Budget 2011: A Budget for Business

My speech in the budget debate, delivered on 24th March, focused on the second objective of the Chancellor's plan for growth; to make the UK one of the best places to start, finance and grow a business. Most of the changes made will not make the headlines like the 1p cut in fuel duty, but have the potential to turn the UK into the start up capital of Europe - a destination for investors looking to invest in fast growing businesses and entrepreneurs looking to start new businesses and create jobs.The survival and success of start-ups is a vital issue for public policy because the 4.8 million SMEs in the UK are responsible for 50% of private sector output and 60% of the jobs. Also according to NESTA, 50% of the jobs in the private sector are created by 6% of the fastest growing companies, which is why I welcomed the measures to help these companies access finance, innovate by investing in research and development, and reward the endeavour and enterprise of those individuals who successfully start up and build these businesses.

Drawing on my own experience, I know how critical it is for small fast growing businesses to get funding to expand and take people on. The policy debate has focused on bank lending but banks typically don't want to lend to these businesses, because their revenue and cashflow profile can be unpredictable which, in the absence of any collateral makes them risky for banks to lend to. We also know that in the UK raising sums of up to £2million in equity (risk capital) is particularly challenging, which is why it was right that the Budget simplified and expanded the rules around the Enterprise Investment Scheme, exempted new businesses from a raft of regulation and raised entrepreneurs relief from £5 million to £10 million; sending the signal that we want to encourage the spirit of adventure essential to business success, and reward the enterprise and endeavour of those individuals who take risk, build businesses and create jobs.

If we want to create the next Lastminute.com, the next Vodafone and the next Dyson, we need to back those with the ideas to take the plunge and this budget does precisely that.

The text of my speech is available at:

http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm110324/debtext/110324-0003.htm#11032467001617

And a video at: http://www.parliamentlive.tv/Main/Player.aspx?meetingId=7926&st=15:11:37

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