Chancellor of the Exchequer George Osborne yesterday delivered his Autumn Statement, which appears to offer design businesses some opportunity for stabilisation and growth against the threat of possible recession in future years.
With a continued aim of reducing national debt, more spending cuts have been announced, with the intention that savings can be made in the short-term to fund infrastructure investment and measures taken to help businesses cope with higher inflation. Several of these measures will directly effect design businesses.
A National Loan Guarantee scheme has been introduced which will reduce the rates businesses can borrow at.
‘New loans and overdrafts to businesses with a turnover of less then £50 million will be eligible for the scheme – so it stays focused on smaller companies,’ says the Chancellor. A pot of £20bn has been set aside for this.
It is estimated that a one per cent reduction in the rate of interest being charged to these companies will be made.
Elsewhere, a construction fund for projects which have planning permission but don’t have finance has been announced, and a huge concession made to engineering in the National Infrastructure Plan, which has acknowledged 500 projects including road, rail and broadband improvements.
There are also plans to make it easier for UK firms to compete for Government procurement contracts, and plans for above-the-line research and development tax credits in 2013.
Perhaps most potently for anyone looking to invest in a new design business, income tax relief of 50 per cent is being offered to investors.
Reaction from the business world is broadly positive. The Confederation of British Industry says, ‘The National Loan Guarantee scheme is a necessary pre-emptive strike to safeguard bank lending to SMEs. With the pressure on bank balance sheets, this is practical and immediately available help.’
Ian Cochrane, chairman of Ticegroup, has identified the proposed enterprise zones as particularly interesting.
This is the idea that 100 per cent capital allowances are made available in six Enterprise Zones – The Black Country, Humber, Liverpool, the North East, Sheffield and the Tees Valley.
Cochrane says, ‘There are lots of breakaway consultancies setting up at the moment – maybe through disenchantment from lack of personal opportunity, no bonus, no share growth, all of which is making people look to set up their own business. It could be interesting if there are no business rates, especially with the super-fast broadband they’re promising.’
Osborne announced, ‘The Government is funding plans to bring super-fast broadband to 90 per cent of homes and businesses across the country, and extend mobile phone coverage to 99 per cent of families.’
Creative industries accountancy specialist Kingston Smith, W1 has focused on the importance of Seed Enterprise Schemes.
Kingston Smith W1 tax principle Mike Hayes says that for start-ups who haven’t begun to trade, the ability to raise up to £150,000 of capital for an investor to receive 50 per cent income tax relief will be very appealing – especially when its so difficult to get funding from the banks.
Meanwhile Foster + Partners which recently unveiled plans for a South East airport hub, has welcomed the Chancellor’s commitment to aviation.
The Chancellor states, ‘We will explore all the options for maintaining the UK’s aviation hub status, with the exception of a third runway at Heathrow.’
Lord Foster says, ‘We welcome the government’s decision to consider airport capacity as part of the National Infrastructure Plan. We believe that the economic case for the Thames Hub is compelling as Britain is already losing out to expanding European hubs. Our proposal comprehensively addresses the infrastructure needed to maximise the advantages of a new airport.’