The speakers for the evening were:
Andrew Tyrie MP for Chichester and Chairman of the
Treasury Select Committee.
Susan Hayes Head of Business Banking, Barclays
Gillian Cardy Managing Director of the Independent Financial
Adviser (IFA) centre.
CWO Chairman, Katy Bourne welcomed our guests on behalf of
CWO and outlined that the purpose of the ‘Business
Budget 2012’ was to allow exploration of the impact of the recent budget
announcements on small businesses. Katy
encouraged discussions around the role of women in business and in what ways
the budget will have an impact on economic growth for all demographics.
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| CWO Forum: Sophie Stratton, Gillian Hardy and Susan Hayes |
Sue Hayes led the
discussion by explaining her role as Head of Business Banking at Barclays and
went on to discuss how and why banks are making a concerted effort, through
their growth agenda to help small businesses.
Currently 50 % of start-up businesses fail within their
first three years; Sue discussed the challenging conditions that a start-up
company is likely to face based on her assessment of the core issues she sees
arising daily within her client’s environment. The three main reasons she identified for the
failure of new businesses are: the economic climate and reduced demand, the
competitive landscape and cash flow issues.
Sue observed that
there is a general feeling of uncertainty around the regulations in respect of setting
up a new business which serve to deter people from venturing into this
territory due to a lack of confidence and understanding of the basic logistics
involved in setting up a new business.
Homing in on the budget, Sue thought that there had been modest
changes but nothing which would make a substantial difference to promote entrepreneurial
growth. However, the reduction in the
higher rate of personal income tax and the increase in personal allowance would
mean that greater disposable income could potentially have the effect of
stimulating consumer spending, albeit not aiding initial investment.
Sue went on to explain how banks can help to stimulate
confidence via a number of fiscal initiatives and support services such as;
-The National Loan Guarantee Scheme which creates lower interest rates for
lending and gives a percentage of cash back to the applicant.
-Business support units and seminars proactively
advising business on any issues they are experiencing and discussing ways to
increase revenues for a new business. E-commerce
for example, if conducted internationally, gives a business a fourfold chance of
being successful in the critical 36-month window.
-Networking forums to link customers and business
together.
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| CWO Forum: Susan Hayes, Theodora Clarke, Margaret Bird, Pauline Lucas, Gillian Cardy and Katy Bourne |
The overall message was that
banks do want to loan to businesses to aid the UK’s economic recovery. Last year alone £4.7bn was invested by
Barclays into small businesses and Barclays hit their Merlin targets. Given the current economic situation today
around 42% of people will have to rethink their retirement plans and 25% of
people will have to work over the age of 65.
Barclays wants to encourage a stimulus for growth to give people greater
flexibility over their retirement options.
Gillian Cardy spoke about her role as Managing Director of the IFA
centre and how she perceived the budget would have an effect on the financial
planning strategies of individuals and businesses alike.
Gillian sees the budget in its
current form as having only nominal changes which directly affect the role of
an IFA in giving client advice. In her
view, present regulations need simplification to stimulate economic growth as
the increased complexity of rules around taxation are making it challenging for
both employers and employees to understand their responsibilities and, as a
consequence, more costs are being incurred by businesses.
Prohibitive costs make it more
challenging for new business to flourish.
An example of these increasing costs for employers is the new National Employee
Savings scheme which all business must start to contribute to.
An example of change suggested by Gillian was
in regards to rules around National Insurance; she suggested a revision of the
current 13.8% which has to be paid even into retirement.
To summarise, Gillian brought the
discussion to an employee level and discussed the current missed opportunities
for road-mapping a real savings plan and taking advantage of tax free opportunities
such as ISA’s and personal allowances.
Finally Andrew Tyrie discussed how he saw the budget from his perspectives
as an Economist, an MP and as the Chairman of the Treasury Select Committee.
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| CWO Forum: Andrew Tyrie MP |
Andrew supported the defining strategy of the
budget which is a deficit reduction programme to deal with the current economic
conditions. He believes in turn this
will promote confidence from the markets. The budget has been set by the Chancellor with
little scope for manoeuvre as there are real fiscal targets to be met and the
government is in the early stages of implementing a long term strategy to
restore economic growth rates to 2.4%. Andrew is confident that this coalition
budget will prevent a UK replication of crises seen in Greece and other
Eurozone countries.
In line with his co-speakers,
Andrew agreed that an overhaul of regulation in certain areas affecting
business is overdue and that a simplification of employers’ legislation and a
focus on making it easier for sole traders to create the jobs, are needed to boost
the economy.
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| CWO Forum: Theodora Clarke |
In agreement with Gillian Cardy,
Andrew went on to say that the British taxation system is one of the most
complicated taxation systems in the world. There are issues around tax avoidance which
could be addressed by less ambiguity on the subject and clearer tax
models. Tax cuts at the top end of the
market are designed to retain wealth within the UK and avoid overseas
relocation in line with Laffa principles. In addition to this, improvements via the Loan
Guarantee scheme will serve as a much needed catalyst for bank and consumer lending
and UK entrepreneurialism.
Questions and
comments from the floor examined issues such as: why has the tax code not
been simplified since the 1980’s; why income tax has not returned to the previous
40% level and will there be more efforts put in place to incentivise start up
businesses and support their growth? Each of the speakers summarised their final
points and the Chairman thanked them for participating in an informative panel
discussion on the budget.
With thanks to: Sophie Stratton, CWO Director of
Forums and Charlotte Argyle.
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