West SMEs highlight lack of Government support as growing concern

Published on: 19th January 2017

West-based SMEs are among those feeling optimistic about the prospects for the UK economy, but increasingly concerned about the lack of support from the government, according to the latest research from Smith & Williamson, the accountancy, tax and investment management group.
The Enterprise Index, a quarterly barometer of owner managers and entrepreneurs including those based in Bristol and other parts of the West, found that confidence in the UK economy grew five points from the previous quarter, with 50% of respondents expecting the economy to improve in the next 12 months.  Optimism in their own business prospects was also high, with three quarters (76%) optimistic about the year ahead.
However, less than half of the respondents believe that the current government is supportive of private enterprise.   This marks the third quarter in a row in which the Enterprise Index has identified a decline in confidence in government policy.  Over the past six months, belief in government’s support has decreased by 20% to 49%.
Commenting on the findings, David Roper, a partner in Smith & Williamson’s Bristol office, said: “Our survey responses show a plateauing of the extreme emotions following the June referendum.  There was an initial panic following the Brexit decision and a huge relief rally when the world carried on turning. However, our respondents, perhaps buoyed by encouraging economic statistics and recent stock market highs, are now looking ahead to 2017 with a cautiously optimistic view.
“For most respondents the macro environment remains worlds apart from their day-to-day business challenges and the apparent lack of government understanding of SME issues is a particular concern. The community has taken a number of hits over the past twelve months and is expecting to face even more over the coming year.  Reforms of business rates, the apprenticeship levy, the national living wage, auto-enrolment and changes to the way dividends are taxed have all had an adverse financial or emotional impact.
“It’s not that all SMEs regard these changes as negative, but the flow of new initiatives has been relentless. Like buses, they’ve all come at once.”
David continued: “The next change on the horizon is the government’s plan for quarterly tax reporting. This is scheduled to commence for some businesses on a voluntary basis in April 2017, before becoming compulsory in April 2018. We strongly recommend that this is delayed, to give businesses and their advisers time to make necessary changes. The introduction of a system that cannot be complied with easily will only add further anxiety and expense to the owners of our smaller businesses.”
Appetite for borrowing grew seven points to 41% as perceived access to finance grew by twelve points to 47%.  David explained: “Our responses indicate that many businesses are borrowing to invest in internal infrastructure, such as their IT systems and capabilities.   Many believe that the creation of solid foundations will leave them better able to face any negative headwinds, increasing resilience, efficiency and growth.
“There appears to be recognition that a failure to invest in infrastructure and growth could be just as detrimental as any negative external factors.”