Cautious Budget gets channel thumbs-down

Alistair Darling plans to lend almost £50bn to SMEs through RBOS and Lloyds

Chancellor Alistair Darling went all out to court SME votes in today's Budget, unveiling tax cuts, lending plans and a pledge to drive more public sector contracts through smaller firms.

One of Darling's headline initiatives is the formation of UK Finance for Growth, a body which he explained which will oversee a £4bn pot of government money earmarked for SMEs. The investment vehicle will help smaller firms negotiate the bureaucracy involved in getting their hands on government funds.

Darling also unveiled plans for state-owned Lloyds and the Royal Bank of Scotland (RBOS) to lend £94bn to businesses over the next year, with at least half of that going to SMEs. Additionally, 500,000 small businesses will see their tax bills reduced from October, as business rates are cut for a year.

In a familiar pledge, he also announced plans for a 15 per cent increase in the number of government contracts fulfilled by SMEs. He added that the next public spending review would be "very tough".

With the general election about six weeks away, the chancellor chose not to tinker with VAT, National Insurance (NI) or income tax, outside of some pre-arranged hikes for society's richest members.

But Shaune Parsons, managing director of VAR Computerworld Wales, claimed such a decision was irrelevant, given the planned one per cent NI increase in April next year.

"Now, whenever we take on a new employee, we have to look very carefully at the National Insurance Costs," he added.

Parsons claimed that the RBOS and Lloyds loan pot would not interest him and was unconvinced by the pledge to offer more public sector contracts to SMEs. He cited the recent £6bn commodity hardware and software framework as an all-too common example of the government's continued reliance on the channel's biggest players.

Among the budget's tech initiatives was the confirmation of a £6 annual levy on landlines to help fund the rollout of superfast broadband to most UK homes over the next seven years.

But Paul Lawton, managing director of carrier Opal, expressed concern that there is no such dedicated plan for businesses.

"We would urge the government to consider specific guidelines for business," he said. "They rely on superfast broadband to carry out effective and efficient business processes and remain competitive, which is more important than ever coming out of a recession."