The Chancellor faces enormous challenges in his first (and last) Spring Budget on Wednesday – at the top of his list should be trying to reassure Britain’s entrepreneurial community which is in desperate need of a confidence boost.
Britain’s businesses are having to contend with a myriad of problems surrounding Brexit. SMEs have the advantage of being more flexible and adaptable than some of their larger peers, but they can also be disproportionately affected by these issues. The devaluation of sterling has hit SMEs particularly hard as they find it far more difficult to pass additional costs onto their customers.
Although Philip Hammond cannot solve all of the problems associated with Brexit on Wednesday, there are things he can do that will make a significant difference to SMEs and increase their chances of succeeding in a post-Brexit Britain.
One way that the Chancellor can do this is by providing comprehensive financial support to SMEs facing increases in business rates. It is estimated that the proposals by the Communities Secretary, Sajid Javid MP, may result in a quarter of firms facing significant increases, disproportionately affecting businesses in London and the South East. Entrepreneurs may find the viability of their businesses under threat due to this financial pressure, and for many it will be the final straw.
Several Conservative MPs have already criticised their Government’s plans on business rates. We already know that Philip Hammond is going to announce limited tax rises to pay for additional business rate relief, but will it be enough for SMEs and start-ups facing the most extreme increases?
Another issue that is high on entrepreneurs’ list of concerns is a potential decline in investment and funding following Brexit. Our universities and businesses currently benefit greatly from EU funding and uncertainty in the market does not make investors more willing to provide funds to businesses looking to scale-up.
In last year’s Autumn Statement, Philip Hammond attempted to help ambitious start-ups by providing £400 million to the British Business Bank’s VC Catalyst programme.
That funding was rightly welcomed by entrepreneurs. However, it is not enough to cover the upcoming funding gap and the approach should be extended. This could either be through further investment to the British Business Bank, or by spreading funding more broadly amongst competing financial suppliers in the private sector.
One early announcement that will enthuse the business community, particularly in Britain’s growing tech industry, is a transformation in technical education for Britain’s young people. It is expected that Philip Hammond will announce £500 million in investment and a plan to create 15 new A-level equivalent technical qualifications to help prepare our young people for the changing jobs market.
Philip Hammond needs to go further than telling Britain’s entrepreneurs that he understands their concerns – he must provide real solutions to the problems that they are facing in an increasingly complex and uncertain world.