Dear George Osborne,
With nearly 20 years between this and the last Conservative Budget, there was always going to be a massive focus on the red briefcase this year, especially from people like me who voted Conservative for the first time on May 7. I'd like to discuss it from an entrepreneur's perspective, and to provide some insight into the issues affecting Britain's 5.2m SMEs, which account for 48% of the UK's private sector employment and 33% of private sector turnover.
My view is that there is some great news for businesses in 2015's Summer Budget, but some areas will need your attention if the UK is to continue encouraging the calibre of enterprises capable of driving growth and creating jobs.
First of all, your commitment to simplifying taxation is a relief for the majority of small business owners who are broadly happy to pay taxes but who want the cost of complying to be lower, and for there to be a level playing field whereby companies large and small pay what they owe. Now it has been given statutory footing we look forward to seeing more progress from the Office of Tax Simplification in the months to come, and something more accessible than the 17,000 page tax code. As well as reducing business' financial headaches, I'm keen to see the extra £800m you have handed to HMRC to tackle tax evasion yield results in the form of tax loopholes being closed down and a greater share of tax revenues flowing in from big corporates.
Additionally, it's greatly encouraging to see the cut in Corporation Tax - already among the lowest in Europe and the lowest in the G7 - which will help put the UK on an even more competitive footing in the global business market. However, why is it Mr Osborne that while one hand gives, the other takes away with increased taxation on dividends? Entrepreneurs are now faced with a far less tax-efficient means of benefitting from their enterprise; is this really the best way to reward the personal risk that we are prepared to take on, and our subsequent contribution to the UK economy?
We must also discuss the status of the entry-level workforce which is the lifeblood for many industries country-wide. Many small businesses might view the proposed living wage increase to £9/hour as an unfair burden. I think it's only right for companies to pay staff a living wage, and what's more it's an important factor in encouraging people on benefits that work pays. So too is the move to waive income tax for those working 30 hours a week on the £9 per hour wage by 2020 - it is exactly the right way to encourage growth in the workforce, which can only benefit UK businesses in the long term.
Finally, your decision to put pressure on business - in the form of a so-called 'apprenticeship tax' - to shoulder more of the cost of apprenticeships is proving controversial, with many concerned about as-yet undeclared specifics of the plan. In principle, I must agree with your initiative because apprenticeships are already proving their worth: the Center for Economics and Business Research puts a value of £34 billion per year contributed to the UK economy from apprenticeships. Growth industries such as the digital industries rely on having a steady supply of young talent but for this to be a reality we need to elevate apprenticeships to the same reputation as university degrees - they are a worthy platform for significant development of practical skills that are beneficial to all parties, as demonstrated by the successes of Germany's well-respected apprenticeship programmes. So I see no reason why businesses should not help with footing the bill for making our apprenticeship schemes not just fit for purpose but world class.
Mr. Osborne, SMEs and startups are looking to the new Conservative government to create a vibrant entrepreneurial culture and increase the UK's commercial competitiveness. This budget shows the right intentions, but I urge the government to keep entrepreneurs front of in mind while you work to balance the country's books.
Entrepreneurs have played an important role in the UK's economic recovery and we are key to its continued economic success. Please ensure we are able to pay ourselves more than we shell out in taxes - if you do, I am sure that the country will prosper alongside us.
Best wishes,
Frances Dickens
CEO Astus Group