What Growing SMEs need to know about the Autumn Statement

John Anderson, Director of the Hunter Centre for Entrepreneurship and former CEO of the Entrepreneurial Exchange, discusses the major outcomes of the Autumn Statement that will benefit growing SMEs.

Entrepreneurship is about growing a business of scale, whether started from scratch, inherited or bought. Here in the Hunter Centre for Entrepreneurship we know all about growth – it’s at the core of everything we do in our research, teaching and knowledge exchange.

The Hunter Centre is deeply embedded within local, regional and national networks that support the creativity, innovation and entrepreneurship needed for firm growth and the associated benefits of job generation and economic and social wealth. We seek to influence entrepreneurship and growth policy in Scotland and as Scotland’s sole representative in the Enterprise Research Centre (ERC) we are able to ensure that UK policies continue to have relevance in Scotland, where of course many economic development levers are devolved.

Chancellor George Osborne presented the Autumn Statement this week.  The main message was that the rate of economic growth is speeding up yet the deficit is still considered too high.  There was good news for small businesses, with the announcement of a £900m funding boost offered by the British Business Bank.  In addition to this, measures have been put in place to encourage entrepreneurs to hire more apprentices and to invest in exporting. With all these initiatives created to encourage growth amongst small businesses, there is an undoubtedly positive recognition from the government of the economic contribution of thriving SMEs.

The government-backed British Business Bank will administer the two schemes that have received the capital injection, with £400m pledged to extend the Enterprise Capital Funds and £500m to extend the Funding for Lending scheme (FLS).  These are significantly beneficial moves that are sure to increase business confidence, as sourcing financial support has often been cited as a major obstacle for SMEs in the past, but we must ensure that Scotland’s growth companies have the same access to these schemes through, in particular the Scottish Investment Bank.  There has been occasion when a practical UK support scheme has taken too long to be made available to businesses in Scotland and through our membership of ERC we will be working to ensure that this is not repeated.

Another encouraging announcement was the exemption from National Insurance when employers hire apprentices under the age of 25.  During the Statement, Osborne said: “When a business is giving a young person a chance in life we’re going to support them, not tax them”.  This is great news for Scotland in particular, that will surely reinforce the surge we are currently experiencing in growing the number of available apprenticeships.  Skills Development Scotland (SDS) recently announced almost 13,000 people have started a modern apprenticeship in the first half of the financial year, with 78% aged 16-24.  SDS is on route to reach its annual target of 25,000, and this exemption will help it do so, specifically targeted at getting SMEs and entrepreneurs involved.

One more highlight for small businesses was a £45m boost to help them export beyond the crisis-ridden Eurozone and US.  The cash will be delivered to help SMEs connect with fast-growing economies in Asia, Africa and South America.  The Scottish Government is aiming for a 50% increase in the value of international exports by 2017 and to reach this goal SMEs, which account for 99.3% of all private sector enterprises, must be engaged.    Small businesses will be no stranger to the fact that in the age of globalisation, it is often a necessity to possess an international perspective.  However, as supported by the Autumn Statement, now is the time to consider less traditional yet rapidly growing markets, where potential remains untapped.  Again, through our ERC role we will be working to ensure that the ambitious Scottish business builder will get access to the full range of support provided at a UK level and that the excellent work of Scottish Development International is optimised.

The Chancellor clearly recognises the important role that innovative companies play in the UK economy and we welcome the announcement that the relief SMEs can claim on qualifying research and development (R&D) expenditure will increase from 225% to 230%. This change, which takes effect from 1 April 2015, further helps innovative companies to improve their cash flow position allowing them to continue to invest in new technology and products.

It is promising to see the government concentrating their efforts on SME and entrepreneurial growth, with such a strong focus on financial support for these businesses prevalent in the Autumn Statement.  The new initiatives reinforce the undeniable influence of the UK’s small business community on the national economy.  It is essential that Scotland’s SMEs seize the opportunities offered up by these initiatives and utilise them to demonstrate their full potential.

What other outcomes of the Autumn Statement do you think will affect businesses in Scotland?  Please share your comments below.

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