Budget 2012: Entrepreneurs’ reactions

Exclusive comment on this year's Budget from some of the UK's top entrepreneurs

As usual, there was much anticipation ahead of this year’s Budget. In particular, the ears of the entrepreneur community were pricked for news on the much-touted Youth Investment Fund – spearheaded by Sir Richard Branson.

Although the government didn’t manage to turn the initiative around in time for this Budget, it did commit to a pilot scheme – a move that has been met with much approval among entrepreneurs. However, other announcements, such as promises to boost small business lending, were met with more disdain.

Speaking exclusively to Startups, some of the UK’s leading entrepreneurs share their surprises, successes, and assess the impact of the latest Budget on their start-up and yours.

Overall impressions:

Melody Hossaini, founder of InspirEngage International:

“The Budget should reflect the current needs of the people, and today’s announcement has – at least in part – shown a willingness to move with the times and reflects a real need to focus on enterprise among the young.”

Fiona Wood, founder of Naturally Cool Kids:

“A decrease in corporation tax and help with exporting can only be good news for small businesses. And to decrease the 50p tax to 45p is a move in the right direction.

“However, where they say banks will help small businesses with loans, they did not really give small businesses a lot of help last year. Let’s see if this improves this forthcoming year.”

Adam Baker, founder of Blottr:

“I think, overall, the Budget can help small businesses – although it remains to be seen how supportive government and banks will actually prove to be.”

Jess Butcher, co-founder of Blippar:

“The chancellor’s Budget speech was full of good words and intentions. He said he wants British business to innovate, and the government’s stated its ambition for the UK to be Europe’s technology centre.

“I agree with these goals but the key thing is about what we do to get there.”

Paul Lindley, founder of Ella’s Kitchen:

“In his Budget statement, the chancellor has today announced a number of policies aimed at lessening red tape for business, including simplifying tax returns for up to three million firms.

“I also welcome the reduction of corporation tax to 24% from next month, with further cuts over the next two years. These are little steps in the right direction to help our country continue on the road to recovery.”

On the one percentage point reduction in interest on small business loans, under the new £20bn National Loan Guarantee Scheme (NLGS):

Mitesh Soma, founder of Chemist Direct:

“While I’m pleased to see the reduction in corporation tax, it’s disappointing there wasn’t more encouragement for [small businesses] when it comes to accessing capital, especially from banks.

“There doesn’t seem to be a great deal of detail behind the headlines. Enterprise loans for young people and the National Loan Guarantee Scheme sounds promising, but I want to know more about how they’ll actually work.”

On the pilot of Enterprise Loans – which, if introduced, would offer start-up loans to young people who want to start a business instead of going to university:

Melody Hossaini, founder of InspirEngage International:

“I am very supportive of the government’s announcement on Enterprise Loans.

“I’ve said in the past that, if young people can borrow to go to university, then they should be able to borrow to start a business. The important thing now will be to design an effective implementation framework, to benefit those who need support, in a sustainable way.”

Adam Baker, founder of Blottr:

“The most encouraging part of this Budget, in my opinion, is the focus on making it easier for young entrepreneurs to start businesses.

“The [proposed] introduction of government loans for young people to start businesses is a very positive step.”

Rajeeb Dey, founder of Enternships.com:

“I am encouraged by the government’s commitment to look at the creation of an Enterprise Loan fund for young entrepreneurs. It’s important that – at a time of record youth unemployment – we do all we can to help young people both into employment, but also to make their own jobs through self-employment and enterprise.”

On tax reforms, including a cut in corporation tax to 24% from April 2012 and the proposed consultation on integrating National Insurance contributions with Income Tax:

Helen McAvoy, co-founder of Rocktails:

“The integration of National Insurance (NI) and Income Tax should be pushed ahead as soon as possible. It will help reduce confusion (and admin) for companies starting the daunting process of hiring their first member of staff.”

Rajeeb Dey, founder of Enternships.com

“The cut in corporation tax will help businesses to grow but I would like to have seen more done to encourage businesses to hire young people through National Insurance and other tax incentives.

“This summer will be toughest period for graduates leaving university, entering a work market with a shrinking amount of ‘graduate’ jobs… and the government needs to do more to encourage businesses – especially micro and small businesses – to hire people.”

On the expansion of research and development tax credits and a £100m fund to support new university research facilities:

Luke Lang, co-founder of Crowdcube:

“With little wiggle room for the chancellor in this year’s Budget, he has lived up to his promise to reduce red tape for small firms, by simplifying tax and expanding research and development tax relief. Good news for start-ups!”

Adam Baker, founder of Blottr:

“Easing rules to help academics turn ideas into businesses (while making scientific research more economically viable) will certainly encourage more entrepreneurialism.”

On the proposed introduction of a cash-only tax system for businesses with turnover of under £77,000:

Adam Baker, founder of Blottr:

“For existing start-ups, taxing small businesses based on how much cash flows through their business is an interesting proposition.

“However, as the company scales, the tax implications could be quite severe.”

On the increase in the Personal Tax Allowance threshold to £9,205:

Rajeeb Dey, founder of Enternships.com:

“Encouraging people to search for work by reducing the liability that basic-rate taxpayers pay is a step in the right direction to ensuring we have a fairer tax system that rewards employment.”

On the announcement that the government will fund ultra-fast broadband and Wi-Fi in 10 cities:

Jess Butcher, co-founder of Blippar:

“Osborne talked about delivering some of the fastest broadband in Europe. These are the kinds of infrastructure policies that will create the conditions for small tech firms to thrive and – on face value – they sound really positive.

“My business’s technology depends on people having access to high-speed internet wherever they are, and these announcements suggest we’re moving closer to becoming a switched-on, digitally savvy nation. That’s vital for our future economic success.”

On the increased investment limit to the Enterprise Investment Scheme and the confirmed launch of the Seed Enterprise Investment Scheme in April:

Jess Butcher, co-founder of Blippar:

“As a start-up owner in the middle of an investor round, I hugely welcome the government’s move to increase the availability of relief to investors, through such incentives as the Enterprise Investment Scheme.

“The test is how these things are funded and whether they actually deliver. Too many government infrastructure schemes get held up with delays or are implemented badly, as a result of squabbles and compromises.

“Our start-up economy depends on new technologies that smart people can use as the springboard for new businesses and jobs. We really can’t afford to wait any longer or to get these schemes’ delivery wrong.”

Luke Lang, co-founder of Crowdcube:

“The new Seed Enterprise Investment Scheme (SEIS), announced in the chancellor’s Autumn Statement, and due to launch next month, has the potential to attract more investment into start-up and growing businesses. It has been widely welcomed by entrepreneurs and investors alike!”

On the announcement that the government’s Business Finance Partnership will invest £100m through non-traditional lending channels, to increase access for small businesses:

Luke Lang, co-founder of Crowdcube:

“The £100m earmarked to be invested through non-traditional lending channels, including peer-to-peer platforms, is welcomed and will undoubtedly make a difference.

“The UK currently leads the world in developing innovative solutions, like equity-based crowdfunding, to solve age-old finance problems.  However, America is hot on our heels, with the Senate currently passing a ‘crowdfunding bill’ to ease regulatory burden for small firms in the US.

“The UK chancellor needs to take note and ensure that the UK remains at the forefront of such financial innovation.”

For a full round-up of this year’s Budget, check out our sister site, Growing Business


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