Tuesday 28 Jan 2014 @ 13:05
Department for Business, Innovation and Skills
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Small business, big support confirmed by Prime Minister

Small firms will see the cost of doing business fall this year following measures brought in by the government to help them get on.

Speaking at a Federation of Small Businesses (FSB) event, Prime Minister David Cameron has set out how the success of small businesses is central to the government’s long term economic plan. He pledged his commitment to continue to make it easier for small businesses to thrive.

The country’s 4.9 million small businesses could save up to £10,000 each a year by taking advantage of government measures available to them, including;

  • Business Rates - £1.1 billion package of business rates measures, with extra relief announced for small businesses through the extended doubling of the Small Business Rate Relief
  • Growth Vouchers – A £30 million programme which will see 20,000 small businesses receive up to £2,000 to help them access specialist support on hiring, financial management and marketing
  • broadband vouchers – 10 out of 22 cities across the UK have already started to benefit from up to £100 million of broadband vouchers worth up to £3,000 each to help more small firms boost their business by accessing faster and better broadband connectivity
  • Employment Allowance – from April 2014 every business and charity will be entitled to a £2,000 Employment Allowance to reduce their employer National Insurance Contributions (NICs) bill each year. Over 90% of the benefit of this allowance will go to small businesses
  • fuel duty - government has cancelled the planned September increase in fuel duty. The average small business with a vehicle will save £1,300 on petrol by 2015
  • regulation - more than 3,000 regulations, including employment, health and safety law and environmental legislation have been identified for scrapping or improvement through the Red Tape Challenge since 2011. This is expected to deliver savings of over £800 million a year once the measures are fully implemented

Business Secretary Vince Cable said:

Small businesses play an important role in boosting growth and creating jobs. I regularly meet these companies across the UK to hear first hand how government can do its part to help small and medium sized businesses grow and succeed. We have acted on their demands by improving access to finance with the new British Business Bank which I established last year, by significantly reducing red tape and by increasing the take up of business rate relief.

We are also tackling late payment, which affects so many small firms that still have to wait too long for cash to flow through to them. It’s important that businesses give us their feedback on this issue. The Business Exchange will help strengthen supply chains and forge good working relationships between firms of all sizes. Big firms naturally have a wealth of expertise and knowledge that small businesses can and should benefit from.

This package is part of the government’s efforts to boost support for the growing number of small businesses across the UK. Small firms employ around 14 million people and are making an increasingly significant contribution to the British economy.

Enterprise and Skills Minister Matthew Hancock said:

Small businesses are the bedrock of the UK economy and I’m delighted that today at the Federation for Small Businesses’ policy day, we are able to cement our commitment to help them grow.

Small businesses are responsible for nearly half the job creation in the UK. That’s why we must continue our drive to provide the support they need to scale-up, move into new markets and hire more staff so that they can compete in the global race.

To further support small businesses the government has been working closely with Enterprise Nation to launch The Business Exchange. This asks big businesses to link up with smaller ones to exchange skills, resources and ideas to help them grow. Building on the industrial strategy this initiative aims to strengthen the UK’s position as a great place to do business.

The government’s Growth Vouchers initiative is a pioneering programme to help support 20,000 small businesses get the advice they need to achieve their growth potential. This £30 million programme will provide an immediate cash injection of up to £2,000 for eligible small businesses to gain professional business advice in areas such as marketing, recruitment and finance. The programme is now open for applications.

These new schemes are among several measures aimed at supporting small businesses and follows Small Business: GREAT Ambition - the government’s commitment to help make it easier for small businesses to grow. The statement was published last month and announced a substantive package of support for small business to remove some of the barriers they face, improve the business environment and make it easier for them to scale-up.

This sits alongside the government’s Business is GREAT campaign, which points businesses to sources of advice and support that can help them grow.

