The Budget: Measures 'best that could be hoped for': Small Business

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SMALL business groups warmly welcomed the improvements to the Small Firms Loan Guarantee Scheme, reform of the VAT penalty regime and other measures designed to help their sector, saying they were the best they could hope for in the circumstances.

Stan Mendham, chief executive of the Forum of Private Business, said most of his organisation's concerns had been met. Although he was unhappy about the treatment of company cars as a perk - which was not true of small businesses - he was enthusiastic overall. The Chancellor 'had made an attempt to recognise the importance of small business to the economy', he said.

This view was echoed by John Harris, chairman of the Federation of Small Businesses. Given that Norman Lamont was in tax- raising mood, small business would welcome being singled out for special support, he said.

However, accountants advising the sector were more cautious. Barry Stillerman, of Stoy Hayward, said that while the Budget had been 'quite skilful', it did not offer enough incentives for manufacturers. Alan Olivey, of Ernst & Young, added that the measures would help 'around the edges'.

Banks lending to small businesses through the loan guarantee scheme said the planned reduction in premiums, increase in the maximum eligible loan from pounds 100,000 to pounds 250,000 and raising of the proportion guaranteed by the Government from 70 per cent to 85 per cent would assist companies seeking to expand as the economic recovery took hold.

Mr Harris, of the Federation of Small Businesses, added that provided banks kept their margins down Britain would be moving towards the situation in Germany and Japan, where long-term fixed- rate loans were common.

On VAT, Peter Jenkins, of Ernst & Young, said the increase in the threshold, from pounds 36,600 to pounds 37,600, was predictable, while the relief on bad debts was largely cancelled out by companies having to write off debts sooner. However, the reform of the penalty regime was 'extremely welcome and not before time' - though its effectiveness would depend on the instructions given to Customs and Excise officials.

There was also support for the plan to fund 10,000 more places on the Business Start-Up scheme in the next financial year, described by the Chancellor as a boost to small business creation and a stimulus to self-employment.