Main business policies and the views and recommendations of the BVCA
Retaining the 2015/2016 cut of main rate of corporation tax to 20%
Tax certainty is of course to be welcomed. A strong feature of this parliament has been the Corporation Tax Roadmap and we would like to see more consensus locked in to this direction of travel.
Expanding the role of the Office of Tax Simplification
Simplifying tax is a worthwhile endeavour and we hope the work of the Office for Tax Simplification continues into the next parliament. Provided this can be done with minimum disruption for small business we would support it.
Supportive of an annual limit on non-EU economic migration
We can understand the sentiment behind this policy but it needs to be refocused on the skills that Britain’s employers need first and foremost. This means clamping down on immigration that our economy doesn’t need and cannot support, but it also means taking a nuanced approach to encouraging the right people with skills and ideas to come to the UK.
For example, the annual cap on “exceptional talent” visas should be abolished and the graduate entrepreneur scheme amended. Specifically on the latter, the quota of 1900 places should be lifted, while the list of authorised higher education institutions needs tailoring to focus on STEM fields.
Finally, the restriction of ten endorsements per academic institution requires amending to ensure that universities with a concentration of talented students do not lose out. Non-EEA graduates should also be granted an automatic one-year visa to search for work in the UK.
Supporting the expansion of challenger banks to diversify the banking market and creating a new online platform for lenders to search for SMEs that are seeking a loan but have been rejected for finance by other banks
Whilst our financial system is well on the way to repair, it is still the case that bank’s risk appetite to support growing companies is not what it was, and in some respects, nor should it be. But this means that we need to do all we can to support non-bank lending financiers who have the appetite to invest in young, growing companies. The British Business Bank’s role as supporting alternative providers of finance should be fostered by further signposting efforts, perhaps along the lines of the European Commission’s “Access to Finance” portal.
Tripling the reach of the Start-Up Loans scheme from 25,000 to 75,000 new enterprises backed by £300m of loan capital
The Start-Up Loans Scheme has proved highly successful in supporting those with ideas and giving them the confidence to start their own business. Provided this scheme continues to attract extensive mentoring support as well as initial finance, we would support its extension.
Cutting a further £10 billion of red tape over the next Parliament
This is difficult to argue with as any small business is against excessive regulation. The BVCA has worked with the Government on their ‘Red Tape Challenge’ to try to identify specific regulations that serve no purpose but impose burdens on businesses. A commitment to cut a further £10bn is a good reminder that the process is not complete.
Raising the target for SMEs’ share of central government procurement to one-third
Access to government procurement is a valuable source of growth for smaller businesses. Experience in the United States shows that a successful public procurement programme can transform smaller companies into market leading firms. The market dynamics in the US are, however, different, so we would caution against trying to replicate the model exactly.
We recommend scaling-up the Small Business Research Initiative (SBRI) so that government departments are committing at least 2.5% of their research and development budgets to small businesses.
Continuing the Funding for Lending scheme into 2016
We support the principles behind Funding for Lending on the grounds that whilst banks are rebuilding their capital provisions, anything that enables them to lend more to businesses is to be welcomed. In addition to continuing FLS into 2016, the scheme should be expanded to guarantee certain amounts of committed capital from institutional investors as well as other non-bank channels when it is invested in the UK.
We believe that a larger investor base for UK venture capital would allow our start-ups to grow further up the funding ladder and prevent premature trade sales to overseas buyers. Institutional investors like pension funds should be encouraged to invest in small growing companies through venture. We recommend the introduction of a tax credit on a pension funds UK dividend income. In a manner similar to the current provisions for private investors, institutional investors would obtain tax relief of up to 30% of their investment in a venture capital trust (VCT), through a tax credit on their other UK dividend.
Creating more Catapult networks
Spending a new £6.9bn capital in the UK’s research infrastructure up to 2021
The Catapult network has been highly effective in providing a platform for founders, researchers and investors to meet. We agree with many recommendations of the Hauser Review of the Catapult Network, particularly that funding for centres needs to be more stable and increased in line with recent commitments to double spending on innovation.
The BVCA is supportive of the expansion of the existing Catapult centres network by concentrating resource in key geographies and sectors where the UK is already strong. We also recommend enhancing the support of the centres for early stage research phases in order to bridge the so-called “valley of death”.
We are supportive of any effort to improve the UK’s innovation ecosystem. The venture capital industry has the ability to develop and commercialise new ideas from spin out companies, and thus translate the research emanating from our world class university system into economic output, providing public investments benefit the vital scientific infrastructure necessary for universities and business.
Rolling out the Help to Grow scheme to fill the funding gap for fast-growing businesses firms
The BVCA, as part of the Scale-Up Alliance, is a strong advocate of the disproportionate contribution by high-growth companies to job creation and economic growth in the UK. Any attempt to improve the funding landscape for this vital part of the enterprise economy is welcome as this would help fast-growth firms expand from small to medium sized companies.
Abolishing the employers’ National Insurance contributions on under-21s and extend this to under-25s
Giving employers direct control over the funding for external training of their apprentices
The BVCA fully supports these proposals, which clearly set the direction of travel towards a better quality and effectiveness of apprenticeships and help to produce a new generation of skilled workers.