Autumn Statement 2014: What do entrepreneurs want to see?
Ahead of the Chancellor’s statement this Wednesday, leading business owners discuss the policies they want George Osborne to address to support small firms and enterprise…
This Wednesday December 3, the Chancellor of the Exchequer George Osborne will be unveiling the 2014 Autumn Statement with the government’s latest plans for the UK economy.
Ahead of the announcement, we spoke to the entrepreneurs behind some of the country’s most successful start-ups and fast-growth firms to find out the key measures they want from Osborne to help support British business.
Here are their Autumn Statement “wishlists”…
1. R&D tax credits
Andy England, partner at Menzies LLP, would like to see an extension of the current research and development tax credits to include businesses that are part-owned by large companies:
“Although the current R&D tax credit system is very generous, the chancellor should consider removing the anomaly that reduces the tax relief where a small or medium company is part-owned by a large company.
“Where a large a company holds between 25% and 50% of the shares in an enterprise, no R&D claim can be made under the current scheme, which reduces the available enhanced relief from 125% to 30%. In addition, the loss of this relief increases the investment risk for large corporates, which may ultimately restrict integration in the UK supply chain.”
2. Government support
Jason Stockwood, CEO of small business insurance broker Simply Business, wants Osborne to expand government initiatives and develop a “voice” for start-ups:
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“We want to see an expansion of the government-backed Growth Vouchers scheme, enabling the smallest firms to secure vital, subsidised advice. And ultimately, as the next Parliament approaches, we are calling for the establishment of a Minister for Microbusiness to ensure that these exciting businesses have a true voice in Westminster.”
3. Corporation Tax
Andrew Granger, managing partner of property and planning company Andrew Granger & Co, believes that the Chancellor should cut corporation tax:
“The government says it wants to make the UK the best place to run a business, which if achieved, would translate into a commercial property boom that would generate billions in investment and thousands of jobs. So, alongside moves to ensure that UK-based corporations pay their taxes in full, there is a strong case for reducing corporation tax.”
Simply Business’ Stockwood shares Granger’s view:
“Instead of more headline-grabbing initiatives on things like export and growth accelerators […] we want the government to get to the crux of what it means to be in business on your own. We are calling on the coalition to cut the small profits rate of corporation tax, following the logic that it is unfair to expect one-man-bands to pay the same as huge multinationals – when those multinationals pay their tax at all.”
4. Raising capital
Arnab Dutt, managing director of manufacturer and exporter Texane, believes tax incentives for businesses looking to raise up to £200,000 would do more to grow the UK’s economy than changes to corporation tax:
“As a small British manufacturer, corporation tax reductions would be welcome but I would prefer to see a big increase in the tax relief on capital investment to £200,000 and a commitment to keep it there for the next five years. We need policies to stimulate investment for the future. The biggest obstacle for small firms remains the lack of access to capital. The government must put in place incentives for capital investment, including extending the tax breaks for small businesses. It will take a lot more than sticking plasters for the UK to regain a sense of its mercantilist heritage and become an export powerhouse to compete with Germany and Asia.”
5. National Insurance
James Hind, founder of car comparison platform Carwow, argues the need for National Insurance (NI) relief:
“In this year’s Autumn Statement, I’d like to see a reduction in the employer NI contributions that small businesses have to pay. Once start-ups become established and have all of the initial costs out the way, it would be beneficial for them to have higher NI relief that could help them move forward more quickly with the growth of the business. “
6. SEIS and EIS
Simon Hill, CEO of software business Wazoku, is sceptical of the measures set to be announced but wants to see development of the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS):
“As it’s the last Autumn Statement before the General Election, businesses can expect a whole host of ‘please vote for us’ policies. I’d like to see two things. Raising capital and ongoing cashflow remain issues for many start-ups, so an expansion of the Enterprise Investment Scheme and Seed Enterprise Investment Scheme to facilitate investments more readily via trusts and pensions, would open up this investment channel much further to early stage businesses.”
7. Business loans
Jane Gomez, managing director of The Supper Club, believes Osborne should bring about improvements in the way UK businesses are assessed for loans, with responsibility lying not just with banks:
“Too many businesses are struggling to grow due to generic assessments that lack common sense and don’t take into account context-specific factors. For example, a business that has a strong long-term business plan but requires intensive R&D investment before returns will be seen may be refused funding for not holding retained profit or real assets.
“There are banks that are more ‘open for business’ but none seem to be able to offer a holistic view, even when a business has a proven track record to balance the risk.
“Risk should not fall solely on the banks, they are not there to be investors. Instead, I would like to see the creation of a government supported Growth Loan Assessment Model, offering a standardised context to the application process. It would provide a more holistic look at the risks surrounding the loan and offer recommendations i.e. not just asset values or retained profits but the validity of the business model, margins, the track record of the entrepreneur, the potential upside. Without bridging loans, small and medium enterprises simply can’t scale fast enough.”
8. Employment incentives
Ian Baxter, owner and founder of Baxter Freight, thinks that incentives to encourage businesses to employ those aged under 21 would help stimulate the UK economy and should be included in the Autumn Statement:
“Young people under 21 should normally be in education, training or at work, benefits should not be an option. As well as carrying on existing policies covering formal apprenticeships for example, the government could subsidise any business to take on unemployed under 21 year-olds; effectively paying benefit entitlements to the employer for a fixed period. For their part, businesses most prove a willing partner in investment in young people who, after all, are the future talent pool from which all of us will draw.”
9. Stamp Duty
Alistair Bingle, managing director of removals company Bishop’s Move, wants the Chancellor to establish a regional stamp duty programme to support local economies:
“The chancellor has an opportunity to introduce a much needed regionalised strategy when it comes to stamp duty. With the average cost of a UK home now £272,000, and £514,000 in London, a stamp duty programme which takes into account the varying levels of house prices across the country would save thousands of people getting pulled into the 3% trap. This could be introduced at various levels across different regions across the UK.
“A stamp duty cut in certain regional areas would encourage buyers to move to a region thereby stimulating regional economic growth rather than buyers moving to over populated areas which in turn pushes up house prices due to supply and demand.”
10. Business infrastructure
Alex Cheatle, CEO of lifestyle concierge business Ten Group, argues that the costs of renting or owning a business is too high, particularly in London, and wants to see Osborne introduce policies to support this infrastructure:
“Office blocks are being converted into flats and as a result our office rents are shooting up and driving business abroad. Many companies now will look further afield to international cities and this is a huge loss for “Brand Britain”. I would like to see a firm commitment from the chancellor to support growing businesses that want to rent property in the UK by improving infrastructure and investing in more affordable office space.”
What measures do you want to see in the Autumn Statement? Share your thoughts in the comment box below…