Budget 2013: Entrepreneurs react to Osborne’s latest report
What do business owners think about the Employment Allowance, Corporation Tax, Fuel Duty, and lending announcements?
With some entrepreneurs arguing that the Budget was ambiguous, confused and “full of hot air” and others declaring the report “good news for business”, Osborne’s announcements have divided opinion among the small business community. The chancellor pronounced it a Budget for an “Aspiration Nation” and once again bellowed, with his breaking voice allowing, that Britain is “Open for business”. But how relevant were the details of the Budget for start-ups and small businesses? We hear from a number of entrepreneurs in reaction to the specifics of Osborne’s report.
The Employment Allowance and Corporation Tax cuts
With George Osborne describing the Employment Allowance as “the largest tax cut in the Budget”, it’s not surprising a number of entrepreneurs have offered comment on the newly announced allowance, which offers every company in the UK a £2,000 cut from their National Insurance Contributions (NIC). Brought in to enable small businesses to more easily take on staff, start-up investor and serial entrepreneur James Caan feels the announcement was the most encouraging from the Budget today: “The private sector has been working hard to increase employment levels and the allowance to reduce the tax on employing people will help many small firms employ their first person and grow their businesses.” In addition, “The cut in Corporation Tax to 20% means we have one of the lowest in Europe. This is encouraging for more companies to do business in the UK.” Founder and CEO of Target Parking Emma Sinclair agreed: “For small businesses, the cut in National Insurance is a significant help and certainly exceeded my expectations. £2,000 of an SME’s bill – or indeed the ability to hire someone on £22,000 or four people on the minimum wage and pay no ‘job tax’ – is a real advantage for a young businesses.” While the reaction to the National Insurance and corporation tax cuts were most positively received among entrepreneurs, others still have some reservations. Chris Ingram, a small business entrepreneur and investor feels “the corporation tax rate cut is a nice-to-have that won’t have any short-term benefit at all”. However he stresses that “Osborne’s proposal to reduce the cost of employing people through the Employment Allowance is the best initiative yet that this government has devised to support SMEs.” Rob Halliday-Stein, founder of Bullion By Post, agrees that the Employment Allowance is potentially interesting but is disappointed to have to wait until next April when the legislation comes into effect. “I think the money could have been better used to support businesses who are creating jobs – rather than a flat giveaway to all businesses – and for it to come in immediately. As someone looking to take on 10 new employees over the next 12 months, I’d appreciate the help now.” CEO of Central Working Jamed Layfield was even more dismissive: “It’s really not clear how this Budget delivers on the Chancellors promise of an Aspiration Nation. It’s not a Budget for start ups, SMEs and entrepreneurs. He hasn’t revised the Loan Guarantee Scheme, the tax changes will only really have an impact for large companies, and the National Insurance changes are really ambiguous? We need some real clarity around what this £2k NI initiative will actually deliver and how it will work.”
Scrapping the fuel duty hike
Another area where business owners were generally pleased was the announcement to scrap the planned fuel duty hike. Alistair Bingle, managing director of removals company Bishop’s Move, comments: “This is fantastic news for businesses that rely on the roads to function and operate. A fuel duty hike would have had a severely negative impact on the haulage industry and a potential loss of jobs right down the ladder – the knock-on effect would have been unthinkable.”
Lending for small businesses
Although Osborne vaguely announced an extension to the Funding for Lending Scheme and plans for the new Business Bank, access to funding for start-ups and small businesses was surprisingly muted. The announcement that the Business Bank will launch a £300m investment scheme this spring is good news for some entrepreneurs, who believe it will help to diversify the supply of lending to small and medium-sized businesses. Co founder of TransferWise, Taavet Hinrikus said: “It’s great to see the government putting money into non-bank lending. It acknowledges the contribution being made by financial entrepreneurs, and recognises that UK is producing some fantastic new start-ups in this field.” However, as a young entrepreneur, Ben Wakeham, founder of fledging business VIDA FX felt he “would have liked to have seen more action on encouraging the banks to lend more to small businesses. “Programmes like Funding for Lending initiative and the Business Bank are good ideas and it is right that the government promotes them but they need to be actioned now not scheduled for later on in the Parliament.”
Not enough focus on tech start-ups
One area that Osborne didn’t discuss was specific support for the tech industry, which has left a number of entrepreneurs frustrated. Matthew Finnie, CTO of telecommunications company Interoute, commented: “It’s really disappointing that today’s Budget speech included no reference to the tech industry. Last year we were inspired with the promise of incentives to support UK tech investment, and a vow to make the UK the tech centre of Europe. But George Osborne was curiously quiet on this today, leaving us to wonder what has happened to last year’s bold claims?” CEO of HR software provider Fairsail, Nic Scott, also felt there should have been more value placed on recognising the value of highly skilled, global sectors like technology: “The chancellor called this the Budget for those who ‘work hard and get on’, and while there were several steps in the right direction, I was disappointed that technology was not singled out as an important, fast-growth sector. Employing people on minimum wage will give everyone a break under the Employment Allowance but we don’t need more burger flippers we need more code writers.”