Autumn Statement fails to inspire print

Simon Nias
Friday, December 7, 2012

This week's Autumn Statement has failed to 'wow' the print industry, despite the reduction in corporation tax, increase in capital allowances and scrapping of the 3p fuel duty hike.

Many felt that, with the Office for Budget Responsibility (OBR) having identified ongoing constraints on the supply of credit as a major factor in the UK’s economic woe, more should have been done to boost lending.

However, the chancellor choose not to provide any further detail on schemes such as the Business Finance Partnership (BFP) and £1bn BIS-backed bank, with an announcement on these now expected to come from the Business Secretary later this month.

Nicholas Mockett, partner with Moorgate Capital, said: "I don’t think there’s much to say; the tax cuts, fuel duty and capital allowances will help business and if the BIS bank and BFP work that could make a difference.

"[But] I can’t help thinking if you posed the question ‘how do you get to prosperity’ the only answer is, ‘well, you wouldn’t start from here’. My suggestion would be giving bigger tax breaks to investors in businesses as one way to stimulate growth.

"It wouldn’t hurt the coffers now, only in say, five years time when the investors realise a capital gain, by which time we can hope that the macro headwinds will have passed."

Tony Rafferty, chief executive of, added: "The downturn is going to last longer and what's clear is that frankly no one can see with any certainty how the upturn will actually take hold. It’s going to be down to entrepreneurs in the private sector to generate the economic wealth and the crucial job creation that the country needs."

However, Rafferty did have some support for the chancellor, and argued that the reduction in corporation tax along with R&D Tax credits were vital to keeping technology initiatives such as its TemplateCloud and W3P developed in the UK.

"Increases in capital allowances should be welcomed by sectors such as ours," he added. "The problem is that capital allowances are only half the story. The banks are still holding onto their cash despite the assurances of the government and the availability of sensibly priced debt to Britain's entrepreneurs is not materialising in the way that's needed."

The availability of finance is an ongoing problem for the print sector and, according to finance brokers, schemes such as the BFP have yet to have any impact on print, while the BIS bank remains an unknown factor.

"The BFP for smaller funds up to £100m was supposed to be distributing funds by now as was the larger fund of which Aviva took a slice yet I am not aware of any being utilised to date," said Deal Bureau’s Gerry Hoare.

"The bank is a great idea and will potentially make lots of money available but the question is how will they get it to the SME's and then more importantly get it back so the taxpayer doesn't end up with another bill?"

Mark Nelson, director at Compass Business Finance, also voiced his disappointment that no further info was provided on the new BIS bank, which "needs some clear direction".

"It could use the existing bank and asset finance lenders to fund opportunities that may otherwise struggle," he theorised. "They could either lend up to 30-40% of a transaction at commercial rates pari-passu with the principal lender, but without any additional security. They would almost certainly make a good return on these investments, with the upside enjoyed on most transactions far outweighing any bad debt."

He added that while the BFP was using non-banking fund managers to provide finance to businesses with a turnover of less than £500,000, "in practice I’m not sure I’ve seen any of this get to the SME’s with which we deal".

Nelson did reserve some praise for scrapping the fuel duty rise and the tenfold increase in capital allowances, from £25,000 to £250,000, which he said was "a pretty straightforward way of incentivising industry".

"I appreciate you have to make a profit to benefit, although investment in modern machinery should help drive future profitability," he added. "This ultimately means the government get the same taxation, or higher, due to efficiencies of modern equipment, albeit delayed."


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