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The Chancellor's Summer Statement: "Good for Young Workers, But What About Startups?"

Posted 3 years ago

The Chancellor's Summer Statement:
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After much anticipation, the Chancellor Rishi Sunak unveiled what many have called an emergency coronavirus budget, pledging a range of new measures worth up to £30 billion. 

With jobs the main focus of the so-called ‘mini budget’, Sunak outlined ways in which employers could benefit by taking back previously furloughed employees - such as the £9bn  job retention bonus - as the government starts to unwind the furlough scheme. 

Despite unveiling some genuinely creative ideas, the Statement does not go anywhere near protecting the startups that continue to be plunged into uncertainty as they battle with the impacts of the pandemic. 

Indeed, perhaps the most noticeable absence was that of the startup sector, and the ways to protect it, namely through the Seed and Enterprise Investment Scheme. 

NextFin has been campaigning for an increase in the tax relief and investment allowances under the above schemes.

Below, CEO of Nextfin, Sacha Bright offers his analysis of the Statement, and what must be done to protect our startups moving forward.

“Leaving out startups” - Analysis by Sacha Bright CEO, NexFin

Rishi Sunak said in his Statement that he wanted to protect jobs. Startups are a major source of employment in the UK, accounting for over 3.3 million jobs in the UK economy. 

But as a small limited company, many of these are simply not getting the help that they need, and are in danger of failing. 

Despite vowing to protect jobs, by failing to address startups, over 3 million jobs are now at risk. These startups are the businesses of tomorrow. We are renowned for being the startup capital of Europe, we’ve done so well to create this thriving business sector. But now, we risk losing it. 

During Phase One we campaigned tirelessly for the implementation of the Bounce Back Loan Scheme, and are proud at how it has offered a lifeline to many small businesses. But I’m hoping as part of Phase Three the Chancellor will ensure that startups get the attention they deserve. 

It was acknowledged that the economy has contracted in one year, what it grew by in 18 years. This growth is attributed to startups. It is the fintech sector and the dot com companies that have contributed to this. So we need to get behind them and ensure that they are able to continue to grow. 

In fairness to the government, it introduced the Future Fund. But realistically a number of small businesses cannot qualify because they used EIS-investment. This risks freezing out a number of startups who rely on equity investment during their initial stages. 

The Chancellor must take heed of this and realise that by providing the UK’s startups with access to long-term capital, the UK economy will hugely benefit, and result in the safeguarding of jobs and offer a way for businesses to end up on the other side with growth. 

This argument is even more pertinent now the European Commission has extended the Temporary Framework to introduce conditions that provide incentives for private investors to participate alongside the State in recapitalisations. 

The UK government must act now to protect the UK’s entrepreneurial future so that we do not lose a generation of startups to Covid-19.

Although I commend Rishi Sunak for buying everyone dinner, which in effect is a very creative way to encourage the public to start going back to bars and restaurants, I also commend his commitment to getting young people to work. 

But in this Summer Statement, we did not see the same type of creativity that was used in the entertainment industry to save our startups and generate enterprise.”

You can also view Sacha Bright’s analysis, here


Authors: Oliver Murphy & Sacha Bright

Disclaimer

To the best of our knowledge, the information we have provided is correct at the time of publishing. Sacha Bright is not a solicitor or accountant and we recommend that you seek professional advice on any topic discussed.

Tagged: smes future fund budget coronavirus news



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