Guest blog: the government must get more creative to help small businesses

This speech included some announcements relevant to businesses, including cutting red tape on bureaucracy, fairer deals for the suppliers of supermarkets of which it includes diminishing regulatory barriers for businesses operations and expected reform changes on the Enterprise and Regulatory Bill, but it just wasn't enough. In fact, it was so lacking in terms of its focus on business I worry the coalition has run out of ideas or is no longer able to listen.

We are always looking over our shoulders at Germany, but the bulk of their growth and exports comes from small and medium-sized businesses. These are the very businesses that are not just strangled by red tape but also looked down upon by banks.

The government thinks that infrastructure as a headline grabbing story will be the way to kick start the economy. This is wrong for two reasons. First, infrastructure takes time to build and second, the funds are barely available unless we sell infrastructure to overseas investors. The sale of nuclear power to EDF and its recent cancellation would suggest that such a route is very high risk.

Getting the economy moving needs to be thought of far more laterally than mere investment. I hope that President Hollande in France also recognises this. De-regulation is a very important part of this, but the creation of enterprise zones will lead the way. These need to be expanded across the UK, as does the thinking behind them.

Let's take an example. In round numbers it looks like the government is overspending on ministry of defence re-fuelling tankers by £6bn over the next ten years. Assuming it corrected this overspend, it has £600m a year to put towards supporting small businesses and start-ups. Supposing each start up needed £50k, that fund alone would enable the establishment of 12,000 new businesses, each employing five people taking 60,000 people off the unemployed total. Not to mention the fact there would be 60,000 people spending more in the economy and paying taxes.

Now suppose the government goes into matched funding partnership with the banks so that their exposure is halved. We now have 120,000 more people a year employed. Add to this corporation tax, national insurance and rates support for say two years and for a zero sum there are seven more incentives to start and sustain a business and employ people.

There needs to be greater incentives and support for exporters too, which will see the balance of payments starting to improve. This is the only way our debt will be reduced in the long run. Also, the government needs to bring in a tax system whereby employers can get corporation tax rebates if they employ more people.

The coalition needs courage and imagination and it needs to come quickly. Osborne looks locked into the City and Westminster bubble and is missing the bigger picture.

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