Autumn Statement 2015: Enterprise Review
UK’s 2015 Autumn Statement strengthens the position of small business enterprise but more support is needed
The UK government’s Autumn Statement, published on November 25th, announced several strategic initiatives to promote the growth and sustainability of small firms. The government’s message of support was clear, however many small business owners will struggle to feel the benefits, raising questions if enough has been done.
This week George Osbourne announced severe cuts to UK spending but offered notable support to small business enterprise through investment and policy change. Priority was placed on the potential of small firms, which account for 99% of business and 48% of employment in the private sector, as a source of significant potential growth.
Key announcements include an extension of the small business rate relief, greater control of business rates for local authorities, a major increase in the transport budget and £400m allocated to a ‘Northern Powerhouse’ investment fund.
Critical support came from a yearlong extension of the small business rates tax relief programme, effecting 600,000 enterprises across the country, offering tax breaks to businesses with operating on low value properties. In addition to creating financial space for small firms to develop such breaks contribute to a culture which supports start-up activity by making entrepreneurial ventures more financially accessible.
The positive impact that the initiative will have for many small business owners is clear, yet in our experience working with thousands of small firms and start-ups, focusing the relief on property rates will leave many without much needed help. Businesses are increasingly operating without occupying a distinct property, with the internet disrupting tradition and growing an increasing number of alternative options for commerce. Cultivating a more supportive environment for entrepreneurs there needs to be a move away from the expectation productive businesses will follow past patterns and introduce policy that will extend support to this group of wealth-creators.
The most promising initiative is the power handed over to local councils to determine business rates. Allowing mayors and council’s the power to lower business rates to increase the desirability of specific areas to businesses and promote regeneration could have a huge impact on the landscape of the UK economy. Encouraging a responsive approach to the needs of local economies opens up significant potential for focused, relevant growth that will contribute to wider gains within communities and ultimately the UK economy.
The government has allocated £400m to a new ‘Northern Powerhouse’ investment fund, which will focus on developing an infrastructure in the North East, North West, Yorkshire and Humber regions that supports small business growth. The fund will play a significant role in the government’s ambitions to stimulate a more even distribution of wealth creation and employment across the UK. Jim O’niell, chairman of the City Growth Commission, highlighted the long term importance of developing industries in the North commenting, “The cities of the North are individually strong, but collectively not strong enough”. Whilst the investment may see small business in the affected areas grow confident that the future will be brighter, it builds on a divide that has already existed too long.