smallbusiness.co.uk: Helping your business think big

In his last Budget before the General Election, Alistair Darling attempted to woo the small business sector with several proposals aimed at SMEs. Here we speak to entrepreneurs and experts to find out what the announcements really mean.

Charlie Mullins, owner of Pimlico Plumbers

It was a total waste of time. [Alistair Darling] is a modern day Robin Hood, except instead of robbing from the rich, he’s also robbing the poor. No one’s better off apart from first time buyers, but who’s going to be in a position to buy a house at the moment anyway?

The increase in the entrepreneurs’ relief threshold will only have the effect of encouraging people to sell their businesses rather than grow them. And going ahead with the 50 per cent tax rate will turn the UK into an entrepreneurial desert.

I would have liked to have seen a reduction in fuel tax, but instead the increase is going to cripple businesses. I’m very disappointed.

Neil Simpson, partner at accountancy firm Haysmacintyre
 
It certainly sounds like good news that Lloyds and RBS are being encouraged to give extra funding to SMEs. But haven’t we been here before? [The problem is] the attitude of the banks to risk and their willingness to make money available to businesses on the ground.
 
The Credit Adjudication Service is good news in terms of placing pressure on the banks to make the right decisions. But whether this process will be capable of moving fast enough to be of any use to businesses remains to be seen.’

Phil Orford, chief executive of the Federation of Private Business



While we’re sceptical of the motives behind some of the measures announced in the budget, coming so soon before a general election, there are some reasons to celebrate.

The target for 80 per cent of invoices to be paid within five-days for businesses supplying to central government departments should be welcomed, though we acknowledge that many government departments are already paying the bulk of their invoices within 10 days.

Similarly, the Chancellor’s intention to increase the amount of government work awarded to small firms by 15 per cent should help some small businesses, as long as it is implemented properly and fairly. 

But it was hugely disappointing to hear that the increase in National Insurance contributions will still go ahead, together with the bureaucratic burden small businesses face in administering its threshold.

Josh Hall from insurance firm Simply Business

Despite the highly political nature of yesterday’s budget announcement, there is a lot for small business owners to be pleased with. The one-year cut in business rates will have a tangible and important impact on hundreds of thousands of small firms, and may even take as many as 400,000 businesses out of the ratings schedule altogether. 
 

The doubling of the annual investment allowance is great news for those thinking about starting new businesses or growing existing firms, but it will only benefit those with cash to spend. Similarly, the doubling of entrepreneurs’ CGT relief is good news at face value, but will only really help those with equity to sell. 


All in all this was a positive budget for small businesses. But with an election looming it remains to be seen how many of the plans actually come to fruition.

Chris Barling, CEO of e-commerce specialist Actinic
 
It felt like a pre-election broadcast. The thing that stood out for me was that the government recognised the importance of small businesses and the manufacturing sector.
 
I would have preferred a lot less spending but, given that they are going to intervene, they’ve hit the right places. Personally, I’d rather they addressed the problems of spending as that is what has exacerbated our economic problems. They are still talking about raising spending levels next year, which seems unbelievably stupid.
 
It would have been good to see the government reduce taxes for small businesses, especially National Insurance contributions.

___________________________________________________________________________________

In association with Simply Business

Three key benefits of factoring:

- Release cash for your expansion plans
- Provide regular and predictable payment of your invoices
- Free up time frm chasing invoices
Get up to 90% of your invoices paid in 24 hours. Compare factoring quotes