Yesterday’s Budget delivered some welcome signals, but several measures risk missing the mark for the parts of the economy that drive long term growth.
The apprenticeship support sounds positive on the surface, but its reach is limited to 18–21 year olds who have been out of work or education for at least 18 months. Offering opportunities to those struggling to get started is hard to argue with, but without any incentives to develop the brightest talent, the would be high-flyers of the future, we risk locking ourselves into a mediocre workforce and a mediocre economy. Businesses need support to help recent graduates make the most of their hard-earned education.
Business rates relief is again focused on companies with physical premises. That overlooks the service sector and particularly micro-businesses, for whom having premises is still a distant ambition. Some of the UK’s highest-value and highest-growth sectors simply won’t feel the benefit.
The increase in dividend tax will also concern many small business owners. From the outside, it is easy to say that any gap between dividend and income tax is a loophole for wealthy individuals. But that view ignores the reality of growing a small business. Taking financial risk usually comes with financial reward, and in the early stages it can feel like one risk after another. If we want an economy where entrepreneurship is genuinely open to all, we need to maintain the right balance between risk and reward. This increase takes another bite out of the potential reward at a time when founders are already being asked to shoulder more risk.
There are steps in the right direction here, but if the goal is a dynamic and diverse economy, the measures announced yesterday will not get us all the way there.