Chancellor Alistair Darling pledged his support for small businesses with a series of measures designed to help them thrive.
In his speech to the House of Commons he described them as “the backbone of future economic growth and jobs.”
But according to Andrew Bullard, Head of Business at invoice finance specialists Cashflow UK, Mr Darling did not go far enough to help hard-pressed small and medium-sized businesses get back on track for growth.
Mr Bullard said: “These steps might help some firms but I feel the damage had already been done before the Budget.”
The Chancellor made a series of pledges in his address designed to win important business votes in the upcoming General Election.
* Eliminating business rates of up to £6,000 a year for 345,000 SMEs and reducing those with a rateable value of up to £12,000 per annum for 12 months from October
* Doubling the tax exemption on investment in plant and machinery
* Doubling capital gains tax relief for entrepreneurs
* Increasing the proportion of central government contracts given to small businesses by 15 per cent
* Freeing up at least half of a £94bn credit package from Lloyds TSB and RBS which will be mainly directed at SMEs
* Extending the Time to Pay initiative to help smaller companies spread out their tax payments further
But crucially Mr Darling declined to back down on the one per cent increase in National Insurance Contributions (NICs) due from April next year.
Mr Bullard added: “The increase in NICs will discourage businesses from recruiting and growing, therefore stunting economic growth.
“I would urge the Chancellor to think again about this increase if he really wants small firms to drive the UK economy into the future.”
In addition, although the chancellors proposal for state-owned banks to free up credit for businesses can only be seen as a positive, Mr Bullard was also sceptical about how quickly this will filter down to firms and how far it will go in easing the banks current reluctance to lend to small businesses.
“Being able to access credit is crucial to the survival of many firms and for the recovery of the economy as a whole,” he said.
For further advice from Cashflow UK please call 0800 132 156 or see the website www.cashflowuk.com
Cashflow UK is the country’s leading brokerage specialising in factoring and invoice discounting, known collectively as invoice finance. It works in partnership with businesses of all shapes and sizes to improve their cash flow and help them achieve their full potential. Trading since 1993, Cashflow UK has a specialist team with more than 60 years combined market experience and has strong relationships with over 50 finance providers.
For more information see www.cashflowuk.com or call 0800 132 156.