By Elliot Jacobs
Before the Budget this year, I had pretty low expectations. Everyone knows the economy is struggling and there is not a lot of money in the pot. I really did not anticipate much of a boost for business.
I have a lot of contact with different businesses, both through my suppliers and clients at UOE, a business supplies company, and through membership of the Entrepreneurs Organisation.
And talking to other business owners, I knew the kind of measures I thought might help stimulate the economy — but was not hopeful they would be put into practice.
But watching and listening to the measures announced on Wednesday, I was surprised to find that much of my personal wish list was fulfilled.
The cancellation of the fuel tax rise makes a big difference to our overheads. Reduced corporation tax — which is good for businesses which are making money — and taking £2,000 off employers’ National Insurance contributions, helps every business, even if they just employ one person.
Stimulating growth is another key factor which will make it easier for businesses to borrow money to invest in growth. The chancellor touched on the business bank and the Funding for Lending Scheme, but with all these changes, it is the detail which matters, and there was not a lot of that at the moment.
We need to see exactly what steps the government plans to take before we know if that is going to work. From personal experience, I know that the Funding for Lending Scheme is making a difference in terms of the way banks are talking and offering lending, and if that is going to be extended, it is good news.
But I am slightly dubious about the benefits for business as a result of any increase in the government procurement fund through the Small Business Research Initiative and providing a single competitive pot for funding local enterprise.
While these initiatives sound great on paper, in practice they are so bureaucratic and complicated to apply for, that it is almost impossible to get any money out of them.
There were some other steps on my wish list which George Osborne missed:
1. He did not carry out the business rates review. This should have been done years ago, but keeps being postponed. Many businesses are now paying more in rates than in rent.
2. He did not order a review of the massively increased interest rates being charged for borrowing on credit cards (for both personal and businesses) when compared to the base rate. Even though the base rate has dropped over time, card charges have stayed the same, or even gone up, which is costing businesses and individuals dearly.
3. And here is a crazy one: do not give the banks any more money; give it to people. The last round of quantitative easing (QE) was £50 billion. If another round was issued and then refunded (equally — no difference for rich or poor, or how much tax you have paid), it would equate to cents, £1,000 cash back per person. That is real money in the economy. People can chose to save it — it helps the banks with their deposits — pay off debt — again good for the banks — or spend it — good for the economy. Plus it would create a level of “feel good” in the economy. It would also feel a lot more valuable than a penny off a pint!
But by having such a large package of measures aimed at small and medium enterprises, the chancellor has given a strong signal that the way out of the economic crisis is through entrepreneurial business.
Business is the solution and a lot of what has been announced will help business grow, create jobs, pay taxes and boost the economy.
Elliot Jacobs bought a photocopying shop at 23 and turned it into a nationwide online office supplies company, UOE. He is a mentor and business coach for MBA students at London Business School, a regular guest speaker on the entrepreneurial programme at University College London, and a member of the Entrepreneurs Organisation.
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