SMEs and the construction industry were looking for more detail in this Budget on measures that would help kick-start growth and promise investment but what they got was very disappointing, says NFB chief executive Julia Evans.
- Recognising the importance of capital investment
- What happened to previous measures to help SMEs?
- One eye on the general election
While housing dominated most of the post-Budget headlines, a more sober reading would sum up the measures that most directly affected the construction and housebuilding sectors as: jam tomorrow.
This was the chancellor’s last opportunity to make changes that could have made a measurable difference before the general election in 2015.
Recognising the importance of capital investment
We did not need to see a rabbit pulled from a hat or any other gimmicks. What we needed to see was a government that had recognised the importance of capital investment and construction activity to the economy, had made previous provisions for infrastructure and was ready to deliver on those previous announcements.
We need to see the delivery of those schemes and a laser-like focus on ensuring the schemes benefit those they were intended to help.
The announcement of £3.5bn for capital spending seems generous; then you realise it does not come into effect until 2015/16.
This sum also does little to help reset an industry that has lost 130,000 jobs, has the highest rate of insolvencies and was subjected to £11bn of cuts in 2010 after the coalition took office.
What happened to previous measures to help SMEs?
Previously unveiled initiatives gained the government much capital, nailing its SME-friendly colours to the mast, but those measures that could help them aren’t reaching SMEs to the extent that would make a difference.
The Enterprise Finance Guarantee Scheme? Limping along. Project Merlin? Missing in action. Business Bank? Trailed before the autumn statement, but not expected before 2014.
“What we needed to see was a government that had recognised the importance of capital investment and construction activity to the economy”
The last great hope, Funding for Lending, along with NewBuy, simply allows the largest lenders to lend to the largest housebuilders, siphoning off most potential housebuyers, creating a false and very narrow market that prevents finance from reaching smaller housebuilders.
My fear is that we will see more of the same with the new-build element of Help to Buy, especially if it allows people to purchase second homes. It would appear that those who need help with financing the least are receiving the greatest amount of taxpayer-funded help.
One eye on the general election
While headline-grabbing measures such as the reduction in beer and fuel duty are, really, small beer in terms of household budgets and the effect on individuals, they will have a downward effect on inflation that will become apparent in the next year or more.
The government needed to make the hard choices for the long term by resolving issues with access to finance for companies of all sizes, improving housing supply (rather than focusing on demand) and boosting SME engagement in building programmes, all of which could have made a difference in the near-term.
Instead, it delivered a Budget with one eye firmly on the 2015 general election.
Julia Evans is chief executive of the National Federation of Builders