HE HAS been criticised for taking too long to find the button marked “growth”, but yesterday George Osborne finally pushed it. Hard. With other business groups, the banks had been writing “Dear chancellor” letters, demanding measures to help small and medium-sized enterprises (SMEs), and this year’s Autumn Statement was his answer.
This isn’t pure altruism on the part of the banking sector, but enlightened self-interest: the better small businesses and the wider economy do, the better the banks do in turn. What is good for the economy is good for us (and vice versa).
The government’s £12bn growth package contained a large number of initiatives that we had asked for. Top of the list was a “use or lose” tax break to get companies to stop sitting on cash piles, and to encourage them to instead invest their money to promote future growth and jobs. The tenfold increase in capital allowances to £250,000 – for two years only – similarly creates a huge incentive for British companies to start spending on plant and machinery, helping both them and the wider economy to grow. At a time when business investment is being held back by lack of confidence about the future, this could be just the sort of kick-start Britain’s economy needs.
There was a raft of measures to help small businesses export, including a budget boost for UK Trade and Industry, and a £1.5bn export finance facility. The increase in the Isa allowance to £11,520, and the lifting of the ban on stocks and shares Isas including Aim-listed companies, was a win-win: good news for savers, and good news for growth businesses that currently want investment. Small business rate relief was extended, tax for SMEs simplified, planning policy was streamlined, £5bn spent on soon-to-be shovel-ready investments, and then the coup-de-grace: corporation tax will be cut to 21 per cent in April 2014.
The cut in corporation tax is to be warmly welcomed, as it makes the UK more globally competitive, and shows the world we are open to business. The whole package was greeted with a chorus of approval from business groups, including ourselves.
The only disappointment was that – as the chancellor made very clear when announcing the cut in corporation tax – he was deliberately exempting banks from the benefit. There is still too little appreciation in the highest echelons of government what a major export industry banking is. British banks win business from across the globe to create taxpaying jobs – not just in London, but across the UK (the biggest private employer in Dorset is JP Morgan).
It is time politicians wake up to the fact that, when it comes to returning the economy to growth, banks are no longer the problem – but part of the solution.
Anthony Browne is chief executive of the British Bankers’ Association.