The small business world reacts to the Spring Statement 2018
This week, the government made several key business announcements. Read up on the policies, and entrepreneurs' reactions, here
In this week’s Spring Statement, chancellor of the exchequer Philip Hammond called the UK government “the champions of small businesses and the entrepreneur”.
Starting with some promising figures, he revealed that the number of people in employment has increased by three million since 2010, with unemployment close to a 40-year low. He also pointed out that the UK’s borrowing is down from £1 in every £4 spent (in 2009-2010) to an expected £1 in every £18 spent, with debt expected to fall as a share of GDP next year.
With a goal of supporting the UK’s start-ups and small businesses, the chancellor went on to announce several measures and upcoming consultations designed to push the productivity of the country’s entrepreneurial community.
Read on for the seven key announcements that you need to know…
The Spring Statement 2018: the key announcements small businesses should know
1. The next business rates revaluation will take place in 2021
In 2017’s Autumn Budget, the chancellor announced that business rates revaluations would take place every three years rather than every five, meaning business rates better reflect current property prices.
In today’s Spring statement, Hammond announced that the next business rates revaluation will be taking place in 2021 – as opposed to 2022, as initially scheduled – with the following taking place in 2024 in line with the new three-year time frame.
2. 13 UK areas are to benefit from £95m digital infrastructure funding
The 2017 Autumn Budget announced the launch of a £190m challenge fund designed to improve digital infrastructure; rolling-out full-fibre broadband across the UK.
Today, Hammond revealed that the first funding from the challenge fund has been allocated, with over £95m going to 13 regions across the country, providing faster and more secure internet connections to businesses in these areas.
3. Up to £80m funding will be released to help small businesses hire apprentices
The chancellor confirmed that the government is committed to providing three million apprenticeship starts by 2020 through the apprenticeship levy. However, he said that the government recognises the difficulty small businesses might find in seeking apprentices through this system.
As a solution, the chancellor announced that up to £80m funding will be released by the education secretary to support small businesses in hiring apprentices.
4. The tax system could change so multinational digital businesses pay fair tax
According to the government, the value that digital businesses contribute to the economy is not always reflected in the tax that multinational digital businesses pay on their profits. Hammond confirmed that the government has considered and laid out its views on how the tax system could change to create a fairer result for such businesses.
5. The government is seeking views on digital payments and the use of cash
As more and more people opt to shop, sell things and save money online, the government is keen to support businesses who take and make payments digitally, ensure that people are still able to pay with cash when they need to, and prevent businesses from using cash to evade tax and launder money.
To this end, Hammond announced that the government has launched a call for evidence from businesses, asking them to share what they think the government can do to achieve these three things. You can now email your views to cashanddigitalpayments@HMTreasury.gsi.gov.uk.
6. Small businesses wanted to share views on extending tax relief to support self-funded skills training
With a view to improving UK workers’ skills and so boosting the country’s productivity, Hammond said the government is also keen to hear opinions on how it can extend the current tax relief available for self-employed people’s training, and the training of employees when they pay for it themselves.
You can have your say on this by emailing your views to firstname.lastname@example.org.
7. The government is taking steps to “eliminate” late payments
Recognising the negative impact that late payments can have on start-ups and small businesses, the chancellor announced a call for evidence which calls on small businesses to help the government understand how best it can help to eliminate late payments.
The Spring Statement 2018: Business owners react
Niels Turfboer, managing director at Spotcap UK:
“Small and medium enterprises are important for the economic health of the nation and tax, as well as talent, are crucial to them. It’s a positive to see the government bring forward the business rates review to 2021 and put in place measurements to encourage apprenticeships.
“It is important not to end up with a situation where businesses that have the ability to grow, choose not to do so. If you want ‘back British business’ it will be necessary to put in place conditions that encourage growth ambitions.”
Angus Dent, CEO at ArchOver:
“If we can’t get out of this rut, we won’t stand much chance of making a smooth economic transition out of the EU next year – we won’t have the leeway to absorb any unexpected shocks. Despite that, Philip Hammond used today’s Spring Statement speech to essentially sit on his laurels and avoid taking any new decisive action.
“While the chancellor rests easy, British business must get to work. Given that the OBR continues to find the government’s position on small and medium businesses’ productivity ineffectual, business owners need to take matters into their own hands and look to fund bolder new business projects and models.
“They should use alternative financing options to fund new services, hire more staff and improve working conditions. You need money to make money, so UK companies must invest in driving productivity. If the government won’t do it, entrepreneurs must take the initiative, using tailored financing to secure the tools they need to boost productivity.”
Tim Walker, managing director at Aura Technology:
“It was welcome to see funds allocated to investment in high street broadband and for the first 5G testbeds, which are an important part of the underlying infrastructure needed for businesses to work efficiently and to maximise productivity through technology that enables remote offices and home working.
“The consultation on measures to encourage digital payments is also promising – the way we transact business as consumers has changed beyond recognition in the last decade, but business has been slow to catch up with late payments and old-fashioned payment practices holding up progress.
“The decision to bring forward the planned business rates reductions and reviews will obviously be welcomed, although I would like to hear more concrete initiatives in the full Budget in the Autumn. It would be good to see an extension and widening of investment incentives such as SEIS and EIS along with further tax incentives for entrepreneurs.
“Finally, we must never forget that all successful businesses are built on people – and investing in the next generation will be key to the future strength of the economy. As a company that is actively recruiting and training staff, we welcome the release of £80m of funding to support small businesses with funding apprenticeships, which is crucial for advancing skills and helping employers fund loyal and long-term staff who can be an asset from the start of their careers.
“Apprenticeships offer a real alternative to young people to gain new skills whilst earning money, and are an alternative to the university option, where they will incur significant student debts which could take them years to clear.”
Gary Turner, co-founder and managing director at Xero:
“While it’s encouraging that Chancellor Phillip Hammond has recognised the impact that late payments have on our small business economy, it’s disappointing that no further evidence on how the government will tackle this was shared in the Spring Statement.
“It’s a problem that impacts eight in 10 small and medium businesses and cash flow is the biggest killer of British small businesses. Not only does chasing late payments create issues with cash flow, but our research shows almost a third of small and medium business owners claim it reduces productivity too, spending a full working day per month chasing invoices.
“It’s a vicious cycle – and the current measures implemented by the Government do not appear to be making the impact that is needed. Like many other small business champions, we need evidence and look forward to the consultations. But we need it soon.”
Peter Tuvey, co-founder of Fleximize:
“The chancellor’s promise to tackle late payments is one that should be welcomed, likewise his decision to bring the next business rates revaluation forward to 2021.
“In our recent survey of business owners, 34% said business rate rises were one of the biggest issues affecting their business, with 40% saying a cap on rates would make the most difference to their company.”
Joseph Valente, founder of ImpraGas:
“Until now, many small business owners have been reluctant to invest in apprenticeships — even though they acknowledge their value.
“This is just the incentive small businesses need to enhance their places in their respective markets, as well as significantly advance small business in the UK and make the goal of three million new apprenticeships by 2020 a reality. It has all the markings of a highly beneficial win/win situation.”