Chancellor George Osborne will focus this week’s autumn statement on increasing the lending available for smaller firms alongside a bank levy increase and a softening of upcoming travel price hikes.
In Tuesday’s autumn statement, the Government will unveil a number of credit easing schemes designed to offer around £40bn of loans to smaller firms. The Government will create the National Loan Guarantee Scheme under which it will underwrite a set amount of lending by banks to smaller firms. It expects the guarantee will lower the price of lending to small firms by 1 per cent.
Speaking on the BBC One’s Andrew Marr show yesterday, Osborne said the National Loan Guarantee Scheme would initially make £20bn of loans available but this could double depending on demand. It should launch early next year and run for at least two years. Osborne said: “The Government will underwrite the loans the banks make to small businesses in order to cut the interest rates the small businesses pay.”
The Government is expected to increase its bank levy from 0.075 per cent to 1 per cent because of concerns the current rate will not bring in the expected £2.5bn of revenue due to economic conditions.
The Sunday Telegraph reports the Government will introduce a new tax avoidance crackdown, including targeting those avoiding stamp duty on expensive properties.
On Friday, the Daily Mail reported the Government was to delay the introduction of auto-enrolment for small firms by one year due to concerns about their growth prospects. Under the current proposals, the biggest employers must enrol staff into a company pension scheme from October 2012. Smaller firms of less than 50 are due to begin a staged auto-enrolment in March 2014 with all small firms auto-enrolled by September 2016. The Sunday Telegraph reports that auto-enrolment for small firms has now been “kicked into the longest possible grass” by the Government with an announcement due as part of the autumn statement or soon after.
The Office for Budget Responsibility will downgrade the UK’s growth forecasts for 2011 and 2012 with next year’s growth expected to be cut from 2.5 per cent to around 1 per cent.
The Government is expected to soften the planned increases to rail ticket prices and scrap or delay the planned 3p increase in fuel duty.
Osborne will also announce details of plans to encourage pension funds to invest up to £20bn in infrastructure projects.