The Chancellor used the opportunity of the pre-Budget Report to commit the government to providing support for businesses during the economic recovery.
Mr Darling announced that the Business Payment Support Service, which enables firms that are facing temporary financial difficulties to arrange with HMRC for more time to settle their tax bills, will continue indefinitely.
So far some 160,000 businesses have used the service to defer paying £4 billion of tax, of which £3 billion has since been repaid.
Another government initiative aimed at helping firms that are struggling to secure finance, the Enterprise Finance Guarantee, is also to be extended, in this case for another 12 months.
The scheme, which uses public money to guarantee business loans granted by the banks, is targeted at firms with a turnover of less than £25 million. Currently, 9,000 SMEs have applied to use the EFG, and it is hoped the extension of the programme will introduce an additional £500 million in loan funding.
The Rowlands Review identified a significant gap in SME growth funding. Many SMEs have funding requirements that are too small to attract venture capital or too large for the banks.
Taking up the Review’s recommendations, the government is to set up a Growth Capital Fund which will offer finance to small, fast-growing firms that are looking for investment sums of between £2 million and £10 million. The Fund would involve some £500 million of capital supplied by investment banks and other financial institutions.
To boost investment in innovative products and ideas, the government is to introduce a ‘patent box’ as from April 2013, which will see a reduced rate of corporation tax on income from patents.
An extra £150 million of investment is to go into supporting low carbon technologies
