Chancellor George Osborne’s speech did not unveil many unexpected measures but reiterated the government’s commitment to reducing red tape and kerbing rising operating costs for small businesses.
Business rates in England and Wales will be capped at 2% for another year, rather than linked to RPI, and, in a surprise move, retail premises with up to £50,000 rateable value will receive £1,000 discount on business rate bills, while there will be a 50% relief for businesses taking on vacant high-street properties.
Another surprise was the scrapping of employer National Insurance contributions for under-21s earning less than £42,285 from 2015, which the government said would affect 1.5m young people. This is in addition to the new Employment Allowance that will give employers a £2,000 relief on their National Insurance bill.
Other measures outlined in the announcement included plans to change some of the green levies to alleviate the pressures of ongoing energy price hikes, while fuel duty was frozen until May 2015.
Additionally, the government pledged to double export finance support to £50bn, while extra backing will go towards helping 50,000 new business start-ups across the UK.
Forum of Private Business (FPB) chief executive Phil Orford welcomed the measures. “Within a time of constrained budgets, it's good to see the chancellor has listened to the concerns of small firms around rising costs,” he said.
“Of course there are other issues not addressed directly today, but upon which work is ongoing. Top among these is energy prices. We are working hard to ensure members benefit from any reining back of green taxation.
“97% of businesses feel property taxation is too high so the extension to Small Business Rate Relief and the cap on business rates to 2% are both welcome, but sit at the lower end of what the FPB was asking for. We feel there needs to be a more fundamental review of business rates and the link to inflation, and also better transparency over where the rates go."
Partner at insolvency specialist Begbies Traynor, Julie Palmer said the announcements were a move in the right direction but suggested that they would not do enough to provide the long-term security needed to encourage growth.
“Businesses have been subjected to an increase of almost 23% over the past five years, the highest in Europe, which has had a crippling effect on firms’ profits and competitiveness,” she added.
“The UK also faces a fundamental flaw in its draconian system that is in dire need of an overhaul to level the playing field with e-commerce businesses, which, at the moment, are not affected by business rates.
“Whilst these short-term measures will no doubt be hugely welcomed, they will do little to provide long-term certainty for businesses and could discourage capital spend and encourage cash hoarding, something the government wants to avoid to aid economic growth.”
