Small businesses are being encouraged to hire more apprentices and raise investment through a series of measures aimed at entrepreneurs.
George Osborne said there would be £500m for the enterprise finance guarantee scheme, which backs lending to small businesses, and £400m for enterprise capital funds, which invest in small businesses. Both of these are run by the British Business Bank, which was created by the business secretary, Vince Cable, last year.
To encourage more firms to take on young apprentices, the chancellor has exempted employers from national insurance contributions when they hire apprentices under 25.
“When a business is giving a young person a chance in life we’re going to support them, not tax them,” Osborne said.
He also extended the Bank of England’s funding for lending scheme for another year. The scheme cuts the cost of borrowing for banks, with the aim that they will pass on the benefits to the small business sector.
In another move towards easier credit he is promoting peer-to-peer lending by changing the tax regime.
The research and development tax credit was also increased to encourage investment, alongside a scheme intended to help small businesses boost exports.
But there was some concern that changes to the way banks are able to use losses stored up from the 2008 crisis to offset their tax bills could reduce the amount of credit to small businesses.
Malcolm Small, senior financial services policy adviser at the Institute of Directors, said: “The announcements of further support for SME [small and medium-sized enterprises] lending through the British Business Bank and the funding for lending scheme are to be warmly welcomed. However, imposing new taxes on banks, whilst making great headlines, could see a reduction in business lending.”
