2015 has been a mixed year for small businesses. May’s election result was largely met with a positive response from the business community and consumer spending has risen at a steady pace. Inflation and the cost of borrowing have been at an all-time low but the strong pound and uncertainty around rate rises have caused many small businesses to fear borrowing, which may in turn impact growth.
At Bank of Cyprus UK we work very closely with small businesses, monitoring their attitude to topical issues which affect their growth prospects through our Owner Managed Business (OMB) Barometer. Despite the introduction of many government initiatives to support small businesses in recent years, we have found that many businesses are often not aware of these initiatives or how to access their benefits. Three examples of where this trend is apparent are the employment allowance initiative, small business rate relief and hiring of apprentices.
The employment allowance was introduced in April 2014, giving 1.25 million businesses the chance to reduce their National Insurance contributions by up to £2,000. A year on when we surveyed OMBs about this initiative, over half (56%) of the respondents said the policy had provided a welcome reduction in costs but worryingly nearly a third (30%) said they were not aware of the initiative.
Similarly, in July 2015 nearly half (45%) of OMBs we surveyed were not aware of small business rate relief, which cuts rates for properties with rateable values of under £12,000.
In July 2015 we also asked OMBs about their views on apprenticeships. Just one in 10 companies said they were currently employing an apprentice, however over half (54%) stated they did not believe they would be able to keep an apprentice busy at their place of work. This highlights a gap between government views on the benefits of apprentices and the reality for many OMBs who may not have fully considered these benefits, or who may be anxious about the potential bureaucracy that comes with such an initiative.
It is clear to us at Bank of Cyprus UK that there is an information gap when it comes to communicating business incentives to OMBs, and that this gap may have an economic impact on the very companies these initiatives are designed to help. Communication and support may therefore need to be better tailored to small businesses so that they can better understand and more readily access the potential benefits offered by these initiatives.