It was one of the most politically self-conscious pre-Budget
reports we've seen for years: dubbed a 'pre-election report' by
shadow chancellor George Osborne, Alistair Darling's delivery
certainly marked the beginning of a fierce election campaign.
But what will it mean for small businesses? Experts had
predicted the pre-Budget report would contain a raft of measures
which, given the likelihood of the Conservatives coming into power
halfway through next year, were unlikely to come to fruition.
Here's our round-up of the measures announced today:
Darling announced he would bring an end to the extension of the
15% VAT rate announced during this year's Budget, taking it back up
to its original level of 17.5% on January 1. Speculators had warned
he might try to raise it to 19%, but it seems their fears amounted
to nothing. Expect a groans from retailers, though, who will once
again have to scramble to change their pricing in accordance with
the new rate.
Time to pay scheme
Darling said the government's Time to Pay scheme, which allows
business owners to spread their tax payments out, has helped over
160,000 businesses since it was launched in February. He recognised
the need to continue this scheme, saying it would be 'extended for
as long as it is needed'. Good news for those struggling to pay
their tax bills.
Empty property rate relief, which caused controversy last year
when it was scrapped for exactly 12 months and then resurrected
with a higher threshold, has been further extended so commercial
properties with a value of less than £18,000 will be exempt from
empty property rates - which, according to Darling, will be a
saving grace for 70% of businesses. Hmm.
The chancellor chose to delay the rise in corporation tax for
smaller companies, due to take place in April, for a second time.
The rise, from 21%-22%, was first announced in October 2008, but
was put off earlier this year. Darling says the delay will help
850,000 businesses - but according to the Daily Mail, it will also
cost the government £500m.
Darling was very proud of the UK's employment record, saying
there were just 1.6m claimants - but given that 10% of the
workforce are predicted to be out of work during 2010, he still has
work to do. Nevertheless, the chancellor promised starting next
month, 18-24-year-olds will have guaranteed work or training after
12 months out of work, while over-50s will receive 'specialist and
A half-percent hike on National Insurance contributions for
those earning more than £20,000 was also put forward. This has
outraged small business owners. Bulldog's Rhodri Ferrier
called it a 'real blow'. "This will be a major tax on jobs just as
the economy is predicted to grow," he said.
Darling announced a variety of investment funds, including £30m
to help industrial businesses in Teeside, a £500m Growth Capital
fund to 'invest specifically in small business' and the extension
of the Enterprise Finance Guarantee (EFG), which will guarantee
£500m worth of loans to businesses on top of the £1bn already
offered this year.
Plans to fund clean technology were also announced: £160m
towards the innovation investment fund and the Carbon Trust's VC
scheme, as well as £90m towards the European Investment Bank's 2020
fund, which finances green infrastructure projects.
So there we go, mixed news from Westminster. The battle lines,
though, have just been drawn. Expect things to hot up over the next
Full details can be found