Policy

Making it easier to set up and grow a business

Issue

Many people feel that starting a business is not for them, either because they’re worried about finding funding and making money or because they don’t think they have the skills or experience needed.

Also, research shows that existing small and medium-sized enterprises (SMEs) can be put off growing their business because of:

  • lack of access to finance
  • not being able to recruit people and lacking the right skills in new and existing staff
  • day-to-day cash flow

Actions

Making the UK an easier place to do business

We’re providing funding and programmes to make loans available to more small businesses, including:

  • a scheme with the Bank of England to enable banks and building societies to borrow from them at cheaper rates so that they can then lend to SMEs at lower interest rates
  • a new business bank that will provide more funding to SMEs

We’re providing funding and programmes to encourage private sector investment in small businesses, including:

  • working with private sector investors to provide government and private sector money to invest in SMEs
  • investing in SMEs with government and private sector money through the Start-Up Loan Scheme, the Business Finance Partnership and Business Angel Co-Investment Fund

We’re funding and managing initiatives to encourage young people and give them the skills to set up their own business, including:

  • recruiting young business owners to volunteer as enterprise champions who will go into schools and talk to young people about running their own business
  • working with schools and colleges to promote schemes such as ‘Tenner’ which gives £10 to each student to start a business and ‘Enterprise Village’ which helps schools to set up businesses

We announced in the Autumn Statement 2013 that we’re capping the inflationary increase in business rates at 2% in the year 2014 to 2015, and extending the doubling of tax reliefs for small businesses (the small business rate relief) to April 2015 to help businesses grow.

We’re providing support and advice to SMEs.

We’re introducing an Employment Allowance in 2014 for all business and charities, which will be entitled to a £2,000 reduction in their employer National Insurance contributions bill each year. This will reduce the barriers faced by small businesses that want to grow, by supporting businesses with the costs of employment.

We’re also making it cheaper for businesses to employ young people by abolishing employer National Insurance contributions for under 21 year olds on earnings up to £813 per week.

We’ve launched websites that provide information to SMEs on how to run and grow their business – Great Business, GrowthAccelerator, Mentorsme and Manufacturing Advisory Service.

Background

The number of private sector businesses in the UK increased to 4.8 million at the start of 2012 – a record high. Barclays estimate there were just under 500,000 business start-ups in England and Wales in 2011; also a record number and 12,700 (2.6%) more than in 2010.

In the same period about 500,000 businesses closed. Businesses have told us that they need access to finance and less red tape in order to keep running.

We’ve developed our policies to support start-ups and SMEs so that they can continue to grow and make a contribution to the economy and so that they get access to finance and support that hasn’t been previously available.

We work closely with businesses, financial institutions and other government departments to help make sure the environment is right for UK businesses to start up, grow and succeed. Our work covers:

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