Our editor unravels Osborne’s orations to explore how key measures will play out for business
There were some encouraging measures for SMEs and mid-market companies in yesterday’s Autumn Statement, including the 2% cap on business rates that will kick in from April (down from 3.2%), the extension of the Small Business Rate Relief, and a £1,000 discount on business rates for small high street retailers. The reoccupation relief for business that situate themselves in empty high street units is also a good way to try to rejuvenate our battered high streets.
And at least this government seems to be trying to tackle the terrible challenge of almost one million unemployed 16-24-year-olds win this country.
There will be no employer’s NI contributions for anyone under 21 – a fantastic incentive in particular for SMEs to create jobs for young people. An employer would save more than £1,000 on a young employee on a salary of £16,000.
There will be a further £40m provided to create 20,000 more higher apprenticeships over the next two years, which is great news. The coalition has unforgivably screwed young people on student fees, but at least this will enable more school-leavers to enter the professions and other industries even if they can’t afford a degree.
Yet government still has a long way to go in aligning education and the working world. Apprenticeships are a great beginning, and it’s great that 1.5 million of them have been started since the coalition government came to power. But more needs to be done.
In Securing Britain’s Talent, our recent publication on the UK’s talent and skills challenges, London’s business leaders wrote time and again that government needs to create stronger links between education and industry; that it needs to consult better with businesses about how to get young people into meaningful employment.
To create a talent pipeline that prepares the country for the next two or three decades rather than just the next two or three years, the government would be wise to spend more time listening to the many business leaders who are passionate about making our education system better at preparing young people for the working world.
We all know that exporting has the potential to be a driver of growth for small and medium-sized companies, so any measures to provide more support to businesses looking to export more (or at all) are always welcome.
The Chancellor admitted that we are still not exporting as much as we should for economic growth. He also underlined our over-dependence on Europe and North America as buyers of our exports. The euro area accounted for 39% of UK exports last year, and the US for 17%, and it’s important for British businesses to broaden their markets. Exports of goods to non-EU countries have risen by around 30% since 2010, but we must increase this to compete internationally in years to come.
The government provided £4.3bn of export finance for UK exporters in 2012-13 – long may those sums continue. It will increase spending on promoting and supporting the Made In Britain brand and British businesses in emerging markets. That is essential if British companies are to stand a chance of being attractive to foreign consumers and businesses and capitalise on the Olympic opportunity. The fuel duty freeze will also help exporters.
It’s a shame there was no mention of the excellent EIS and SEIS investment schemes, which are fantastic incentives for investing in SMEs and which are hugely highly lauded by those who know about them. They are woefully under-publicised by government. Extensions of both schemes and more financial support for promoting them would have been a smart move to chime with the other measures designed to support SMEs.
Rather than whacking up the bank levy again, it might have been nice to hear a mention for the blossoming alternative finance sector as a key way to create more competition in the financial industry, and a credible way finance growing businesses.
For London generally, the introduction of capital gains tax on the sale of homes under foreign ownership may take a bit of heat out of the highest reaches of the London property market. But you’d still be right to fear the disastrously bubbly effect of Help to Buy, which is flooding the market with yet more demand at a time when housebuilding is still critically low. Homebuilding might be rising at its fastest rate in a decade, but we need 50,000 new homes in London every year according to estate agent Savills, and there are currently little over half that amount being built in the capital. This is a grave issue for people on all incomes living in London. The London housing shortage also has the dangerous knock-on effect for businesses of pushing workers out of the capital and so out of reach, and of inflating wages as the cost of living continues to escalate with property and rental prices.
All in all, not a bad Autumn Statement for London SMEs and mid-market companies, even if there were some troubling oversights. But the government still has plenty more to do to grow the economy as a whole. And it will need to do all it can to support growing businesses to have any hope of bringing us back to pre-recession prosperity.