As usual, there was much discussion about this year’s budget. But did the chancellor come up trumps for the UK’s SMEs in 2013?
Here at Elite Business, it is our default position not to take anything at face value. Nevertheless, we couldn’t help but think that some of the announcements made by George Osborne in the budget did appear, at least on the surface, to be relatively attractive for SMEs. We’re talking about the new Employment Allowance of £2,000 for National Insurance contributions, the 1% cut in corporation tax in 2015, and the increase in personal tax allowance to £10,000 being brought forward by a year.
Given the time of economic austerity during which these measures were revealed, it would be wry to assume that they will have a massively beneficial, or life-changing, impact for our country’s entrepreneurs and small businesses. That said, some of the chancellor’s rhetoric about his budget being for the “aspiration nation” and those who “want to work hard to get on” shouldn’t simply be dismissed as well, rhetoric. Naturally, people on both sides of the SME coin had their bit to say about Osborne’s plan for economic recovery, and whether it recognised the value of start-ups to the financial future of the UK. So, was it a good budget for Britain’s SMEs and entrepreneurs?
Taavet Hinrikus, co-founder of TransferWise
This year’s budget wasn’t a bad one for entrepreneurs. The ‘employment allowance’ was a big win for small firms keen to take on new staff. George Osborne took the first £2,000 off employers’ National Insurance bills. This will make it easier for small firms to increase the net salary of those on their payroll. The increase in the personal tax allowance to £10,000 being brought forward by a year is also good news since it’ll give employees a small boost in income without affecting businesses.
The best aspect of the budget, however, was the government’s commitment to using non-bank providers to boost lending. The traditional banking system has been letting its customers and the country down for decades. It is over-ripe for disruption – not only are the banks not lending, they’re charging too much and making the whole process a bureaucratic nightmare. In channelling money to alternative lenders, the government goes some way to acknowledging this. Hopefully, the publicity this has generated will increase the uptake of non-bank solutions and have a knock-on effect for others in the financial technology industry.
Arpita Dutt, senior partner at law firm Brahams Dutt Badrick French
Overall I think the budget could have been a lot more supportive of SMEs, which are meant to be the engine for economic growth in this country. The National Insurance holiday was the most positive measure, but why do we have to wait until April 2014? The issue for SMEs is immediate and if we need to stimulate growth immediately, let’s do it now. Why wait until next year? An equally good measure was the cut in corporation tax, but for SMEs, why couldn’t it have been brought down to 15% or 10%?
There should have been more focus on avenues of funding and finance for SMEs, which doesn’t seem to have been addressed at all by this budget. I think it is still extremely hard to get lending from banks – they have very high funding requirements, personal guarantee requirements, collateral requirements, and as I understand it, lending and loans to SMEs decreased by £2.4bn in the last quarter of 2012. A business rate holiday would have also been a great boost for a lot of businesses. There is a lot that could have helped; there is a lot that still could help. Better next year, maybe?