Notes to Editors:

1.Small Business: GREAT Ambition set out how the government will:

  • increase support for innovation through a £50 million investment in popular Smart grants for small firms, 3 new ‘Launchpad’ competitions to spur on innovation clusters and new networks to showcase innovative small firms to investors
  • double the number of regional Export Finance Advisors, simplifying application forms and working with the banks to make them more aware of UK Export Finance (UKEF) support and to provide clearer information that can be passed on to customers, helping firms to benefit from greater support from UKEF
  • work with the British Bankers Association and the major banks will work together to create a strengthened referral process by the end of 2014, so that business which may be declined finance can be signposted to an even wider range of other finance providers, brokers and advisors
  • give small businesses a stronger voice to challenge heavy-handed regulation, including a new independent Small Business Appeals Champion in every non-economic regulator. These Champions will have responsibility for making sure small businesses have a proper route of appeal and we will consult on the detail of these reforms in early 2014

2.For more information about the Business is GREAT campaign, visit ‘Business is GREAT’.

3.For more information on Growth Vouchers go to Growth Vouchers programme.

4.The government’s £1.1 billion package of business rates measures include:

  • support for all: the government will cap the business rates RPI increase in 2014-15 at 2% to reduce the burden of business rates for all businesses. This will benefit around 1.3 million properties
  • extra relief for the smallest businesses: the government will extend the doubling of the Small Business Rate Relief (SBRR) for a further year to 31 March 2015 to provide particular support for 540,000 of the smallest businesses. And the government will relax the SBRR criteria from 1 April 2014 to remove the disincentive for the smallest businesses to take on second properties to support small and medium enterprise (SME) growth
  • help for the High Street: the government will introduce a business rates discount of £1,000 for smaller retail premises for 2 years from 1 April 2014 benefiting around 300,000 shops, pubs and restaurants. And the government will introduce a new reoccupation relief to help bring empty shops back into use
  • steps to improve business rates administration, including reforms to appeals, a commitment to clear 95% of the current backlog in appeals by July 2015, a change to the payment schedule to allow businesses to pay over 12 months rather than 10 months, and plans for a discussion with business on options for longer-term reforms to business rates administration to improve its transparency, efficiency and responsiveness

This responds to calls from the CBI, BRC, FSB and major retailers; it represents the biggest package of support for business rates in over 20 years and it builds on the £11 billion a year of cuts this government has announced for business since 2010 from corporation tax, employer NICs and fuel duty.

5.Employer National Insurance will be abolished for under-21 year olds on earnings under £813 per week (£42,285 per year) from April 2015, significantly reducing the cost of employing young people. This will make it over £500 cheaper to employ an under-21 year old earning £12,000 and over £1,000 cheaper to employ an under-21 year old earning £16,000.

6.The Red Tape Challenge – which asks businesses and the public themselves to identify the rules that hold them back – is already saving firms some £300 million per annum, and is expected to deliver savings of over £800 million a year once the measures are fully implemented. An infographic on the Red Tape Challenge is available here: http://www.flickr.com/photos/bisgovuk/12170644674/

7.The Growth Vouchers programme is being run as a randomised control trial (RCT) jointly by the Department for Business, Innovation and Skills and the Cabinet Office Behavioural Insights Team.

  • RCTs are widely regarded as a gold standard for empirical research. This is the first time an RCT has been run on this scale and aims to find out what sort of business advice is most effective for government to support
  • Businesses that have been running for a year, with 49 employees or fewer, and have not paid for strategic external advice in the past 3 years will be able to apply for Growth Vouchers. They will go through a process which will help them identify what sort of advice they might benefit from. Small business network Enterprise Nation has developed a marketplace for business advice where participants will then be able to find a qualified advisor
  • every business that participates in this programme will be monitored to see how they progress over the next 2 to 3 years
  • “paid for external strategic advice” does not include services such as day-to-day bookkeeping, filing of statutory accounts, or fulfilling of legal/regulatory requirements

8.The discussion paper ‘Building a Responsible Payment Culture’ which seeks views on how to tackle late payment in business transactions will close on 31 January 2014.

9.The government’s economic policy objective is to achieve ‘strong, sustainable and balanced growth that is more evenly shared across the country and between industries’. It set 4 ambitions in the ‘Plan for Growth’, published at Budget 2011:

  • to create the most competitive tax system in the G20
  • to make the UK the best place in Europe to start, finance and grow a business
  • to encourage investment and exports as a route to a more balanced economy
  • to create a more educated workforce that is the most flexible in Europe

Work is underway across government to achieve these ambitions, including progress on more than 250 measures as part of the Growth Review. Developing an Industrial Strategy gives new impetus to this work by providing businesses, investors and the public with more clarity about the long-term direction in which the government wants the economy to travel.

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