Detailed reaction from the Forum of Private Business to the Budget 2014

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“The headlines for business today are on energy policies and export. There are sizeable gains for UK manufacturers here in particular over the next few years. On export the Chancellor has thrown his weight behind getting more businesses exporting. Our membership is confident about growth but much of that growth is UK based so we needed to see such a commitment, though we will continue to work with the Treasury and others to develop even healthier export subsidies for business.
“This was a budget that offers some help to all levels of business, with perhaps a slight focus on the mid size energy intensive and manufacturing businesses, rather than the very small ones. However, it does help to tackle the cost of energy and makes good on the commitment trailed before the Budget to support those that look to invest, either in the UK – with a more extensive Annual Investment Allowance –  or abroad, with a £3bn export support budget.

“Overall, the Budget, combined with the more cost measures to help small businesses announced in the Autumn Statement, sent out a positive message to invest and grow in the year ahead.”

On export, the Government said it will overhaul UK Export Finance’s (UKEF’s) direct lending programme, doubling it to £3 billion and cutting interest rates to the lowest permitted levels to provide competitive financing that helps UK firms win contracts and expand overseas.

Mr Orford said:

“Exporting was a central theme in today’s Budget as the Government continues to encourage a balanced recovery. The package of support announced today will help UK businesses looking to export, particularly those who have struggled to secure export finance. Driving awareness of UKTI and UKEF is as important as increasing the availability of finance and the commitment to increase marketing of UKEF’s products and services is welcome.”

On apprenticeships, the Government said that the AGE grant will be extended to December 2015 to support 100,000 additional apprenticeship programmes and from January 2015 the AGE grant will be exclusively for small employers (fewer than 50 employees).

Mr Orford said:

“The Forum of Private Business is pleased to see an extension to the AGE grant to support small employers to take on more apprentices this year and in the next. This was a central ask of our budget submission; ensuring small businesses have the skills they need is essential to creating sustainable growth. Small businesses’ access to apprenticeship programmes must continue to remain at the forefront of the Government’s mind as it proceeds with its programme of apprenticeship reform.”

On R&D Tax Credits, the Government announced that from April 2014 it will increase the rate of the payable credit to loss makers from 11 per cent to 14.5 per cent. A loss making SME investing £100,000 in qualifying R&D will be able to claim a cash payment of £32,600; £7,800 more than under the existing scheme.

Mr Orford said:

“This is obviously a more generous scheme rate than previous. We are interested to see how a government can take the successful R&D scheme and apply it to export, which is where future growth needs to come from.”

On infrastructure, the Government announced an additional £140m of new funding will be made available for damaged flood defences, a £200m competitive fund will be made available for local authorities across the UK to bid for funding to repair roads, targeted support has been made available for specific areas (Mersey Gateway, Welsh Government is allowed to use existing borrowing powers to invest in the M4), some start-up support will be made available through the Regional Air Connectivity Fund for new routes at smaller regional airports and the Government has commissioned HS2 Ltd to develop proposals for accelerating the project and opening the line to Crewe by 2027 (six years earlier than planned).

Mr Orford said:

“The additional funding to repair damaged flood defences announced today by the Chancellor will be welcomed by the regions hit hardest by the recent severe weather. Similarly, funding for road repairs is good news for small companies who find their businesses hampered by roads plagued with pot holes – an issue often brought to our attention by members.”

The Government announced it will support businesses across the UK to invest and expand by doubling the annual investment allowance to £500,000 until the end of 2015.

Mr Orford said:

We are a long way from the early years of the Chancellor’s reign, when the Annual Investment Allowance was reduced to £25,000. We are overwhelmingly supportive of the doubling of the current rate to £500,000, as well as its extension, which will help any small business looking to invest. Over half of Forum of Private Business members have targeted 2014 for growth and this allowance will help support them to invest for that.”

The Government announced it will reduce business energy costs to ensure that the UK remains a competitive location for manufacturing, including capping the Carbon Price Support rate at £18 from 2016–17 to 2019–20 and providing targeted support to energy intensive industries.

Mr Orford said:

“High energy bills are a key cost weighing down some small businesses. It is particularly acute in energy intensive industries but all businesses struggle with significantly above inflation increases in utility bills. The Forum of Private Business felt there was an opportunity to tackle the Climate Change Levy for some businesses to give some savings in the short term but the Chancellor chose not to do this in his Budget this year. We will lobby for it to happen in the future. Nevertheless, this £7bn package is enormously helpful to the UK wealth generators.”

The Government announced it will make permanent the SEED Enterprise Investment Scheme.

Mr Orford said:

“The Seed EIS scheme has helped well over a thousand early stage businesses to date and we welcome the scheme being put on a permanent basis. It is important that further sources of finance are clearly signposted as businesses outgrow the finance available through this scheme.”

The Government announced better banking for businesses through opening up SME credit data to challenger banks and other finance providers, a new consultation on legislating to help match SMEs who are turned down for a loan with alternative lenders and changes to the issue of Deeds of Priority.

Mr Orford said:

“The Forum of Private Business has already encouraged the Treasury to go further on opening up credit data to all lenders by creating portable bank account histories owned by the business. However, we are encouraged with moves to see banks forced to signpost businesses to alternative lenders if they are turned down. Peer to peer financing is a rapidly growing area of finance for small businesses and one that needs greater awareness.

“The Forum is particularly delighted to see action in the area of deeds of priority. These can hold up businesses wanting to access finance away from their primary lender. This process looks as though it will be speeded up dramatically and is a key plank for encouraging businesses towards alternative sources of finance.

“Finally, allowing ISA investors to invest in peer-to-peer finance is a further solid and welcome measure to support this industry.”

The Government announced a 1p cut in beer duty

Mr Orford said:

“Any duty cut that helps small businesses is to be welcomed. However, the Government is sitting on a potentially much bigger source of help for pubs and that is reform of the Pubco model. By providing tied tenants with a market rent only option they can really boost the sector.”

Responding to the Chancellor’s Budget, Phil Orford, Chief Executive of the Forum of Private Business, said: