Budget 2017: Creative entrepreneur’s reaction. A few positives but not enough support for small firms
Ellen Green, managing director of Bristol-based Blue Badge Co, which makes design-led independent lifestyle products and travel aids, said the Chancellor could have offered more support to small businesses in last week’s Budget.
“While the Chancellor announced some measures designed to please small businesses, such as holding the VAT threshold at £85,000, there was little in there to proactively support UK SMEs at a time when many are facing big challenges,” she said.
“Recently, small businesses have had to adjust to rising business rates, increases in minimum wage and rising auto enrolment in pensions. With inflation rising, we will see a slowdown in consumer spending, combined with persistent uncertainty over Brexit.
“One piece of really good news for small businesses was the decision not to reduce the VAT threshold. This would have added an extra burden for struggling small businesses, creating an uncompetitive market for independent companies who previously had not needed to add VAT to their prices.
“There were also positive moves on the Enterprise Investment Scheme (EIS), which encourage investment in high risk budding enterprises. We were pleased to see the Chancellor doubling the EIS investment for knowledge investment firms while taking action to ensure the schemes are not used for low-risk capital preservation.”
However, the announcement that the main research and development tax credit (RDEC) will go up from 11% to 12%, will principally benefit larger companies making research and development claims, rather than smaller innovative companies.
Blue Badge Co has grown its workforce significantly over the past three years and the cost of employing people in the UK continues to soar, said Ellen.
“Yet the economic reality is that real incomes are falling, so the increase in National Living Wage and income tax threshold, while they will be welcomed by employees, are only just above the level of inflation.
“SMEs are also indirectly affected by many of the other issues, such as housing, as staff need affordable places to live near their workplaces. Most of my staff are struggling with the cost of both renting and buying houses in Bristol, after a boom in prices in recent years.
“Young people simply cannot afford homes. The housing market desperately needs transformative change. Let’s hope that the £44bn investment and planning reform, paired with investment in transport links, will go some way to boosting housebuilding in high demand areas. The abolishment of stamp duty for first-time buyers is the right move to get young people on the housing ladder.
“So there are some positive steps but these will not make the next 12 months any less challenging for the vast majority of UK SMEs.”