Wednesday saw Chancellor George Osborne deliver his first full budget, and where last June’s was focused on deficit reduction here he focused strongly on investment, and private sector growth as a key strategy to drive Britain out of the financial crisis.
The largest share of his hour long speak was given over to four key areas for supporting businesses:
- Ensuring Britain has the most competitive tax code to encourage international investment
- Ensuring Britain was the best place in Europe to start a business
- Ensuring Britain had a balanced Import and Export strategy
- Ensuring Britain had a highly trained workforce
Osborne stressed the need for Britain to have a far simpler tax code, making it easier for employers and employees to understand. To that end he is starting consultation on the merging of Income Tax and National Insurance to provide a single tax.
It will be interesting to see how this is received – the new 32%/52% tax rate might be perceived as an increase. Osborne has gone on to abolish a further 43 complex reliefs and stripped out £350m of business regulation that hold businesses back. Small businesses of less than 10 employees, or other genuine start-ups will have a moratorium on new regulation for three years – bringing more certainty to the process of setting up a new business.
Corporation Tax was due to be reduced by 1%, but this budget reduces it by 2% for 2011, and a further 1% a year for three further years, leaving Britain with the lowest Corporation Tax in the G7 at 23%.
Osborne declared to an excitable house “Britain is open for business!”
The Government has stressed before that Enterprise and especially new startups are essential to driving Britain forward. We need to innovate our way out of the Financial crisis. The budget announced an increase in the Enterprise Investment Scheme, giving investors in qualifying businesses 30% relief on their Income Tax up from 20%. This helps our VC industry to plough more resources into the start-up market.
Osborne announced that Entrepreneur’s Relief will be doubled to £10 million from April 6th. Those that invest their money in new Companies can benefit from this reduced Capital Gains Tax to again spur on new business investment.
The Government will be setting up 21 new Enterprise Zones – further information to follow tomorrow, but these will be based in urban areas – one of the first will be in Bristol. The Enterprise Zones will have enhanced Capital allowances, excellent broadband, and provide a hub for new businesses to get underway.
Education is key to developing a successful workforce. Osborne announced 12 new technical Colleges, with funding for 24. 100,000 places for work experience were announced, along with 40,000 new apprenticeships. In the UK, he said, less that 1 in 10 Companies run some form of apprentice scheme.
As a business owner I’m pleased to see the focus that has been put on business, and start-up businesses especially in this budget. SME’s are the core of the country’s economy and stimulating the start-up and growth in this area has to be an essential ingredient to any deficit reduction plan.
I love the sound of the Enterprise Zones. Were we starting today then I would definitiely be looking at basing Keboko in one. Everything that we hear about TechHub in London is that it creates a vibrant start-up community where knowledge and passion can be shared out. If the Enterprise Zones can bottle this up then they will be in a good position.
Funding of new businesses is essential. Great ideas go no-where without the cash flow to support them. So I’m excited to see that investors now get greater relief on their investments.
And for me I am especially pleased with the focus on education and the new technical colleges. In the Cloud Computing world there is a dramatic shift towards new ways of delivering technology, and Keboko is one of many Companies on the lookout for Consultants and Developers who have skills in these new development languages.
Many young people will never have heard of Public Cloud, or Salesforce.com, or Google Apps, or Apex code, or Google App Engine. If we can encourage work experience placements and apprenticeships to get young people into the work place and understand some of the new job roles available then we’ll have a better chance of growing our businesses quicker.
What were your thoughts on the budget? Do you feel they go far enough to help businesses grow faster?