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March 23, 2011

Budget “a reasonable stab at growth” for small firms, say business groups

Business groups have criticised the Government’s so-called “enterprise Budget”, saying the announcements would do little to encourage people to start a business and will only help small firms in the short term, writes Clare Bullock.

National Federation of Enterprise Agencies chief executive, George Derbyshire said this was a “reasonable stab at a growth strategy” as small-business owners didn’t expect a lot due to Government spending cuts.

“I didn’t see anything to help those people on the brink to make a positive decision to start a business,” he said.

Commenting on the plans to launch 21 enterprise zones in deprived areas to encourage start-ups, he said: “The Budget seemed to suggest that it would be up to individual Local Enterprise Partnerships to decide what their enterprise zone was. There’s no [guideline on] how big they’re going to be or how that process will happen.”

Forum of Private Business spokesman, Chris Gorman, also questioned how much the Budget would encourage enterprise in general. “It’s lacking in long-term measures. We wanted to see some more drastic changes in terms of tax and regulatory simplification, such as businesses up to a certain size being removed altogether from certain regulatory and tax requirements.”

“The Budget is broadly in line with expectation,” he added. “I think a lot of business owners didn’t expect to see anything hugely radical, but they did expect to see some concessions because it’s such a difficult time. With the threat of renewed recession, fuel prices and a very shaky consumer confidence, they expected some sort of reward for tolerating all that. It needed to be stronger.”

As predicted, Chancellor George Osborne also scrapped the planned 4p rise in fuel duty, but surprised small firms by announcing an immediate 1p cut. “It’s not a massive amount but it’s better than nothing,” said Gorman. “On a national scale it will help ease the pain that small-business owners have faced.”

However, founder of small business Red Apple Delivery, Meera Shah, said that the cut wouldn’t make an impact. “It’s going down by 1p tonight, but in some parts of the country fuel prices might have gone up by 2p since last night,” she said. “How much difference will 1p really make?”

Managing director of small business Magic Whiteboard, Neil Westwood, agreed. “I’m glad he’s addressed fuel duty, but I would have liked more – on my deliveries it’s costing me a lot more than this time last year,” he said.

Overall, Westwood said he felt that the Budget did not provide enough incentives for people to give up their jobs and start a business. He added that National Insurance (NI) was going to be increased as planned on 6 April and would remain one of his biggest expenses.