Federation of Small Business (FSB) members are pleased with the confirmation of plans to reduce business rates by £6.7 billion, and the decision to make rural rate relief fairer for small firms.
We welcome the government responding to our calls to increase investment in local roads and digital connectivity to help rebalance the UK economy.
We also back the £2 billion per year boost for research, development and innovation, plans to improve management skills, the £400 million to improve small business finance through the British Business Bank, and the doubling of export finance.
The latter is vital as we need to reach new markets in the wake of the Brexit decision.
The statement is modest and for the medium term. There will need to be stronger fiscal interventions to boost the economy next year, with the prospect of weaker longer-term growth looming.
Small firms want to grow, export, innovate, recruit and be more productive – and they need to know as soon as possible the framework they will operate in.
We also call for ministers to act to bring down the costs of doing business. The Autumn Statement moves to tighten conditions for the self-employed must also be followed up with help to give them parity in benefits so that the UK’s army of genuine self-employed people will continue to grow.
The government’s confirmation to permanently increase business rates relief will provide crucial support for small businesses. This will take 600,000 small firms out of the rates system altogether and will mean lower bills for many thousands more.
FSB has campaigned on this issue for many years and we are delighted that from April 1st next year small businesses will start to benefit. We are particularly pleased to see that the government listened to our calls to give rural businesses 100% relief on rates.
National Productivity Investment Fund
The new £23 billion fund announced will help drive important improvements in productivity across the UK. Increased investment in transport, digital communications, housing and research and development (R&D) are all key priorities for businesses.
Many small businesses view problems with the local road network as a key barrier to growth and this is especially true in rural communities.
The £1.1 billion in additional funding for the upgrade and maintenance of roads outside the Strategic Road Network should help deliver real benefits to small firms.
This is a key win for our members who have consistently raised this issue. A further £220 million set to be invested in pinch points on the motorway network will also address frustration and delays.
The announcement of £1 billion funding is an important step in the right direction to improve digital connectivity with three in four (75%) small firms saying broadband is vital to their business. This investment should be targeted towards small businesses and business parks to have maximum impact.
This investment is a welcome and timely development, and should help lead to faster broadband speeds across the UK. Beyond this investment, it is also important that the new Universal Service Obligation includes business premises to help those in the most hard to reach areas. A strategy is now needed to help businesses take full advantage of the digital economy which will help improve productivity and growth.
Research & Development (R&D)
We welcome the extra £2 billion a year by the end of this Parliament for supporting R&D. It is essential that this investment addresses the challenges specific to small businesses trying to develop their ideas and successfully commercialise them.
R&D tax credits are an effective incentive for innovation in small businesses. However, only a minority access them so FSB is keen that the review focusses on much greater take up from the small business community.
To date, Innovate UK has been an effective champion for small business innovation. We are pleased to see that alongside research councils, it will be managing the new Industrial Strategy Challenge Fund.
Freezing fuel duty will provide a significant boost to small business confidence and stability and will be universally welcomed by our members. In recent research, 93% of small firms said cars are important to their business. Businesses across the country are heavily reliant on roads for customers, staff, and suppliers, and affordable fuel is a lifeline to those in rural areas.
National Living Wage
Government has announced a more modest increase in the National Living Wage (NLW) to £7.50 per hour. The 4% increase is within the range of small business expectations.
But small employers will need support, especially looking ahead to steeper increases to meet the 2020 target.
Recent FSB research found that 47% of small businesses cite labour costs as the main driver of the rising cost of doing business. For this reason, we are calling on Government to increase the employment allowance from £3000 to £4000 to help small businesses increase pay and create jobs.
FSB fully supports the government’s aims to enhance the UK’s reputation as an internationally competitive business tax location.
The decision to further lower corporation tax is an important statement of intent and will provide a welcome boost for incorporated businesses. We hope the government and the Office of Tax Simplification now builds upon this measure for small businesses by streamlining the tax system, particularly delaying implementation of mandatory quarterly tax reporting.
Mike Cherry is the National Chairman at the Federation of Small Businesses.