Commenting, Edward Rimmer, UK chief executive at Bibby, said: “Darling’s list of four measures designed to support small and medium-sized businesses simply doesn’t add up. Nor does the package go far enough to help UK businesses play their part in driving economic growth.
“Indeed, while with his first proposal – getting state-owned banks RBS and Lloyds TSB to free up at least half of a £94bn credit package to improve access from SMEs – is positive in recognising that ‘viable’ businesses are still struggling to access credit, I would question whether this will really ensure that business owners know where to go or are truly able to use this stimulus to get the cash flowing.
“Similarly, it is difficult to see how the launch of a credit adjudication service to fast-track business owners’ complaints about accessing credit will really prove effective if the banks simply can’t lend to some businesses. I suspect that, like the EFG, it will prove a nice idea supported by little substance.
“Nevertheless, the new UK Finance for Growth investment corporation, designed to provide greater financial support to businesses and help them cut through the ever-increasing amount of red tape, should start to bring some clarity for businesses who are trying to stay afloat amid ongoing bureaucracy and cashflow difficulties.
“In addition, freeing up a greater proportion of public sector contracts (15 per cent) for tender by small and medium-sized businesses should help a broader range of companies start to access this once-lucrative sector. However, speeding up of payments from the sector to a maximum of five days, while ideal, is also difficult to see how it will really work in practise.
“Finally, the extension of HMRC’s Time to Pay initiative is simply a necessity at this point in time if Darling does not want to force large insolvencies among a number of barely-afloat businesses. That said, other measures to help businesses survive, such as the year-long suspension of business rates for 500,000 small firms, will no doubt be welcome – but again, this could go further.
“With so many businesses struggling at the moment, and little sight of a major economic recovery in the short term, it is vital the government provides a package of support to help all businesses, whatever their size, in order to sustain the lifeblood of the economy.”