Autumn Statement 2015: Abolition of grants in favour of loans risks stifling innovation

Autumn Statement 2015: Abolition of grants in favour

While entrepreneurs and owner managers may be breathing a collective sigh of relief that the rumoured cuts to entrepreneurs relief did not come to fruition, there is a risk that grants being replaced by repayable loans will have the unintended consequence of stifling innovation, rather than encouraging it.

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Effects on Britain’s fast-growing small and medium-sized businesses

Commenting on how the Autumn Statement will affect Britain’s fast-growing small and medium-sized businesses, Ben McDonald, enterprise partner at KPMG, said:

“While entrepreneurs and owner managers may be breathing a collective sigh of relief that the rumoured cuts to entrepreneurs relief did not come to fruition, there is a risk that grants being replaced by repayable loans will have the unintended consequence of stifling innovation, rather than encouraging it.

“There is a certain psychology attached to indebtedness, rather than the incentivisation attached to grant funding. So while any increase in availability of finance will always be welcomed, young fast-growing businesses don’t necessarily want to be burdened with short-term cash interest and the longer term spectre of repaying loans.

He added, “Nevertheless, the financing of much larger apprenticeship programmes through the levy on larger employers, in addition to further investment in science, should be good news for our inventors and innovators looking to create and produce new technology on our shores.”

 

ENDS

 

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