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Five things you need to know about the Autumn Statement

Pack away the popcorn and switch off the news, for all but the hardcore the Autumn Statement is done and dusted for another year. Whilst policy teams, newspaper editors and the opposition pore over details, the main facts are out there. So here's the main impact on small businesses, broken down for you by our policy team. 

1. Economy

Ignore the growth forecasts (revised upwards to 2.4% next year), the important bits of information are:
  • By 2019 the Government will start paying off debt – that is reducing the debt as a share of GDP. Right now, the focus is on reducing the amount we are borrowing. By 2019 we will be able to start paying back that borrowing, which is estimated to be 80% of our GDP.
  • Unemployment is expected to fall to 7% by 2015. Why is this important? The Bank of England has suggested that when unemployment reaches 7% it may raise interest rates, which means more expensive borrowing putting at risk approximately 400,000 businesses (according to some forecasters).

2. Taxation

  • Business rates capped at 2% next year
  • Small Business Rate Relief extended to 2015
  • £1000 further discount for retail properties under a certain value
  • Ability to pay business rates in smaller chunks
  • A review of the business rates system in or around 2017.

97% of businesses feel property taxation is too high so the extension to Small Business Rate Relief and the cap on business rates to 2% are both welcome but sat at the lower end of what the Forum of Private Business was asking. The £1,000 further discount for retail properties with a rateable value of less than £50,000 is a bonus we didn't expect and hugely welcomed.

With Councils freezing or capping Council Tax businesses continue to pay a higher proportion of local taxation without seeing real benefits to those taxes. The system needs a proper review and businesses need more transparency as to where their money is going. We will push for a review before 2017.

3. Employment

  • Employer National Insurance contributions are to be scrapped on 1.5 million jobs for young people
  • Additional support from the Job Centre in training 18-21 year olds.
A double policy intervention to support youth employment. From 2015 employers will not have to pay employer NICs for those under the age of 21. This will be on top of the Employers Allowance that will allow employers to save £2,000 on their national insurance bill.
 
The Government hopes by tackling both the cost of employing young people and their employability skills, businesses will be incentivised to take more on. We think they will, but would welcome your thoughts.

4. Fuel

The fuel duty freeze is working for businesses. Less members are reporting fuel costs as a primary concern, although of course it remains significant. We welcome the fact that savings have been found to further extend this freeze, saving businesses around £1200 since 2010 according to the Treasury. We are pleased they listened to the Forum of Private Business call on this issue, though of course around 60% of petrol cost is still taxation.

5. Finance

  • Plans for banks to share SME data
  • Additional funding for start-up loans
  • £250m of funding to the British Business Bank.

A lack of information on SMEs' creditworthiness is an issue we have highlighted as well as others and a real barrier to accessing finance. The Government's forthcoming consultation is a necessary next step to get ideas on how this can happen but it is the commitment to legislate in the next session of parliament which is important, ensuring action is speedy and allowing businesses to look outside of the main banks for finance.

We're also delighted to see more money for start up loans, a successful and proven policy that merits additional investment.

There was also £250 million for new programmes to specifically support smaller businesses, in addition to the £1 billion new capital allocated at last year's Autumn Statement, all invested through the Business Bank. This, together with the refocusing of Funding for Lending on small businesses, will help address issues of confidence in SMEs that they can get money to make investment.

What did you think of the announcements in the Autumn Statement? Let us know in the comments below.

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