In the Chancellor’s own words on his new Twitter account this morning, this was to be a budget that “tackles the economy's problems head on helping those who want to work hard [and] get on". Amongst his first announcements was an admittance that growth forecasts had been cut, with just a 0.6% increase in GDP expected in 2013. This is half of the prediction (1.2%) made in last year’s Autumn Statement. But what was in George Osborne’s red box to help small businesses and SMEs assist with economic growth? The SBF blog summarises the key points that will affect the UK’s hard-working small businesses, which employ more than 14 billion across the UK and contribute greatly to GDP:
Employer Allowance
Among the measures announced was a brand new £2,000 per annum Employer Allowance, tasked with reducing contributions made by employees to National Insurance costs.
This is to apply to all businesses of all sizes.
Corporation Tax
Corporation tax is to be reduced to 21% in April 2014, before falling again to 20% in 2015. The rate paid by small companies and the overall corporation tax rate will then be aligned from 2015.
Red tape cuts
By 2015, more than 3,000 regulations affecting businesses will be abolished or reduced.
Scrapping of planned fuel duty hike
A planned fuel duty increase was scrapped completely, so meaning the overall rate paid by consumers was frozen.
Infrastructure investment
An extra £3bn a year will be spent on infrastructure improvements from 2015. This equates to £15bn being spent on various roads, railways and power stations projects over the next decade.
Reaction
The Federation of Small Business (FSB) indicated that this was a budget that would improve confidence amongst SMES and help growth, if small businesses capitalise on the positive measures announced. John Walker, National Chairman of the FSB, said: “The FSB asked for a budget for small businesses and this is what has been delivered. This Budget opens the door for small firms to grow and create jobs." “The National Insurance Contributions cut goes beyond what we were asking for and we are pleased to see the 3p fuel duty rise due in September completely scrapped,” Walker exclaimed.The British Chambers of Commerce (BCC) felt that measures were on the whole positive, but had possibly come too late. Director General of the CBI, John Longworth, said: “We need urgency, scale and delivery today.” “Business will appreciate many of the Chancellor's measures, and his personal commitment to fiscal discipline, enterprise and infrastructure, but will wish he had been even more radical in the pursuit of growth,” he concluded. The Confederation of British Industry (CBI) was especially happy with the chancellor’s corporation tax cut, with John Cridland, Director General, saying: “An extra one penny cut in corporation tax will also make the UK one of the most internationally competitive locations in which to do business.” The decision to cancel the planned hike in fuel duty was also widely welcomed, although the point was made that families and small businesses will be no better off. Spokesman for FairFuelUK, Quentin Wilson, said: “This is welcome news for families and businesses across the UK as far as it goes. It is a sign that the Government is listening, but there will be widespread disappointment that the cancellation of this duty rise gives them no immediate relief from climbing fuel prices”.The Road Haulage Association said of the scrapping of the fuel duty rise: “We urged a “no increase” announcement and the Chancellor delivered – although we would have liked him to go further by cutting diesel duty.” “This is another massive achievement for the road haulage industry and the FairFuelUK campaign, which the RHA co-founded three years ago. We have transformed the debate around fuel taxes”, RHA Chief Executive Geoff Dunning concluded.