Pre-Budget statement: More workers to take share stake

Small Businesses

THE CHANCELLOR'S move to encourage share ownership by making it easier for all employees to become stakeholders in their companies was described as "brilliant news" by the Employee Share Ownership Centre.

Malcolm Hurlston, chairman of the centre, said: "These tax incentives should encourage millions more employees to invest in their own business for the long term." The centre also said that such moves tended to increase efficiency, productivity and staff loyalty.

In his speech, Gordon Brown said that he wanted to "encourage the new enterprise culture of teamwork". He was particularly concerned about the provision of incentives to make such share schemes attractive to small-business owners. A consultation document is due to be published shortly.

Banks and their customers also welcomed the acknowledgement by Mr Brown of the importance to small firms of access to finance, and the planned review of the banking sector.

Tim Sweeney, director general of the British Bankers' Association, said the study would "give banks the opportunity to highlight the many new customer-focused developments in the industry".

Stan Mendham, chief executive of the Forum of Private Business, stressed that the review would need to cover "behaviour and attitudes on both sides" of the relationship.

Moves to encourage an entrepreneurial culture were also welcomed, with firms and their advisers pointing in particular to the announcement of consultation on new incentives aimed at boosting the venture capital industry.

Charlotte Morrison, of the British Venture Capital Association, hoped that the Government's interest in providing new sources of management expertise as well as finance would lead it to support her organisation's call for measures to make it easier for companies to give key executives equity incentives to make up for shortfalls in salary.

In addition, accountants warned that the Treasury would have trouble achieving the aim of doubling the number of firms where employees could own shares without running up the costs that contributed to the ending of profit-related pay.

The Chancellor also held out the prospect of further cuts in corporation tax for small companies.

But Patrick Stevens, tax partner with accountants Ernst & Young, summed up many advisers' feelings by saying Mr Brown's speech was "very light on anything practical".

The things that would be of genuine help to small businesses, including proposed tax relief for spending on research and development , were all going to consultation, and their detail would not be known for some time.

John Battersby, tax partner with accountants KPMG, added that the speech offered "a tantalising glimpse of what might be".