£50m risk capital for small firms

THE Chancellor has announced a £50m fund aimed at helping small firms access risk capital, which he says is often not available from the high street banks.

And as a further boost to small businesses he also said a new community investment tax credit will be introduced which would match every £100 million of private investment with £250 million of public investment.

Speaking about the £50m put aside by the treasury for risk capital, Sally Low, policy adviser at the British Chamber of Commerce, says: ?In general we‘re very supportive of this initiative and think it will help those companies who are beyond the start-up stage and looking for financing.

That said, it‘s not yet clear which firms it will be available for – in terms of the limitations and restrictions. As ever, we‘ll have to wait to read the small print for that.‘

The Chancellor has also reaffirmed his proposals for a training tax credit to encourage in-work training skills. The government has been investigating its viability since last year, after proposals were put forward by the CBI and TUC.

And Gordon Brown also announced further help for small companies: ?Following today‘s report from the Performance and Innovation Unit we will, from September next year, pilot a new approach combining direct financial support for businesses – especially small businesses – with time off for training, under which employees, employers and government each accept their responsibilities.‘

John Whiting, tax partner, at PriceWaterhouseCoopers believes that in general tax credits are a good idea and do help those in low paid work but he expresses concern at the increased burden they place on employers, particularly smaller businesses.

?Yet again the beleaguered employer will be stuck with administering and carrying through the Government‘s idea – with no compensation for it. The working families tax credit has just got off the ground and there are plans for other tax credits to arrive next year and Gordon Brown is changing things already,‘ he says.

The Government is increasingly placing strong emphasis on workplace training and training for life. The Chancellor plans to use a Downing Street study on workforce development to launch a cross-departmental review of policy options, including the training tax credit.