(Last Updated On: 3rd January 2012)

The latest ICAEW/GrantThornton research is out for Q4 2011.  The headlines state:

  • The BCM Confidence Index (CI) has fallen from +8.1 in Q3 2011 to -9.7 and is at its lowest level since the depths of recession in 2009
  • Turnover and profit growth expectations have now declined for two successive quarters, implying sluggish growth will continue
  • A steep drop in capital investment growth expectations – a worrying sign of continued business nervousness – and over three-fifths of UK companies are operating below capacity

A gloomy picture indeed.

The Chancellor gave his Autumn Statement in November which included the now familiar dose of austerity measures but mingled with investment in major infrastructure projects.  Some of the highlights aimed at stimulating growth in the small business sector included:

“- Business rate holiday for small firms extended to April 2013. In the following years, there will be the possibility of deferring 60% of the bill.

– R&D tax credit to help businesses invest.

– A new Seed Enterprise Investment Scheme, to encourage individuals to invest in SMEs, which offers 50% tax relief to investors

– Several new financing schemes for business including a new £1 billion Business Finance Partnership for medium sized businesses, an extension of the Enterprise Finance Guarantee Scheme to help start-ups including a one-year waiver on capital gains through the scheme, and a further £1 billion for the Regional Growth Fund over this parliament.

– Credit easing: A National Loan Guarantee Scheme, the Government will underwrite £40 billion in extra bank loans to small businesses, expected to cut interest rates on small business loans by up to 1%. The scheme will guarantee bonds sold to UK banks on condition they lend the cash to firms with a turnover of up to £50m.

– A review of employment legislation with proposed new rules around unfair dismissal to make it easier for small firms to dismiss employees, and around health and safety and TUPE rules.

– Less burdensome social and environmental goals, for example help to carbon-intensive industries like smelting to stop them relocating outside the UK.

– A youth contract for out of work young people which includes work experience and paid apprenticeships which might help small businesses take on young people.

– Government investment in Maths academies and Free Schools, which may produce more young people with the numeracy skills that businesses need.

– Government investment in 500 road, rail and other infrastructure projects to help stimulate the economy around the country”  ICAEW.

My thoughts:

With many small companies with 31st March year ends needing to pay their Corporation Tax by end of December 2011 and the self-employed to pay Income Tax by the end of this month, I hope that the banks will indeed be lending.

The enhancement of the Enterprise Investment Scheme to Seed EIS sounds very promising. A 50% tax relief on invested monies will act as a great incentive to obtain investment from individuals. If your company is seeking equity investment, make sure you look into this scheme and include the tax relief in proposals to investors. The EIS rules can be complex so I’d recommend you speak to a qualified accountant.

I look forward to seeing more work experience and paid apprenticeships coming through. I’ve seen businesses take on employees under previous schemes where the cost of the employee was subsidised for a number of weeks/months. The success of these schemes is dependent on finding the right person for your business and spending the time training them upfront.  I’ve always found that as long as the person is willing to learn and has a strong work ethic, then they can be successful.

I am cautious over proposals for less burdensome social and environmental goals. I agree such regulation should not be burdensome, it should instead be effective.

My last comment is on investment in Maths Academies and Free Schools.  I’ve spent quite a bit of time in the classroom over the last year as a facilitator for Magnified Learning.  I’ve seen a variety of maths skills from some who needed help with decimal points to those who could do percentages in their head well before I could.  I agree investment in numeracy skills is needed, but I hope it includes building confidence with numbers. I often hear ‘I just can’t do numbers’ or ‘I freeze as soon as it comes to numbers’, from both adults and young people.  Perhaps I’m just biased as I’m an accountant, but numbers don’t need to bring up fear, there are lots of tools which can take away the pain.  Most mobile phones have calculators, and all computers have spreadsheets. It just takes a bit of confidence to give numbers a go!

So in conclusion I am hopeful for 2012 as long as we remember to support local small businesses and I wish you all a successful 2012.

Leave a Reply

Your email address will not be published.