Despite the doom and gloom, today’s Autumn Statement saw a ray of hope for start-ups and SME’s. What does this mean for outsourcing?

Autumn Statement 2011

The Chancellor of the Exchequer George Osborne delivered his Autumn Statement to parliament today, and he did not have a lot of good things to say. Osborne admitted that the task of reducing Britain’s financial deficit was bigger than he had anticipated, before announcing that the country’s economy would grow just 0.7% next year compared to the 2.5% previously predicted.

With fears that the UK might slip into another recession in 2012 if it continues to suffer from the effects of the Eurozone Crisis, it was difficult to find anything positive about the nation’s future over the next twelve months. However, amongst the necessary cost-cutting measures, the Chancellor seems to have put his faith in small and medium-sized businesses to generate growth and drive Britain out of the economic gloom.

Investment and growth

The government has pledged £21bn of support known as credit easing through a National Loan Guarantee Scheme and a Business Finance Partnership, making it easier for new start-ups and small businesses to fund early growth. Business Link also describes how the government has updated its National Infrastructure Plan and announced measures to support growth. These include:

  • introducing a new build indemnity scheme for builders and lenders to stimulate the construction of new homes, and launching a new £400 million Get Britain Building investment fund;
  • launching a new Seed Enterprise Investment Scheme (SEIS) from April 2012, offering 50% income tax relief on investments, and a capital gains tax exemption on gains realised in 2012–13 and then invested through SEIS in the same year;
  • making 100% capital allowances available in the Enterprise Zones in Sheffield, the Black Country, Liverpool, Tees Valley, North Eastern, and the Humber; and
  • introducing an ‘above the line’ tax credit in 2013 to encourage research and development activity by larger companies.

At Budget 2011, the Small Business Rate relief holiday was extended by one year to October 2012. This has now been extended again until April 2013. In addition, all businesses will be allowed to defer 60% of the increase in next year’s business rates to the two following years.

The Federation of Small Businesses (FSB) has hailed the Autumn Statement as “a step in the right direction for small businesses”. John Walker, national chairman of the FSB, said: “Taken as a package, the announcements in the Autumn Statement address many of the concerns raised by small businesses and are therefore to be welcomed. The key now is for the Government to be consistent, and set to the task of translating these policy intentions into tangible actions on the ground.”

First thoughts

The Autumn Statement has shown that it is impossible to predict how the country will progress economically when nearly all of our European neighbours are tackling fierce recessions. However, it is possible to draw some positive conclusions from the Statement for outsourcing agencies such as ourselves. The business measures introduced are good news for us, as new businesses especially will be more confident to adopt more innovative business models than their predecessors. As the Law Society Law Conference, next year demonstrates, all businesses are being forced back to the drawing board to find new ideas and new strategies to remain competitive in their respective markets. With more new businesses arriving as a result of government funding, these sorts of gatherings will become more common. As new and old businesses alike begin to appreciate the benefits of outsourcing, such as lowering costs, reducing workload and increasing service level provision, the outsourcing model will become an increasingly attractive option.