£40bn loan guarantee programme headlines Osborne’s Autumn Statement
Chancellor also promises extension of business rates holiday and new seed investment scheme
The chancellor has announced the creation of a £40bn credit easing programme for small businesses in his Autumn Statement this afternoon.
George Osborne said that, under the terms of the National Loan Guarantee initiative, the government will initially underwrite £20bn in bank loans to small firms – and there will be scope to guarantee up to £20bn of further credit over the following two years.
Osborne added that the scheme “will use the hard-won interest rates that the government can borrow at to give a rate that small businesses can borrow at”.
He estimated that interest rates for small businesses will fall by around 1% as a result of the initiative.
In addition, the chancellor announced plans to inject a further £1bn into the regional growth fund, extend the business rate holiday for small firms by a further six months (to April 2013), and scrap the 3p rise in fuel duty which was set to take effect in January.
Super-fast digital broadband networks will be extended across the country, and new Enterprise Zones will be created in Lancashire and the Humber.
The government will also launch a new scheme for seed investment, entitling anyone investing up to £100,000 in a qualifying start-up to receive income tax relief of 50%.
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Osborne said 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”.
Reaction from small business trade bodies was mixed. John Cridland, director-general of the CBI, said that Osborne’s statement “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 the chancellor’s policies “address many of the concerns raised by small businesses”.
However Phil Orford, chief executive of the Forum of Private Business, said that “the government should have acted to encourage private lenders” alongside its help for investors.
Meanwhile 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 government’s existing strategy.