This year’s Budget was extraordinary because of the economic implications of Covid-19. Traditionally in the run-up to the big day, there’s speculation over what needs to be done to drive economic growth. However, the build-up to this year’s speech by Chancellor Rishi Sunak revealed that it was time to focus on damage control and not growth.
In this year’s Budget, the importance of SMEs to the long-term recovery of the UK economy was clearly stated when the Chancellor announced:
We all know that ambitious, high growth SMEs are the lifeblood of the UK’s economy and it was clear from the Government’s growth plan, ‘Build Back Better’, which was published on Budget day, that innovation is the driver to aid recovery.
We know this first-hand as working with ambitious and innovative businesses on a daily basis, we see the sizeable hurdles they need to overcome to secure funding and grow - so this year’s Budget was interesting.
The Chancellor announced two new training schemes to help smaller businesses become more productive. £520 million of funding via a new ‘Help To Grow’ programme offering 130,000 SMEs training support, with the Government covering 90% of the cost. And a Help To Grow Digital scheme to help firms with free training and 50% discount on software.
He also announced the establishment of a new £375m UK-wide scheme, Future Fund: Breakthrough which is to be delivered by the British Business Bank. It is hoped this will encourage private investors to co-invest with Government in high-growth, innovative businesses. Launching in early summer, it will focus on investment for R&D driven companies.
During this year’s Budget, the Chancellor offered businesses two new concessions. Firstly, with regards to the tax treatment of losses, businesses can now carry back up to £2 million for three years (worth up to £760,000 per company).
They can also unlock investment via a new “super deduction” for future investment which will help firms reduce their tax bill by 130% of the cost of their investment. This is worth around £25 billion to UK companies over the two-year period the scheme will be in effect.
It was really good to see that the first UK Infrastructure Bank will be opened in Leeds with £12 billion provided by the Government and a further £28 billion expected to be available from other investors. The Levelling Up Fund is also a step in the right direction to support long-term economic and social regeneration as well as recovery from the pandemic.
A significant aspect of this year’s Budget was that the Chancellor chose to extend the furlough scheme until September. This was welcome news for some of my nightclub clients, as they are not expecting to open until at least June. The furlough scheme has provided a lifeline to them since it was originally put in place in March 2020. Hopefully the extension will mean they can slowly begin to bounce back after such major disruption to their businesses.
The 100% business rate holiday is set to continue until June, with a two-third discount for the rest of the year. The 5% reduced rate of VAT for hospitality, accommodation and attractions across the UK will be extended to the end of September and will only return to normal levels in stages starting with 12.5% until March 2022.
For employers taking on new apprentices of any age, the incentive payment will be doubled to £3,000 and £7 million is being made available for a new “flexi-job” apprenticeship programme in England that will enable apprentices to work with a number of employers in one sector.