Autumn Statement 2013: Is government “ignorant” about finance for UK business?

Osborne’s latest plans have met with mixed reaction from entrepreneurs and businesses

The Autumn Statement caused quite a stir. Despite being delivered optimistically by Osborne with key measures including a 2% cap on business rates and 50,000 additional loans for the Startup Loans scheme, entrepreneurs and figures from the world of finance were quick to suggest the government is still not doing enough to facilitate funding to businesses.

Leading business experts within the space discuss the government’s latest finance initiatives and share their thoughts on how it impacts on both their business and yours…

Government’s approach to peer-to-peer lending

Luke Lang, co-founder of equity crowdfunding platform Crowdcube: 

“The government’s initiatives to support equity investments have been pitiful in comparison to its support for debt, which the chancellor has announced now qualifies for ISA tax reliefs. This needs to change. While support for peer-to-peer lenders is laudable it is frustrating that the government continues to focus on debt, which is often unsuitable for start-up and early stage businesses.

“The government has already lent £100m through peer-to-peer lending websites (via the Business Finance Partnership) and has more plans with Vince Cable’s Business Bank. This demonstrates a real ignorance about the types of finance that are needed by Britain’s future entrepreneurs.

“Our message for the government is you’ve done enough with debt finance, now let’s focus on what small businesses really need. Creating a co-investment fund for Britain’s burgeoning equity crowdfunding industry would be a great place to start.”

Lack of support for high growth businesses

Simon Cook, chief executive of venture capital firm DFJ Esprit:  


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“We’re disappointed that we didn’t see any measures that will boost investment to support more high growth businesses. For example, increasing the availability of follow-on funding for companies as they grow through changes to the rules on EIS Funds. We hope that this will be something that is included in the next Budget.

“The venture capital industry is making great strides to boost the flow of EIS funding into technology companies; we’ve just led a BVCA (British Venture Capital Association) scheme that will allow angel investors to invest alongside venture capital funds into EIS deals. This is a major step but there’s lots more government could do to support entrepreneurs and start-ups. If the government is determined for the UK to be the best place to start and grow the businesses of the future then action is required – the data this year shows a decline in UK investment while venture investment in other countries in Europe is increasing.”

Need for government to collaborate with banks

Louise Beaumont, co-founder of invoice finance service Platform Black: 

“We welcome [George Osborne’s] gifts of a cap on the inflation increase in business rates and helping those small and medium businesses who have struggled hard on the high streets as he announces a new reoccupation relief, but the fundamental issue remains that small and medium-sized businesses are quite simply not getting enough access to finance.

“Lending to [start-ups and small businesses] shrank by £505m in October. This is the fourth consecutive monthly decrease in lending to small and medium enterprises. Listen to any small business owner that is looking to grow their business and they will tell you this is the key concern for the UK’s early-stage companies. The answer is simple; encourage the banks to refer those small and medium businesses who they reject for finance on to the alternative finance providers and ensure that the Business Bank fulfils a vital role in telling all businesses about how they can access alternative sources of finance.”

Changes to the Seed Enterprise Investment Scheme (SEIS)

Jean Miller, CEO and co-founder of crowdfunding site InvestingZone:

“Investing Zone fully supports changes to the SEIS that will allow savers to invest up to £500,000 in a British company under the incentive. In a recent survey we commissioned of 1,000 British investors, 62% said they believed British firms to be under-invested compared with early stage companies overseas. This change should better enable the nation to invest in its start-ups through equity crowdfunding, providing the country with sustainable economic growth.”

 

What do you think? Are you disappointed by the measures or do you see them as a positive step forward?

 

 

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