Everyone knows that running your own business is one of the toughest challenges out there in the professional world. It takes a mixture of guts, determination and self-belief to make a success of a small enterprise and the UK’s army of entrepreneurs need all the help and support they can get.
There are plenty of groups and organisations which offer advice and mentoring for people who have taken the decision to work for themselves. But in the post austerity era the sources of funding that businesses can tap into are not always available and there is a real danger things could get even tougher if some experts get their way.
As 2017 drew to a close the Government set out it’s stall in terms of encouraging productivity in industry in the UK. Ministers have been talking about the importance of encouraging and backing innovation in industry and business. And it would be all too easy to fall into the trap of focusing all the available resources and support into the wrong areas.
In recent months when ministers have spoken about innovation they have concentrated on areas such as artificial intelligence, aviation and cutting edge digital communications. By its nature this type of research and innovation costs millions and tends to be the preserve of big business and major manufacturing.
Every economy needs innovation and creativity to flourish but it would make no sense to ignore the fact that is smaller firms need the most help and support. The Institute for Public Policy Research came out against tax relief for research and development in its recent report and argued that the Government could save £1.9 billion in the process.
The influential think tank went on to describe the majority of payments as deadweight – the logic being that most of the research would have been carried out even if the payments had not been made. But that argument in many ways entirely misses the whole point of tax relief.
The reality is that all good business people are constantly looking at new and more efficient methods of working. Often the very survival of a new enterprise may rely on being innovative and finding ways of offering better products and services at a better price than rival companies.
Business people do not decide they need to carry out research and development because they know they can apply for extra funding. They introduce new practices and techniques because they are good at what they do and they are constantly striving to improve and get even better.
The ability to think creatively and to be innovative is often in the DNA of the best business operators, it is not something that can be created by a Government scheme. The reality is that tax credit relief only becomes accessible after the innovation has been already implemented.
What makes the scheme so important and valuable is it gives small businesses the support and back-up to carry on innovating and improving. To remove this important stream of revenue at a time when businesses need it more than ever could prove to be a very costly mistake.