Helping the Private Sector-led Recovery
The Coalition Government’s focus on supporting growth, fairness and reform, emphasises that for businesses, there will be a strong focus on creating the right conditions for sustainable economic growth.
The Chancellor's key business announcements include:
- A £1.4 billion Regional Growth Fund to support investment in infrastructure projects with significant growth potential, to help areas move from public sector dependency to sustainable private-sector growth and employment.
- Investing £1 billion with additional significant proceeds from the sale of government-owned assets to create a UK-wide Green Investment Bank providing incentives for investment in the low-carbon economy.
- A £250 million a year boost to adult apprenticeships to ensure that businesses have the highly skilled workforce needed to drive growth, providing up to an additional 75,000 apprenticeship places per annum by the end of the Spending Review period.
- £530 million directed from the Government and the BBC to put in place superfast broadband pilots across the country.
- £860 million of new funding over the Spending Review period to support businesses and households investing in renewable heat measures.
- Driving commercial investment in scientific knowledge by reforming the Higher Education Innovation Fund.
- Maintaining the science budget in cash terms with resource spending of £4.6 billion a year by 2014-15.
- Future publication of a White Paper on local growth setting out the Government's strategy for ensuring that all places benefit from sustainable economic growth.
- Focusing capital on projects that will deliver the highest economic returns.
- A decision to axe the 'Train to Gain' programme.
In reaction to the Review, the Federation of Small Businesses (FSB) has additionally urged the Coalition Government to now put in place what it considers to be 'the missing link', namely a Small Business Programme for Growth. This, FSB maintains, will address the need to create growth by increasing the tax base, creating more businesses and incentivising small firms to grow and innovate
Backing Small Business
The government has published its strategy to assist the growth of small enterprises across Britain, including measures to improve access to finance and make it easier to do business with the public sector.
The UK’s five million small businesses constitute a key segment of the economy and are a major driver of economic growth, providing 60 per cent of jobs and half of the GDP. In order to create favourable conditions for private sector growth, the government has announced developments in six major areas to support SMEs, covering:
- Improving access to finance.
- Making it easier to do business with the public sector.
- Supporting those starting a business.
- Making sure the competition framework helps new companies access existing markets.
- Providing targeted support to those that have high growth potential.
- Ensuring that Government is deliberately reoriented towards their needs.
Improving Access to Finance
The government will make provision to maintain reliable sources of public finance to compliment commercial lending. The Business Secretary has announced several measures in response to the consultation to the ‘Financing a Private Sector Recovery’ green paper launched in July 2010, these include:
- The Enterprise Finance Guarantee (EFG) will continue for the next four years to with an additional £600 million to guarantee a further £2 billion of lending for up to 6,000 viable small companies without adequate credit history or collateral.
- A further £200 million over four years allocated to the Enterprise Capital Funds to support equity investments in businesses with high growth potential.
- A co-investment fund as part of the Regional Growth Fund that will support business angel investments in high growth, early-stage SMEs.
- Exploration of additional ways to provide finance for exporters.
- Several measures to address the Banks’ response to the Business Finance Taskforce green paper, including the £1.5 billion Business Growth Fund, mentoring and a new lending code.
Making it Easier to do Business with the Public Sector
Measures to support SMEs seeking to access government contracts and procurement opportunities, including:
- A target of one quarter of Government procurement directed to SMEs.
- Agree action with each government department to increase the amount of business going to SMEs.
- The removal by government agencies of qualifying barriers that prevent small businesses accessing government contracts.
- Reaffirmation of the commitment that 80% of prime contractors are paid within 5 working days.
- All government contractors will be required to pay their suppliers within 30 days.
- Continue the Small Business Research Initiative (SBRI) to award high-tech government contracts to SMEs.
Supporting Those Starting a Business
To reduce the burdens for those seeking to start a business and encourage other would-be entrepreneurs to move forward with starting a business. This measure also seeks to tackle institutional bias for those on Jobseekers Allowance or in social housing and support enterprise creation by all members of society, including people from disadvantaged backgrounds, by:
- Providing access to mentors and small loans through the New Enterprise Allowance scheme to help unemployed people to start a business.
- Provide greater access about franchising opportunities as method to returning to work following unemployment.
- Working with social landlords to tackle the misconception that social tenants cannot start up a business, and encourage tenants to pursue their enterprising ideas.
- Introduce a simplified 'one click' incorporation service from April 2011 to reduce the level of administration needed to start a business.
- Extend the Enterprise Finance Guarantee to small community finance institutions, to benefit businesses starting up in disadvantaged communities.
Making Sure the Competition Framework Helps New Companies Access Existing Markets
To reduce barriers to entry and growth in existing markets to increase competition through:
- Merging the competition functions of the Office of Fair Trading and Competition Commission.
- Introducing a tougher and more streamlined competition regime.
- Helping new companies break into existing markets.
Providing Targeted Support to Those That Have High Growth Potential
To benefit new and existing high growth firms which have greater capacity for job creation, innovation and commercial success, including:
- Establishment of a network of growth hubs to provide specialist support for businesses with growth potential.
- £200m for elite Technology and Innovation Centres to drive innovation and the commercialisation of new technology and new ideas.
- £600,000 for a Launch Pad competition aimed at small companies with disruptive solutions to energy, digital, healthcare and sustainability problems.
- Continue support through UKTI.
Ensuring that Government is Deliberately Reoriented Towards Their Needs
A general approach to continue to review and explore support methods for SMEs. The Lord Young Report in spring 2011 will investigate what changes are necessary to make government more SME and start-up friendly.
Some of the measures that Government is announcing will apply to England only but Government will look to work closely with the Devolved Administrations to ensure that SMEs are supported across the UK.
Read the strategy in full on the Department for Business, Innovation and Skills website (http://www.bis.gov.uk/backing-small-business)
