George Osborne ruled out borrowing to fund temporary tax cuts when he addressed the Conservative party conference today, but he revealed that the Treasury was examining how to ‘inject money directly into parts of the economy that need it such as small businesses’.
‘It’s known as credit easing,’ the Chancellor said. ‘It’s another form of monetary activism. It’s similar to the National Loan Guarantee Scheme we talked about in opposition.’
Osborne ‘wants in the medium term to develop a corporate bond market for smaller companies’, according to Jim Pickard, author of the Financial Times Westminster Blog.
The Guardian, briefed by Conservative party sources, reported that the initiative ‘will involve the Treasury lending billions of pounds’.
Questions
Alex Henderson, tax partner at PwC, said: ‘When a business is looking to expand, availability of finance can make the difference between success or failure so assistance from the Chancellor with raising finance is welcome. This builds on changes in the Budget to increase the availability of equity finance for smaller businesses through for example, the Enterprise Investment Scheme.
‘The questions now will be how easy the new finance will be to access, how much is going to be made available and what will be the cost to the borrower. Down the line there could be worries around how the Government will deal with the costs of any bad debts. If businesses see that other taxes will have to rise to fund the scheme then the initiative will have less effect.’
'Sound public finances'
The Chancellor told the conference: ‘Each day, people suggest to me things we should be doing differently. Some say, borrow more for more spending. Or they say, borrow more for temporary cuts in tax – so you’d have to put taxes up even more later.
‘I’m a believer in tax cuts: permanent tax cuts, paid for by sound public finances. Right now, temporary tax cuts or more spending are two sides of exactly the same coin - a coin that has to be borrowed. More debt that has to be paid off.
‘I know we are asking a lot from people. And I want them to know that when these arguments are put to me, I consider them carefully. Don’t think I haven’t thought hard about what more we can do. That I don’t explore every option. I do. But borrowing too much is the cause of Britain’s problems, not the solution.’
George Osborne ruled out borrowing to fund temporary tax cuts when he addressed the Conservative party conference today, but he revealed that the Treasury was examining how to ‘inject money directly into parts of the economy that need it such as small businesses’.
‘It’s known as credit easing,’ the Chancellor said. ‘It’s another form of monetary activism. It’s similar to the National Loan Guarantee Scheme we talked about in opposition.’
Osborne ‘wants in the medium term to develop a corporate bond market for smaller companies’, according to Jim Pickard, author of the Financial Times Westminster Blog.
The Guardian, briefed by Conservative party sources, reported that the initiative ‘will involve the Treasury lending billions of pounds’.
Questions
Alex Henderson, tax partner at PwC, said: ‘When a business is looking to expand, availability of finance can make the difference between success or failure so assistance from the Chancellor with raising finance is welcome. This builds on changes in the Budget to increase the availability of equity finance for smaller businesses through for example, the Enterprise Investment Scheme.
‘The questions now will be how easy the new finance will be to access, how much is going to be made available and what will be the cost to the borrower. Down the line there could be worries around how the Government will deal with the costs of any bad debts. If businesses see that other taxes will have to rise to fund the scheme then the initiative will have less effect.’
'Sound public finances'
The Chancellor told the conference: ‘Each day, people suggest to me things we should be doing differently. Some say, borrow more for more spending. Or they say, borrow more for temporary cuts in tax – so you’d have to put taxes up even more later.
‘I’m a believer in tax cuts: permanent tax cuts, paid for by sound public finances. Right now, temporary tax cuts or more spending are two sides of exactly the same coin - a coin that has to be borrowed. More debt that has to be paid off.
‘I know we are asking a lot from people. And I want them to know that when these arguments are put to me, I consider them carefully. Don’t think I haven’t thought hard about what more we can do. That I don’t explore every option. I do. But borrowing too much is the cause of Britain’s problems, not the solution.’
