Comment: No magic bullet for business in this autumn statement
By Elliot Jacobs
As a business owner, I am fully aware of the pressures of keeping my business going through the recession. I and my fellow entrepreneurs all know that the economy is in dire straits and is taking a while to recover.
What we need to do as business owners is cope with the rising prices and squeezed budgets – and to find ways of keeping our business solvent and even thriving. And we would all agree that support from the government for small and medium sized businesses is crucial if the country is going to pull itself out of the economic doldrums.
There were a few positives this afternoon. The cancellation of the 3p fuel tax increase planned for January will make a huge difference to many businesses. I run an online office supplies company, and we rely totally on road haulage to keep our business moving, both on the supply side and for our deliveries. So any increase in fuel costs has a major impact – and though oil prices have been falling, it hasn't made a huge difference to the cost of petrol. This was good news.
The reduction in corporation tax coupled with increase from £25,000 to £250,000 in the annual allowance for investment in plant will also make a big difference, because businesses will be able to invest their tax savings in new machinery. The only problem is that businesses need to be making money before they can invest it – which in this climate is tricky.
It was good to see that the chancellor is tightening up the rules so international corporations can't avoid tax in the UK. Hopefully this will level the playing field for UK businesses – but it remains to be seen whether the HMRC tax avoidance experts are smart enough to stay one step ahead of the tax avoidance experts at Google, Starbucks and Amazon.
But there is no magic bullet that will make our economy boom – we know it and the chancellor knows it.
All he has been able to come up with for business is a sensible set of proposals which won't change the world. But they won't cause any damage, either.
What are most significant are the measures he didn't take. It was widely rumoured that he was planning to increase VAT – that would have been catastrophic for business.
But there were some steps he could have taken which would have been a big boost for businesses.
Firstly, he could have agreed to review business rates on the original planned deadline of 2015 not wait 2017. The current rates were set at the height of the boom, and they're causing businesses real problems. If the chancellor had reversed this decision it would have made a huge difference to high street retailers particularly.
Secondly, to postpone the introduction of pension schemes to smaller businesses for 18
months. By forcing small businesses to introduce pension schemes, the government is adding another burden in both costs and paperwork, just at a time when we need to preserve all our energies to keep our businesses going.
And it would have been great to see some real innovation, some radical incentives to increase employment rates. So he might have created a discount on employers' national insurance contributions for any business which took on additional staff.
While he did offer some relief by extending the temporary doubling of small business rate relief scheme until April 2014, that's not going to make a whole lot of difference to businesses in London where rates are high and not really included in the scheme as a result.
What he really could have done with was to add London weighting to the scheme to give a fair support to businesses in the capital.
So my general assessment would be: this was an encouragement for business, but it is not going to radically change my or anyone else's decisions about what they do with their businesses.
Elliot Jacobs is a member of the Entrepreneurs Organisation, and is managing director of www.uoe.co.uk, an online office supplies company.
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