It was always likely that the Chancellor would devote a proportion of the Budget to outlining government plans for stimulating business growth and development as the economic recovery begins.
A seemingly enduring problem for many businesses during and after the credit crunch has been securing finance.
The Chancellor announced that, where he has leverage over the banks, he would apply it in the case of RBS and Lloyds, both of whom have benefited from substantial financial help from the taxpayer. Between them, the banks will be lending upwards of £105 billion to both homebuyers and businesses over the next 12 months. Some £41 billion of which is to be earmarked for small business borrowing.
A new credit adjudicator is to be set up in order to fast track complaints from small firms that believe they have been unfairly refused credit. The adjudicator will be given statutory powers so the judgments handed down can be enforced.
To tackle the issue of the funding gap that exists between banks and investment companies, and into which many smaller firms fall, the government is to create a Growth Capital Fund. The fund will help to channel both private and public investment into fast-growing businesses that are looking for capital of between £2 million and £10 million. The government has already set aside £200 million for project and is planning to raise the total fund to £500 million through contributions from the banks and investment companies.
A new national investment corporation – UK Finance for Growth – will be established to oversee the government’s £4 billion portfolio of business support funds.
HMRC will continue to offer firms that are struggling to pay their taxes access to the Time to Pay scheme. The scheme allows businesses in temporary difficulty to negotiate an extended timetable for settling their tax bills. The taxes include VAT, corporation tax, income tax, NICs and PAYE payments. However, HMRC appears to be tightening its scrutiny of the scheme. Businesses that wish to defer payment of tax bills in excess of £1 million will be required to provide an independent business review to support their case. The new requirement could come into effect as from April 2010.
The government has said that in future, when consulting on new business regulations, doing nothing will be one of the options available. The government will also consider whether it should introduce a benefit to cost threshold for new regulation, and whether it should conduct an affordability analysis as well as a cost-benefit analysis. Departments will work with regulators to identify and review regulations that could be simplified.
Skills and innovation
A £35 million University Enterprise Capital Fund will be used to strengthen links between university innovation and the commercial development of those innovations by spin-off companies. A one-off £270 million payment to universities will help provide 20,000 more places for students studying science, mathematics and engineering.
An extra £84 million has been set aside for road repairs, and £250 million for improvements to motorways as part of the Managed Motorways programme.
The Budget heralded the arrival of a Green Investment Bank. The government will invest £1 billion in the bank, the money raised by the sale of assets, with £1 billion of matching private sector investment. The bank will focus on supporting green, low carbon projects, particularly in the energy and transport sectors.