Liberal Democrat Party
Main business policies and the views and recommendations of the BVCA
Establishing an independent review to consult on how to set Living Wage across all sectors
A living wage is a desirable policy outcome but careful analysis needs to be done to ensure it doesn’t have a chilling effect on hiring.
In sectors that are characterised by minimum wage labour such as social care, businesses would like to work with the government on paying higher wages, provided more investment is forthcoming.
Expanding transparency requirements by 2020 to include publishing the number of people paid less than the Living Wage and the ratio between top and median pay
If the Liberal Democrats are nonetheless minded to go in this direction, we would encourage them to exempt small businesses from such proposals to insulate them from unnecessary cost and regulatory burden.
Creating a stronger public interest test for takeovers in research-intensive industries
We don’t believe that Government is well equipped to dictate and monitor criteria for foreign takeovers and that actually what ultimately benefits UK businesses is having an open, market economy.
Processing times tackled for quicker visas for short-term business visitors, tourists and students
We would support measures to improve processing times for business visas.
We would also urge expansion of the entrepreneurs visa, as well as the issuance of more visas in general for highly skilled migrants, particularly those who have studied a STEM subject, to help meet the demand of fast growing businesses.
Maximising revenue from Capital Gains Tax by more closely aligning rates to Income Tax and introducing a de minimis capital gains exempt amount on top of a single tax free threshold for both income and capital gains
We do not believe that this is an effective way to maximise revenue and in fact this would prove to be a block on investment. Having a lower rate for capital gains encourages investment and entrepreneurship as well promoting growth.
Indeed a lower rate of CGT for investment into SMEs, particularly long-term investment, would unleash countless businesses with high growth potential.
Refocusing the Entrepreneurs Relief to ensure it only helps genuine entrepreneurs and isn’t used as a tax loophole
Entrepreneur’s Relief is there to encourage people who want to start a business by allowing them to keep what they earn up to a lifetime limit of £10m, to reflect the risks they have taken and the benefits to the wider economy.
In fact we believe it should be expanded so that not just those who own 5% or more of the business can benefit and indeed not just those who are ‘employed’ by the business. This will encourage more investment and more willingness for talented people to work in small fast growing companies.
Reforming and improving the Regulatory Policy Committee to reduce regulatory uncertainty and remove unnecessary business regulation
This is difficult to argue with as any small business is against unnecessary regulation. Indeed we have worked with the Government on their ‘Red Tape Challenge’ to try to identify specific regulations that serve no purpose but impose burdens on businesses. It is a process that is not complete though so anything that keeps it on the agenda is to be welcomed.
Supporting tough ring-fencing of banks; potentially enforcing full separation of retail and investment banking operations
This measure should be viewed through the lens of whether it affects banks’ abilities to lend to the real economy, finance business acquisition and expansion. Particular attention should be paid to ensuring domestic and European reform measures in this area are compatible.
Supporting innovation through greater public funding on a longer time scale, more ‘Catapult’ innovation and technology centres and a green innovation arm in the new Business Bank
We support Catapult Centres as it remains vital that we find ways to commercialise our world class intellectual property base emerging from British Universities. However feedback from BVCA members suggests that geographically and in resources terms, efforts are being spread too thinly across too many centres.
Instead of new centres, additional resource should be deployed in existing ones to help build scale.
Expanding the British Business Bank so that it can provide more long-term capital for middle-sized business
The Business Bank should be used to provide financial guarantees for investment into businesses that is deemed unsuitable for bank lending.
Whoever forms the next government should pay particular attention to the contents of the revised EU Risk Finance Guidelines in the design of new or amended distribution channels to sit within the British Business Bank.
By doing so any such measures will stand the best chance of receiving state aid clearance from the European Commission and be up-and-running as quickly as possible.
Changes to the tax deductibility of interest payments
As yet we have very little detail on this policy but any moves in this direction would be unwelcome in the business community. The issue the UK faces is still the over taxation of equity.
That is why we welcome the Government’s commitment to work on the Allowance for Corporate Equity which would make equity cheaper, rather than significantly increase the costs of capital by making debt more expensive.
Reinstating post-study work visas for STEM graduates who can find graduate-level employment within six months of completing their degree
Fast-growing businesses have a strong demand for highly-skilled migrants, particularly for those who have studied a STEM subject. We would support the reintroduction of post-study work visas for STEM graduates to help meet that skills shortage.
In addition, we believe the number of visas for skilled migrants and entrepreneurs – particularly the Tier 1 Exceptional Talent Visa, the Tier 1 Graduate Entrepreneur Visa, the Tier 1 Entrepreneur Visa and the Tier 1 Investor Visa – should be increased since these are exactly the people that Britain needs to succeed in the global economy.
Continue the Regional Growth Fund throughout the next Parliament
The Regional Growth Fund (RGF) is intended to help businesses in areas where private sector employment is low. Despite this aim, the scheme has often funded substantial loans to larger firms, which increase the risk of dead-weight loss.
We would support the continuation of the Regional Growth Fund, provided it presents genuinely ‘new’ investments. The RGF should focus on providing finance to companies that have proven potential and represent a more secure investment in future jobs and growth, whilst it may be less geographically expansive.
Providing further support to medium-sized businesses through a one-stop shop for accessing government support, a dedicated unit in HMRC and the development of management skills
Having a dedicated contact for accessing government support is certainly a policy that we would agree with, as is having a unit in HMRC. Any further signposting efforts designed to help SMEs access to all types of finance, should be encouraged. Having a cabinet level representative, exclusively responsible for high-growth businesses, is also a policy worthy of consideration.
Opening public procurement policy as a tool of local growth and community development
Access to government procurement is a valuable source of growth for smaller businesses, regardless of where they are based. This impact on ventures based in underserved areas is all the more transformational. We encourage government commissioners to further include social impact in their procurement decisions so that a new culture of public services procurement encouraging innovation and prevention becomes the norm.
We would also 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. There is a huge potential for innovation to benefit the NHS.
Working with Local Enterprise Partnerships to improve their effectiveness and coordination
Local Enterprise Partnerships (LEPs) could be a valuable medium of driving growth in the regions, should they be provided with more substantial powers and funding to link business needs to local skills and infrastructure development. To improve their effectiveness, we also encourage LEPs to invest in a portfolio of proven and emerging models which engage SMEs in university partnerships.
The City Growth Commission report, sponsored by the BVCA, has highlighted several examples such as the Knowledge Economy Skills Scholarships and Eulergy, a new web-based services aimed at matching a specific business need for research with an academic or postgraduate student.
Supporting a network of incubators for technology companies
We recognise the importance of having technology and innovation clusters as it remains vital that we find ways to commercialise our world class intellectual property base emerging from British universities. 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.