Iain Moffatt, head of KPMG Enterprise, comments on the measures that small and medium-sized businesses would like to see announced by the Chancellor’s Autumn Statement on 3 December 2014:
“Recent research from YouGov on behalf of KPMG showed that 70 per cent of SMEs across Britain think the Government could do more to support small businesses, so all eyes will be on the Chancellor as he sets out his latest plans for the UK economy. However, with the general election only five months away and indications that the OBR is about to revise upwards its public sector borrowing requirement projections, the consensus is that there will be few, if any, surprises.
“Nevertheless, we do expect there to be some good news for small and medium-sized companies with both the Chancellor and Vince Cable recently dropping heavy hints that an announcement will be forthcoming regarding an overhaul of the much-maligned business rates regime.
“Access to funding for SMEs remains an area of red hot debate. What we’re hearing from those companies we speak to is an acknowledgement that there is already a wide range of support available to them, but a complaint that the marketplace is perhaps too fragmented and difficult to navigate at present. Unfortunately, this is dissuading businesses from accessing the funding they need. Greater clarity around or a simplification of the myriad of schemes and incentives available would therefore be incredibly welcome.
“Owner managers are also telling us that they would welcome a widening of the application of both the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) in order that more investors can use these routes to finance more businesses.
“For example, many directors aren’t eligible for the tax reliefs offered via the EIS due to the 30 per cent shareholding rule. This is a particular issue for the thousands of family-owned businesses around the country – many of which tend to fund their business from their own pockets rather than taking on high levels of debt – as their shareholdings are aggregated for the purposes of this test. Widening the scope of the scheme or relaxing the rules would encourage investment from owner-managers, which in turn would help drive future growth.”
Iain Moffatt added: “We would also like to see the government reaffirm its commitment to the greater procurement of services from the UK’s SMEs. While the Cabinet Office’s aspiration to achieve 25 per cent of spending with SMEs by 2015 has certainly opened up opportunities for some, there is undoubtedly more to be done if this target is to be met and more importantly, stuck to.
“Finally, the war for talent and increasing labour costs continue to pose significant challenges for many small and medium-sized businesses. In the same way that we incentivise expenditure on R&D in order to encourage innovation, one wonders whether a similar approach could be taken around apprenticeship programmes and in particular, around the employment of those in the 18-21 year old age bracket. Such incentives would stimulate greater learning and development, boosting the skills base of the UK.”
Gary Turner, managing director Xero, the cloud accounting software for small businesses, which partners with KPMG, said: “Half of the UK’s GDP comes from small businesses – they are the lifeblood of the economy. Any initiative that supports them is hugely important, which is why we are calling for clarity around existing schemes. We also support the Federation of Small Businesses’ call to double small business rate relief beyond March 2015.
“It’s never been a better time to run your own business. With the UK now moving towards economic recovery at a faster rate than much of Europe, any support the Chancellor can give to small businesses now will doubtless pay dividends in the longer term.”
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Katy Broomhead, Senior PR Manager
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Samuel Shannon, Account Executive, Whiteoaks PR on behalf of Xero
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KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 11,500 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
Xero is beautiful, easy-to-use online accounting software for small businesses and their advisers. The company has over 370,000 paying customers in more than 100 countries around the world, with more than 60,000 in the UK. Xero seamlessly integrates with over 350 best-in-class business tools, was ranked No.1 by Forbes as the World's Most Innovative Growth Company and was recently also the recipient of prestigious British Accountancy and International Accounting Bulletin awards.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.