In a bid to help boost the economy, the Government is set to create a £20bn National Loan Guarantee Scheme, to lower the cost of loans to small businesses and a £1bn Business Finance Partnership, which will lend money to small and medium sized businesses.
In addition, from April 2012, anyone investing up to £100k in a new start-up business will be eligible for income tax relief of 50 per cent.
There are also plans to launch a £50m a year programme to support 16 and 17-year-olds into education, an apprenticeship or a job.
As part of the plans the Government has pledged to ensure the funding for at least 40,000 incentive payments for small firms to take on young apprentices and make it easier for them to appoint them. Employers will now be able to advertise a vacancy a month after deciding to take on an apprentice and remove all excess health and safety requirements for apprenticeships.
Health and safety
Osborne also confirmed that recommendations on slashing health and safety red tape for small businesses, as published in the Löfstedt Review, would be accepted.
From 1 January, more than half of the existing regulations would be scrapped and employers will no longer be held responsible for damages when they have done all they can to manage risks.
The planned 3p a litre rise in fuel duty for January 2012 has been postponed to August 2012
Osborne said: “We are committed to making Britain the best place to start, finance and grow a business. The measures I am announcing today will help us to achieve this by creating an environment in which businesses are easy to set up, have access to credit when they need it and are able to grow without being held back by red tape. This action supports our deficit reduction plan and the Government’s monetary activism as we build a balanced economy."
Responding to Osborne's statement, Brigid Simmonds, chief executive of the British Beer and Pub Association (BBPA) welcomed the measures to help small businesses, boost apprenticeships, and cut red tape, but re-issued a plea for the Chancellor to abandon the beer tax escalator.
"It would safeguard 27,000 jobs and boost revenues by £126m in three years. If ‘RPI plus’ was too much for commuters, it is certainly too much for the Great British pint," she said.
The British Hospitality Association welcomed the news that the Enterprise Investment Scheme was being extended to hotels. Until now, hotels have not qualified for the scheme.
“The Chancellor’s statement that the restriction on investment in hotels will be removed from 6 April 2012 is a welcome move in the right direction,“ said chief executive Ufi Ibrahim. “There is a £15m maximum gross asset rule but this change is potentially very good news for medium sized businesses – and their investors - because it will encourage investment in the industry through new sources of finance.”
The Forum of Private Business welcomed the move on relaxing health and safety red tape, but said the steps made for small businesses were not enough.
“Complying with health and safety regulations has become a serious burden for business and a major barrier to growth,” said senior policy advisor Alex Jackman.
“That this Government is finally taking action to streamline and improve the system is brilliant news for SMEs who have for too long been drowning under a sea of needless rules and regulations that were ineffectual and over bureaucratic."
Chief executive Phil Orford added: “Overall, small business finance – freeing firms’ cash flow by removing the cost barriers they face and improving levels of affordable commercial funding – remains the immediate priority. The Chancellor has taken some steps in the right direction but he could have made much bolder strides to get Britain trading by providing more support for the smallest businesses.”