Welcome for measures that will pump more money into SMEs

Andrew Burton, managing director of Normanton-based Viking Fund Managers, said the Budget would effectively pump more money into the small firms hit by the credit drought.

Mr Osborne raised the income tax relief on the Enterprise Investment Scheme (EIS) from 20 to 30 per cent, from next month, and doubled the relief for entrepreneur tax to £10m. He also extended small business rate relief holiday by a year to October 2012, at a cost of £370m, as the coalition pins its hopes on a private-sector led recovery. The moves are also designed to stem the tide of wealth leaving Britain in search of better returns in the Far East and Mr Burton said they will increase the number of people, particularly high-net worth individuals, investing in SMEs here.

“Tax relief when you invest will go up – that is good news. That will encourage more people to invest through EIS qualifying investments... Effectively it will pump more money into the SME end of the market.”

Last year the Yorkshire Post called on the Government to make it more tax-friendly for entrepreneurs to invest in small businesses.

Relief for entrepreneur tax, raised yesterday, could be taken even higher Mr Burton said, but he added: “Let’s not be greedy, it is pretty good... It means more money retained to re-invest.”

Stephen Hall, entrepreneurial business tax partner at Deloitte in Leeds, said some small businesses are still struggling but supported initiatives on enterprise and research and development. “It is extremely encouraging to see that entrepreneurs’ relief has been increased to £10m, along with EIS improvements and SME R&D credits up to 200 per cent and then 225 per cent.

“It will be interesting to see if anything comes through to change the five per cent ownership (rule on the sale of stakes in SMEs) and working requirements for entrepreneurs’ relief.”

Gary Williamson, chief executive of Leeds, York and North Yorkshire Chamber, highlighted the Chancellor’s downgrading of economic forecasts but described the Budget as “pro-business, pro-growth and pro-skills”, backing the measures for small businesses.

“The Chamber also welcomes the Government’s support for young and new business through the creation of Start-Up Brit- ain.”

Simon Wilson, managing director of Leeds IT and systems firms Express Data, said SMEs had suffered since the start of public sector spending cuts.

“I don’t think the Government realised what a huge knock-on effect the initial cuts would have on the UK economy and this Budget seems to be trying to make up for it by promoting apprenticeships and making small cuts in corporation tax.

“However, when money is tight and skills are lacking, the only way to maintain productivity is to improve efficiency.”

John Walker, chairman of the Federation of Small Businesses, said the Budget was “in part” a programme for growth but said concerns remained over employment laws due to come into force, which could deter firms from hiring staff.

“There are vital components missing for small firms to create jobs.”

‘There’s still a lack of support’

BRITAIN’S SMEs are still being let down by the major banks, according to senior Conservative backbencher John Redwood.

The former leadership candidate, now co-chairman of the party’s economic competitiveness review, said the banks needed to be “sorted out” so small businesses could stimulate growth.

“All colleagues in the House (of Commons) are united in having individual cases where they feel that a company could have been saved or a company could have grown more rapidly if only there had been more sympathetic or understanding bank managers and facilities.

“I think there is a problem with British banking serving the SME sector.”