Smaller Firms Welcome Autumn Statement

The much-anticipated Autumn Statement from the Chancellor has revealed a mixed bag of measures for the ailing UK economy.

One development welcomed by Phil Orford, Chief Executive of the Forum of Private Business was the announcement of 50% income tax relief and a one-year capital gains holiday for those investing in start-ups under the Seed Enterprise Investment Scheme (SEIS).

However, he said the Government should have acted to encourage private lenders too.

Mr Orford said: "Small firms need a range of funding options, and equity finance is certainly one of these, but lending at interest remains their preferred route by far."

Mr Orford added: "I think we have seen some tentative steps towards easing fuel duty and business rates, but we need to go much further and introduce real tax reforms in order to help them to grow and create jobs.

"The Government is extending the rate relief holiday by six months and allowing businesses to defer 60% of the RPI-linked business rate increase in 2012-13. This will help but it is not the freeze we asked for.

"Further, scrapping January's 3p fuel duty rise completely and reducing the increase scheduled for August is good news but we wanted all fuel duty increases scheduled for 2012 to be postponed," he said, adding there were a range of other announcements such as welcome reforms to employment law.

These were including delaying implementing pension auto-enrolment and proposals to give business owners more freedom to make staffing decisions with less fear of being taken to a tribunal, and much-needed infrastructure investments.

"Education and skills was also high on the agenda. This will be a crucial area for growth - when firms are in a position to recruit in earnest again they will need a much stronger talent pool of skilled, young workers," the smaller firm's representative said.

"We have also seen procurement proposals and incentives for mid-caps, but very little for micro businesses, which make up the majority of small firms in the UK and require special attention.

"Given their importance to plans for economic growth, this was an omission.

"The Chancellor has taken some steps in the right direction but he could have made much bolder strides to get Britain trading by providing more support for the smallest businesses," he concluded.

Pay Capped

George Osborne also announced public sector pay rises are to be capped at 1% for two years, and other bad news was that the number of public sector jobs set to be lost by 2017 has been revised up from 400,000 to 710,000.

He said economic growth will be lower, and borrowing and unemployment higher, than forecast in his Budget in March.

Outlining his plans to MPs on Tuesday, based on economic forecasts from the independent Office for Budget Responsibility (OBR), Mr Osborne said the UK economy was now forecast to grow by only 0.9% this year - compared with 1.7% forecast in March and 0.7% next year, down from the 2.5% forecast in March.

He said the forecast from the OBR were down to the eurozone crisis, a hike in global commodity prices and a new assessment that the UK's economic boom was bigger and the bust deeper than previously believed.

But he said, because debt interest payments had dropped, the government would be spending £22bn less over this Parliament on them than predicted.

The chancellor conceded he would not now be able to eliminate the structural deficit and see national debt falling by 2014/15 as predicted.

The structural deficit is now predicted to be eliminated by 2015-16, pushing it beyond the next general election.

Other plans include a bid to raise the state pension age from 66 to 67 would be brought forward by up to ten years to 2026, to save £59bn in the long term.

The child element of the working tax credit will be uprated in line with inflation, but other tax credit increases will be restricted.

But in April there will be a £5.30 increase in the basic state pension to £107.45, in line with the 5.2% inflation rise in September.

Pensioners receiving pension credit will also benefit from an increase worth £5.35 and "working age" benefits would also go up in line with the higher inflation figure - contrary to earlier reports - which he said would be a "significant boost to the incomes of the poorest".

Other announcements included an increase in the bank levy to 0.088% from 1 January and a 50% discount for social housing tenants who want to buy their own home - the proceeds of which would go towards building new affordable homes.

There's also a £5bn plan to improve national infrastructure over three years and a further £25bn could be spent in future years

A £1bn scheme to subsidise work placements for the young unemployed was confirmed and the mortgage indemnity scheme to help 100,000 people get onto the property ladder as well as a £500m housebuilding plan in England.

(BMcC)