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Budget support for small business and the green economy

24 March 2010

In today's budget, the Chancellor has announced the creation of a new statutory Small Business Credit Adjudicator to help SMEs that need access to credit. The Adjudicator will work closely with a newly enhanced Business Link Financial Intermediary Service, in order to ensure that SMEs are treated fairly when applying to their bank for finance, and will have statutory powers to ensure that the judgements it makes are enforceable.

There is evidence that companies are often unaware of the full range of financing channels and how best to access them. The Department for Business, Innovation and Skills (BIS) will take the lead to increase awareness of the diverse sources of finance available, working with companies, Business Link, the Association of Corporate Treasurers, and the industry.

A temporary increase in the level of small business rate relief will also be funded, so that eligible small businesses occupying properties with rateable values up to £6,000 will pay no business rates for one year from October. In addition, small businesses benefiting from the rate relief taper (rateable values up to £12,000) will receive significant reductions. It is estimated that over half a million businesses across England will benefit, many by well over £1,000. Around three quarters of all small business units, two thirds of smaller shops and over half of offices and smaller industrial premises will qualify if occupied by an eligible business.

The government has also signalled that it will work with business to design a practical and competitive regime for patents to support the UK's strengths in innovative industries. This will include looking at how to identify and value embedded patent income and how to give relief to acquired patents. In addition to patents granted after legislation is passed in 2011, the consultation will also consider how to include patents not yet commercialised at that point, and how the regime will apply to equivalent overseas patents held by UK companies. Consultations with business will be undertaken during the summer.

On environmental issues, the Budget announces the establishment of a Green Investment Bank operating on a commercial basis and involving both public and private sector capital investment in the low-carbon sector. The government will start by investing up to £1 billion from the sale of mature government-owned infrastructure-related assets and will seek to match this with at least £1 billion of private sector investment. Some £60m is earmarked for the redevelopment of ports that play a key role in the offshore wind turbine sector, providing facilities for sector manufacturers wishing to locate in the UK.

The Engineering Industries Association (EIA), which represents the interests of SMEs in engineering, welcomes the statement of the Chancellor that he is putting SMEs at the centre of his economic growth package but questions how the banks will respond. EIA President Sir Ronald Halstead welcomes the requirement for RBS and Lloyds to lend an extra £94 billion pounds to SMEs.  However, the banks are making it difficult and more expensive to borrow, he claims, saying they are increasing charges, reducing overdraft limits and asking for personal guarantees.
“How will the banks respond to the Chancellor and make borrowing less difficult and less expensive for SMEs? This also applies to the Small Firms Loan Guarantee Scheme and the Enterprise Finance Guarantee Scheme administered by the Banks.
“SME’s want to borrow but just cannot afford to do so until new measures are brought in by the Government to alleviate this problem.”

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