Budget 2010: Darling shows ‘business-friendly’ face

ALISTAIR Darling poured on the praise for business in his speech, but is this as much of a Budget for enterprise as the Chancellor would have us believe?

A freeze on business rates, the doubling of the capital gains cap for entrepreneurs, and a promise to make government bodies pay their bills to SMEs on time presented the business-friendly face of the government.

But the Chancellor may have been looking to his announcement of a raft of measures to help SMEs gain greater access to finance and government contracts to get the greatest applause from business.

The two ‘nationalised’ banks, RBS and Lloyds, have, he said, been told to redouble their efforts to get business loans moving again. The pair will provide a total of £96bn of new business loans, nearly half going to SMEs.

And a new National Investment Corporation would bring together the government’s various business funding agencies under one roof to provide a ‘one stop shop’ offering a range of support packages totalling £4bn.

Part of this would be a new Growth Capital Fund of £200m to promote rapid growth and innovation.

Mr Darling promised to increase by 15% the share of procurement business that SMEs could expect from public bodies, which would benefit the sector by some £3bn.

Business rates would be cut for one year from October, benefiting more than half a million companies, he said.

For entrepreneurs, the feared slashing of the current £1m relief against capitial gains tax didn’t materialise, and was instead extended to £2m.

But the continued prospect of a hike in national insurance payments, clampdowns on tax avoidance and the gradual erosion of personal allowances for high earners also ensured the Budget scored the political points the government so desperately needs just weeks away from the General Election.

Terry Jones, tax partner at BDO in Leeds, said: “He (the Chancellor) has doubled the amount available for ‘entrepreneurs’ relief – the 10% CGT rate on the first £1m on the sale of shares in a business has been doubled to £2m.

“The Chancellor is certainly encouraging the entrepreneurial spirit and transaction with a measure that doesn’t really cost the Government anything.

“Out there there is said to be a big wall of private equity money but slowing it up is the availability of bank lending. There is an appetite among the private equity community so if this encouragement of banks feeds through then, coupled with entrepreneur’s relief then it might be a filip to the mergers and acquisitions market.”