Autumn Statement: Small firms get £40bn credit help

George Osborne: 'Youth unemployment ... is now unacceptably high''

A series of measures aimed at helping UK businesses and the wider economy have been announced by Chancellor George Osborne in his Autumn Statement.

The biggest new policy is a £40bn "credit easing" scheme to make it simpler to underwrite bank loans to small firms.

Small businesses with an annual turnover of less than £50m qualify for the scheme.

Mr Osborne says it will cut the average interest rate for those firms by 1%.

The chancellor also said he wanted to help medium-sized UK businesses - "who have been neglected for too long" - and announced a £1bn business-finance partnership aimed at companies.

John Longworth, director general of the British Chambers of Commerce, said: "Businesses will support the aim of credit easing, but will be watching carefully to ensure that viable small- and medium-sized companies can access the finance they need to grow."

'Help, not loans'

Reacting to the government measures, Nigel Buckle, who owns a farm in County Durham that produces beef, and also sells boarding kennels and Christmas trees, said he was "very impressed".

"This is a way of getting investment back into business," he said. "We need help, we don't need loans."

Small businesses have complained banks - including those bailed out during the crisis - will not lend to them and this is meant to solve that problem.

"The banks aren't doing their jobs," said the 59-year-old Mr Buckle, who has been in business for the past 35 years.

He said that banks were "overcharging" businesses like his and the costs of borrowing are "phenomenal".

Mr Buckle also said the costs of his Christmas trees had risen by 20% because of fuel costs and VAT. Transport costs have trebled in 20 years, he added.

On Tuesday, Mr Osborne decided to cancel January's 3.02 pence per litre fuel duty hike.

'Plan A plus'

The chancellor also announced tax relief for people who invest in start-up businesses.

Autumn Statement documents

PDF download Autumn Statement 2011[3MB]

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From April 2012, anyone investing up to £100,000 in a new start-up business will be eligible for income tax relief of 50%. In 2012, any tax on capital gains invested in such businesses will also be waived.

And the government has identified more than 500 infrastructure projects - road, rail, air and high-speed internet - that it wants to see built in the coming years.

An extra £1bn is being allocated to the Regional Growth fund in England and almost £500m will be invested in high-tech industries.

The government has also announced a £500m housebuilding scheme in England as well as the mortgage indemnity scheme to help 100,000 people get onto the property ladder.

"We particularly welcome the new emphasis on capital spending, and the measures to leverage private sector investment on infrastructure for roads and energy," said John Cridland, the CBI's director-general.

"This is 'Plan A plus' in all but name."

Unemployment

The chancellor has announced a £1bn "youth contract" to subsidise six-month work placements for 410,000 young people and increase the number of apprenticeships.

This comes amid increasing unemployment.

General unemployment is high - about 2.6 million. And official forecasts see the unemployment rate rising to 8.7% in 2012.

And youth joblessness has reached a record level - more than 1 million people aged from 16 to 24 are currently not in education, employment or training.

"This package is a very positive step," said Paul Brown, a spokesman at charity the Prince's Trust, which works with young people. "The question is whether it is enough."

He says that 45% of the young people most affected have been out of work for six months or more and the challenge is to avoid a "lost generation" of people out of work.

With the boost to infrastructure, Mr Brown suggested there may now be more opportunities in the construction industry, for example.

Retail is another sector that could benefit from the Autumn Statement. (The service sector represents more than 70% of the UK economy.)

There will be an extension of six months to the end of March 2013 on the relief that all small businesses with properties receive from business rates.

The BBC's business editor Robert Peston says that retailers represent about three-fifths of these businesses. "Apparently some 500,000 businesses see a benefit, of which 330,000 are retailers," he says.

Companies whose premises have a rateable value up to £6,000 will receive full relief, and then there is tapered relief on premises with a value up to £12,000.

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