Business News

More government work to go to SMEs

Filed under: Small business — Alan @ 1:42 am

Chancellor Alistair Darling offered the last Budget of the current administration before the General Election takes place taking care to outline many attempts by the Government to balance the books while still putting forth funds to help stimulate the economic recovery.

Darling did not mention what the Labour plans spending cuts would affect in terms of education and health but instead said that the settlement after the election will be one of the hardest in the last few decades.

There were a few smaller cuts announced that affected the NHS IT system which he confirmed will go ahead as scheduled.

A few other budget points mentioned include the award of 15% of all central government contracts to SMEs which could bring in £15b worth of new business in the public sector.

Also announced was the UK Finance for Growth Investment Corporation which will be used to improve and streamline the way the government is able to offer aid to SMEs.

Other budget measures addressed was the implementation of the new Growth Capital Fund which will offer firms that are currently growing private capital eventually offering around £500m in finance.

By the end of 2010 the Government also plans to publish all contracts in the public sector online if they are worth over £20,000.

Darling also estimated to the House of Commons that the economy will continue to grow anywhere from 1% to 1.5%this year with a larger growth ration in 2011 of somewhere between 3% and 3.5%.

The Chancellor gives, but also takes from SMEs

Filed under: Small business — Alan @ 6:55 am

Leaders of many of Britain’s small companies have stated that the national insurance rate increase attacks jobs and will hinder the growth rate of Britain as it comes out of the recession.

The FSB or Federation of Small Businesses stated that Chancellor Alistair Darling has effectively taken away with the same hand he gave out after he deferred a one pence increase on SMEs corporate tax, but then hiked the contributions of small businesses to national insurance by about half a percent.

The move to defer the corporation tax will help out about 850,000 SMEs, but the move to increase national insurance will hurt companies and increase the rate of unemployment since companies will not be able to afford new or possibly current employees.

Chairman of the FSB, John Wright, stated that the new tax will hurt the UK’s employment rate and that since the unemployment is on the rise it is not excusable for the government to use national insurance tax hikes as a way to get revenue.  Instead, Wright stated that SMEs should have been rewarded for hiring new employees to encourage job creation.

The new point hike is on top of a previous rate increase from 2008 that affects all SMEs, their staff, and those who are self employed in Britain.  Workers who earn less than twenty thousand pounds a year will be exempt from the tax hike however.

Darling also announced in his pre-Budget report that the Enterprise Finance Guarantee scheme will be offered for another year.