This was a budget of mixed messages for Britain’s entrepreneurial community.
SMEs will be relieved that businesses below the VAT registration threshold will have the requirement for quarterly reporting delayed by one year. No doubt they will also be pleased with the announcement that there will be a £300m fund for discretionary relief for local authorities on business rates. It remains to be seen whether this will be enough to cover the astronomical rate increases that many businesses will be facing. There were several announcements that will reassure Britain’s tech industry that the Chancellor takes their contribution to the economy seriously. £270 million to keep the UK at the forefront of disruptive technologies such as biotech, robotic systems and driverless cars is one such example.
The announcement of the introduction of new technical qualifications called T-levels was not a surprise but should also be welcomed by Britain’s tech industry which is facing skills shortages, especially after Brexit. No doubt the tech industry will also welcome the £40m for pilots on lifelong learning projects as reskilling older workers will be vital to fill skills gaps in the future.
Further positive measures in this sector include £200m for local projects to leverage private sector investment in the full-fibre broadband network and £16 million for a new 5G mobile technology hub.
However, the Treasury’s plan to raise £145 million from increasing the national insurance contributions of some self-employed people may have a detrimental impact on entrepreneurs. While the principle of people paying similar taxes for similar work is understandable, self-employed workers take on additional risks that should be recognised - their work is often unreliable and they aren’t entitled to employee benefits enjoyed by those on permanent contracts.
Similarly, the big announcement that the tax-free dividend allowance is to be reduced from £5000 to £2000 from April 2018 will dismay many entrepreneurs, especially those just starting out. The concern is that these measures will stifle entrepreneurs who do not want to take any additional risks.
While some of Philip Hammond’s announcements will be rightly welcomed by Britain’s entrepreneurial community, there is more that could have been done to encourage entrepreneurship and reassure existing small businesses. Policies that make it costlier to be an entrepreneur are short sighted and could end up doing more harm than good.