Britain’s small businesses gave a muted reaction to the Chancellor’s measures aimed at boosting investment – with one warning: “Government efforts are seen as a bit of a joke”.
George Osborne’s main gift to small and medium-sized enterprises (SMEs) was a 10-fold increase in allowances on capital spending such as tools, office equipment and commercial vans to £250,000. The annual investment allowance was slashed by the Coalition to £25,000 in April this year. Mr Osborne has performed a U-turn on that decision, meaning firms will now be able to claim 100 per cent tax relief on capital investments.
But Saurav Chopra, the chief executive of Huddlebuy, which works with 100,000 small businesses, said: “The previous allowance was preventing small businesses from investing for growth. However, Mr Osborne needs to do a lot more for small businesses across the UK to flourish. Government efforts are seen as a bit of a joke.”
The Chancellor also announced the creation of a £1bn Business Bank. But Xenios Thrasyvoulou, an entrepreneur who founded the freelancer marketplace PeoplePerHour, said: “The worry is that this £1bn fund will be out of reach for many businesses desperately in need of capital and support. The Chancellor skimmed over how firms will be able access these funds, how long the application process will take and, crucially, who will be eligible. The problem for small businesses has not been that lenders don’t have cash to lend; it’s that there are far too many hoops to jump through and red tape to cut to even get to the front of the line.”
Case study: Big business benefits, but it’s one rule for me and another for them
Ed Hoad, 29, operates a small recruitment business called Catalyst Executive Search. He and his wife Heidi, a teacher, have a seven-month-old son, Rufus.
I set up a business in 2010. With the economic turbulence, it’s been quite stressful actually watching my wife’s maternity pay dwindle and not really knowing what the economy is going to do.”
My wife and I have said we’re not going to spend that much on Christmas presents this year and it’s not because we don’t have any money, but I think you just need to be careful at the moment.
Having your own business, you almost live year to year, good years are great and you try and keep some money back but I think the cumulative effect of the recession makes it very hard to actually keep a buffer in for next year.”
I’m so angry they can get away with it. I just don’t understand how that can be so. I feel it is one rule for me and another for them. The thing that really frustrates me from the Autumn Statement is the fact that they dropped corporation tax to big businesses to 21% but mine isn’t going to change. Mine’s not going to go down to 19%.”
Case study: These are small measures that won’t make a massive difference for my business
Paul Blazdell, 39, is the sales director of Floppets, a Brighton based start-up which makes small collectible toys which can be clipped on to children’s bikes, shoes and bags.
The Autumn Statement was pretty much what we expected: continuing austerity and not a lot to stimulate growth in small and medium-sized businesses. One of the biggest problems is that banks still refuse to lend, while for us there is the issue of retailers being cautious about new products. We didn’t approach the banks for this venture as we knew it wouldn’t even be worth trying. Thankfully, these days you can sell your products on a website and promote through social media in a way that you couldn’t five years ago.
“The axing of the fuel duty rise is a good move, though you never know whether firms will pass that saving on to their customers. The increase in personal tax allowance is also welcome. If our business grows, the reduction in corporation tax could be helpful but it will have a minimal effect in the short term.
“But all of these are small measures, and I don’t see anything that’s going to make a massive difference for us, as we’re a business of just two people.”