The Budget

Speciality Bites with

Paul Hargreaves

Chief executive of Cotswold Fayre

• Becoming a B Corp
• Top trend predictions for Christmas 2021
• Self-sacrifice: The importance of building a leadership legacy centred on others
• Undercover Boss
• Can/should bosses really be close friends with their staff?

I was asked by a magazine for my comments on the recent budget, so here they are regurgitated for my blog readers

A call to action for governments of any political persuasion as no doubt we will be in the same situation at the start of the next parliament.

My initial thoughts on hearing the headlines from the March 2013 Budget were ones of disappointment.  Here was a superb opportunity for the Chancellor to encourage an entrepreneurial culture in the UK through help for SMEs completely spurned.  As a small business owner with over 40 employees, I have always resented the tax levied on employers for the “privilege of employing people”  - otherwise known as Employee’s National Insurance Contributions.  These were increased by 11% by the previous government only a few years ago, and the reduction of £2000 per annum announced in this budget only goes a very small way to clawing some of this money back.  For a business of our size this amount of money is completely insignificant, and won’t benefit us to any extent.  The only type of business this measure will benefit is those one man bands thinking of taking on their first employee – for some this may just help sing their decision.  However, it is businesses like ours that are growing rapidly and taking on new employees every quarter that will make far more impact in a positive way on the national economy – and we really are not getting the help we need.

The only other measure that I can see that will benefit us, but not for two years, is the corporation tax cut of 1%.  Actually this won’t affect tax bills until Jan 2016, so nearly three years from now, by which time we will either be in recovery or another recession.  It does absolutely nothing for small businesses now.  The future of this country’s economy is SMEs – it is they that will drive the recovery not big businesses, yet the Chancellor never seems to put in place measures that purely benefit small businesses.  This budget was an opportunity to do something radical and dramatic to fuel growth in small businesses, but the opportunity has been missed.

Since the budget the Treasury has also asked the banks to raise £25 billion to protect against future financial shocks, which could represent worse news for small businesses. This will further reduce the already low chances of any small businesses being loaned money by the banks.  Despite repeated assurances from the government that banks are being told to lend to small businesses, this simply isn’t happening, and these measures will make the situation worse.  Our overdraft is a pathetic 0.4% of our annual turnover, and this ridiculous situation is mirrored across many other of my friends who also run their own businesses.

Think again, Mr Osborne!