at the next election.Reuse content