£40bn credit easing scheme headlines chancellor’s Autumn Statement
Osborne's speech receives mixed reaction
The chancellor unveiled a £40bn credit easing initiative for new and growing firms in his Autumn Statement yesterday.
George Osborne announced that, through the National Loan Guarantee programme, the Treasury will underwrite £20bn of bank loans to smaller businesses – with scope for a further tranche of £20bn over the following two years.
According to Osborne, the scheme will yield a 1% reduction in interest rates for smaller firms. He explained that the initiative “will use the hard-won interest rates that the government can borrow at to give a rate that small businesses can borrow at.”
The chancellor also unveiled proposals to add an additional £1bn to the regional growth fund, extend the business rate holiday for small companies by a further six months, and abolish the planned 3p hike in fuel duty.
A super-fast digital broadband network will be established across Britain, and two new enterprise zones will be created – in Lancashire and the Humber. Finally, Osborne announced a new seed investment initiative, the Seed Enterprise Investment Scheme (SEIS),offering income tax relief of 50% to anyone investing up to £100,000 in a qualifying start-up business, launching in April 2012.
At the same time, for one year only, the government will offer investors an exemption on capital gains tax (CGT) on gains realised in 2012-13 and then invested through SEIS in the same year.
According to Osborne, the government “must help businesses to grow and succeed, and we can do that at a national level”. He was particularly effusive on the subject of bank lending, saying the coalition has to “do more to help those small businesses which can’t get credit at an affordable price”.
Osborne’s statement received a mixed reaction from small business industry bodies. John Cridland, director-general of the CBI, said the chancellor’s package of measures “works with the realities of today and provides an imaginative framework for UK businesses”, while John Walker, chairman of the Federation of Small Businesses, said it will “address many of the concerns raised by small businesses”.
On the other hand Phil Orford, chief executive of the Forum of Private Business, asserted that “the government should have acted to encourage private lenders” to complement its help for investors.
Furthermore shadow chancellor Ed Balls, speaking in response to Osborne’s speech, said the new plans within the autumn statement show “the truly colossal failure” of the coalition’s previous strategy.