- RBS and Lloyds must provide £94 billion in new business loans, half of which must be provided to small to medium-sized businesses.
- A credit adjudicator service to be set up to help SMEs to deal with complaints and examine lending decisions to determine whether they are fair.
- The Government will set UK Finance for Growth to help to expand the financial sector. The FSA to speed up the licensing process for new banks.
Edward Rimmer, UK chief executive of Bibby Financial Services, said:
“Darling’s proposal – getting state-owned banks RBS and Lloyds TSB to free up at least half of a £94bn credit package to improve access from SMEs – is positive in recognising that ‘viable’ businesses are still struggling to access credit, I would question whether this will really ensure that business owners know where to go or are truly able to use this stimulus to get the cash flowing.
“Similarly, it is difficult to see how the launch of a credit adjudication service to fast-track business owners’ complaints about accessing credit will really prove effective if the banks simply can’t lend to some businesses. I suspect that, like the EFG, it will prove a nice idea supported by little substance.
- Commits to G20-approved levy on banks.
- 50 per cent tax on bonuses in excess of £25,000 introduced in the Pre-Budget Report has raised £2 billion.
- Business rates will be cut for one year from October.
- The computer games sector in Britain will receive investment. Will also set up a £35 million University Enterprise Capital Fund.
- To introduce a 50p tax on landlines to fund superfast broadband rollout for 90 per cent of the country by 2017.
- To double the annual investment allowance to £100,000. The main rate of capital gains tax will not increase.
Thomas Coles, Managing Director of MSM Software Said:
“Many points made in the budget were a direct result of the huge borrowing that has taken place by the government. Every business and individual is now paying the price for this. The Chancellor didn’t mention it in his speech but this budget will also see personal allowances frozen. This can only have a negative impact on morale; employees are already facing rises in National Insurance and now effectively they will be paying more tax.
“We are already one of the highest taxed nations from around the globe, particularly in the corporate world. Because of this we risk other countries attracting start-ups and relocating businesses. We desperately need to make ourselves more competitive to ensure this country continues to attract new business talent and growth.”
- Entrepreneurs’ relief for capital gains tax to be increased to £2 million.
UK200Group President Colin Howe said:
“The doubling of the Entrepreneur’s Relief lifetime threshold to £2 million appears to have taken all commentators by surprise but may well precede an increase in the full rate of CGT post election.
The 12 month reduction in Business Rates for smaller businesses is also most welcome.
- 15 per cent more of government contracts will go to small to medium-sized businesses, many of which count the central government as one of their key clients.
Martin Rice, CEO of Erudine and co-founder of the UK Innovation
“Clearly it is a positive step to increases the
amount of Government business going to SMEs, but this target will not
address the fact that in reality few small businesses can afford the
huge cost of engaging with the vast machinery of Government procurement.
“Where we most need innovation, for example in Government IT projects,
the supply chain is managed by prime contractors and at present SMEs
are held back and squeezed by larger companies in the chain. This means
the value of innovative ideas and entrepreneurial SMEs is often
crushed, with the smallest companies bearing the brunt of pressure to
deliver reduced costs.
“This new target will do nothing to bring innovation into Government
from the SME community or improve supply chain professionalism. Unless
major obstacles are removed, it would appear talk of embracing
innovation is simply pre-election rhetoric.”
- The Time to Pay scheme for tax payments from SMEs will be extended for the whole of the next parliament.
Michael Izza, chief executive of the ICAEW, said:
“UK businesses have played their part in helping get the UK economy through the downturn – by maintaining employment and revenues. However, they also need certainty and confidence in the recovery. Whilst the focus on jobs and investment is important in the short term, businesses will want to know more about what they can expect in the medium to long term.
They need greater clarity on how departmental spending is going to be cut and also if taxes are going to be raised. This will have a direct influence on their plans to invest and grow.”
- Pledges that the Government will pay 80 per cent of invoices from small business within five days.