CONSERVATIVE backbenchers roared with delight as George Osborne unveiled a series of initiatives to boost businesses amid Britain’s flagging economic recovery.
Their main wish had already been granted after the chancellor scrapped the 50p top rate of income tax but he also devised several moves on enterprise, investment and exports.
Osborne announced a £200m increase to the £1bn Business Finance Partnership, in which the government matches investments from the private sector to provide credit to medium-sized companies.
The Treasury has shortlisted seven fund managers to take part in up to £700m of the scheme.
It will also increase the Enterprise Finance Guarantee Scheme (EFG), which was designed to boost lending to small companies. The share of their loan book which they can put into the fund will be raised from 13 per cent to 20 per cent.
Last night, however, it appeared difficult to predict the level of take-up and the cost to the Treasury. Recent figures showed lending under the EFG dipped 24 per cent to £77.8m in the final three months of last year.
John Cridland, director general of the CBI, said: “Increasing the government’s risk sharing under the Enterprise Finance Guarantee will make banks more able to boost small business lending.”
Osborne’s small business measures included the Seed Enterprise Investment Scheme, which will provide income tax relief of 50 per cent for individuals investing in certain seed companies, coupled with a capital gains tax holiday for profits on the disposal of assets into such firms.
Small companies are also set to enjoy a fillip through the Enterprise Management Incentive scheme, which yesterday had its grant limit doubled to £250,000. The investment limit for Venture Capial Trusts is now £5m.
The government also wants to boost British exports, which have lost global market share over the last decade as Germany’s grew. It will more than double the value of UK exports to £1 trillion by 2020 and will expand the overseas presence of UK Export Finance, although the Treasury was not able to put a cost on the scheme.