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Autumn Statement: Small Businesses Need to See Real Benefits From These Announcements

Posted: 29/11/11 17:37

Much of what the Chancellor has said today in his Autumn Statement didn't come as a surprise as it was so well trailed over the weekend. The main announcement that will benefit small businesses will be the National Loan Guarantee, or credit easing scheme.

This should allow businesses to get cheaper finance, but we are concerned that it is still going to be run through the banks and remains to enhance their position. The banks already hold more than 85% of the small business banking market and so we wanted to see measures that would open up competition, not just credit.

Further, figures released from the Bank of England this afternoon showed that in the three months to August 2011, lending to small businesses fell by 2.1%.

This hardly comes as a surprise when the main banks have missed their Project Merlin targets to small firms, but is a clear indicator that regular health-checks on how the National Loan Guarantee Scheme is working will be needed.

The government is due to give its response to the Independent Commission on Banking report before the end of the year so we hope that the recommendations to increase the level of competition in the banking sector is addressed there.

However, the seed enterprise investment scheme should help start-ups and growing businesses find finance from angel investors and so open up new channels for them. And, with the Office for Budget Responsibility forecasting that unemployment will peak at 8.7%, now is the time to ensure that more people can set up if they have a viable plan.

Plans to consult on changes to employment law - announced last week by Vince Cable - are welcomed. It will help to remove some of the risk that small firms feel about taking staff on. It is measures like this which may allow a business to take on its first member of staff.

One of our members has grown his business and so needs someone else to help him to be able to cope with the demand. He is really excited about that, but had waited for some time as he was also apprehensive about the cost and the admin surrounding it.

So, with unemployment at more than 2.6 million, we were disappointed that there were no really ambitious plans to help incentivise job creation, like extending the current Work Trials scheme - something which the FSB estimates could create around 46,000 extra jobs.

Overall though, the Statement does go quite a way to help businesses manage their overheads. Cancelling January's fuel duty rise will help in the short-term, but in the longer-term businesses need help with the sheer volatility of the price of fuel at the pumps. We believe that the government could introduce a true fuel stabiliser mechanism, to lessen the impact and give certainty to enable small businesses to plan.

And, businesses on the high street will be pleased that the small business rates relief (SBBR) will be extended for a further six months. Had SBRR not been in place for the last couple of years, small firms would have seen their rates bill rise by 10% and many would have gone out of business.

Boosting infrastructure projects will be good for UK-plc but what we need to see now is that small firms have access to the contracts to provide the work for it. This will not only help the government to meet its target of 25% of contracts going to small and mid-sized businesses, but also give small firms a real boost.

Small businesses need to see real benefits coming from these announcements - more finance available for them to grow, as well as more choice; better access to public sector contracts to boost their bottom line; and the ability to take on staff so they can help to get the economy out of the doldrums and flying high once again.