Budget measures intended to improve the environment for small business were roundly criticised by advisers as ineffective, political and pointless and giving no incentive to investors.
The chancellor announced a number of measures in his 2010 Budget, including doubling entrepreneur’s relief on capital gains tax, relief on business rates for small firms, doubling of the annual investment allowance and some proposals on venture capital trusts (VCTs).
Alistair Darling also gave some detail on the £200 million growth capital fund announced in 2009, which was dismissed as 'old news'.
Pressure would be applied to RBS and Lloyds, he said, to release £94 billion of loans to small businesses in the coming year.
Brian Tora, consultant at JM Finn stockbrokers, says: “It all just seems to be political posturing to me. You can ask the banks to lend but are they really going to make them?”
He adds: "It would be better off just cutting all the paperwork they increasingly make small business do.”
Paul Cooper, tax partner at Grant Thornton, says: “The detail on the growth capital fund is old news and the help with rates is all right if you run a corner shop but not in serious business.”
Mark Longley, senior partner of Clayton Longley accountants, says: “The only useful thing here for business is the mention of the Time to Pay scheme [which allows firms to defer tax payments]. On the other hand, any accountant in practice will tell you the Inland Revenue is increasingly hard to do business with, so I’ll believe that when I see it."
On the doubling of the annual investment allowance, Longley says: “That’s fine if you are the kind of business that spends £100,000 a year on kit, but how many really do? And motor cars are exempt.”
Business advisers were also dismayed by the lack of action to stimulate investment in VCTs and the chancellor’s failure to tidy up the enterprise investment schemes - both tax efficient routes for investors into start up business.
Up until three years ago, companies with gross assets of up to £15 million before new money, and £16 million after it, qualified for VCT investment. The rules were tightened dramatically taking the limits down to £6 million and £7 million respectively.
This change pushed VCTs into investing in smaller, earlier stage and riskier companies - and effectively killed the market.
But the government has announced that it is to consult on reversing these restrictions.
Stephen Austin, managing partner of Hybridan, says: “The proposed changes to VCTs represents a violent u-turn for the government.
"There is now a proposal to reverse these changes – however still only a proposal and subject to consultation, so what are the chances of that happening before the election? None."