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£7bn deal targets medium and small firms
BUSINESS A £7bn package is aimed at helping smaller firms, including access to loans, the deferring of tax rises and the scrapping of business rates on some empty buildings.
Amid increasingly dire warnings from business groups about the scale of the damage to industry as Britain heads towards recession, the Chancellor pledged "real help" to small and medium-sized firms, which employ 60 per cent of the private sector workforce.
Mr Darling took action aimed at stopping firms from demolishing empty properties in a bid to avoid paying business rates, an issue raised by business leaders in the region.
He announced a temporary increase in the threshold for empty property relief, so that for the 2009-10 financial year, empty commercial properties with a rateable value below 15,000 will be exempt from business rates.
But last night there were concerns it did not go far enough.
The chief executive of the British Property Federation, Liz Peace, said: "The Chancellor said that this would help 70 per cent of properties, but buried in the small print is the revelation that this will only give back around 185m of the predicted 1bn hit to business. But this is not retrospective and it is not immediate. The smallest firms will have to struggle on until next April.
"While there are 1.7 million properties liable to pay rates, this could include anything from a single room to a large shop. This change will help only the very smallest property owner."
Labour MP for Halifax Linda Riordan said: "I welcome the change but would have liked it to have been extended beyond this bare minimum. The majority of those who are affected by this across Halifax and the rest of the country will have properties with a much higher rateable value than 15,000.
"I would like to urge the Chancellor to look again at this as we desperately need to offer real help to firms hit by the downturn."
Mr Darling also said he wanted to help equip small firms for the challenges of the future, improve access to credit, ease cash flow and reduce burdens.
Firms will be allowed to spread tax payments, including VAT and national insurance "for as long as they need".
The Chancellor announced a 4bn deal with the European Investment Bank to provide money to UK banks to pass on to small and medium-sized enterprises (SMEs), which seven banks had already expressed an interest in.
Around 1bn will be available to their customers by the end of the year and credit will also be offered through a temporary Small Business Finance Scheme, worth another 1bn.
Mr Darling said: "It should allow small businesses to borrow sums from 1,000 to 1m at more flexible terms than before, making lending more affordable and easily accessible. This will help SMEs experiencing short-term cash flow problems get the funding they need."
Banks are being closely monitored to make sure they keep to their commitment to treat business customers "fairly and decently".
The Chancellor also said a further 1bn of support will be offered to companies which export goods, through the Export Credit Guarantee Department. From January, it will offer a temporary facility to support the availability of short-term working capital for smaller exporters.
And Mr Darling announced that he had decided to defer the increase in the small companies rate of corporation tax, which firms pay on their profits, leaving their tax rate in 2009 unchanged.
He said: "This is a comprehensive package of support which business has been asking us to provide. A package to support business, worth 1bn of tax cuts, 2bn in loan guarantees, along with 4bn of European money. A 7bn package of measures, real help.
"Funding we can provide because we have decided to take action to support our economy through this recession. I believe these steps will help businesses through the current difficulties and enable them to invest so they can make the most of opportunities as the global economy recovers."
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Saturday 11 February 2012
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