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Pre-Budget Report must include support for small business investment, says FLA
Asset finance providers report that businesses, especially hundreds of thousands of small businesses, are still delaying investment in essential business equipment. The FLA has called for next week’s Pre-Budget Report to include tax incentives to help businesses to invest in leasing new equipment.
The latest statistics from the Finance & Leasing Association show that asset finance provided to UK businesses fell by 33% in the third quarter of 2009 compared with the same period a year ago (table 1). The FLA’s figures are supported by statistics on business investment released by the Office of National Statistics which show that total business investment by all UK companies fell by 28.9% in Q3 2009.
The trend is for businesses to delay investment in the recession. Many small businesses do not have the capital to replace ageing equipment and are instead making outdated equipment last longer. The FLA is calling on the Government to support the efforts of leasing companies to help small business by providing tax help to businesses leasing equipment equivalent to the help already available when paying up-front.
Commenting on the statistics Julian Rose, Head of Asset Finance at the FLA, said:
“Many businesses rely on leased equipment. Our latest statistics show that asset finance markets are still down a third on last year. When cash is tight in businesses, we would normally see growth in leasing new equipment. But today’s tax rules limit the leasing industry’s ability to help a sizeable minority of businesses to invest. The consequences for business recovery are worrying. The Chancellor’s statement needs to finally recognise the need to help small businesses to invest in efficient, reliable equipment.”
Table 1: Total asset finance business, and extracts of breakdown by asset class
| Sept 09 | % change | Q3 09 | % change | 12 months to Sept 09 | % change | |
| Total FLA asset finance (£m) | 1,806 | -30 | 4,818 | -33 | 21,295 | -30 |
| Business equipment finance (£m) | 119 | -37 | 322 | -41 | 1,499 | -34 |
| Car finance (£m) | 499 | -20 | 1,429 | -17 | 5,253 | -28 |
| IT equipment finance (£m) | 119 | -25 | 355 | -2 | 1,318 | -18 |
| Plant and machinery finance (£m) | 236 | -36 | 625 | -42 | 3,208 | -36 |
| Commercial vehicle finance (£m) | 314 | -27 | 809 | -27 | 3,613 | -28 |
| Aircraft, ships and rolling stock finance (£m) | 80 | -54 | 270 | -33 | 1,536 | -3 |
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Note to editors:
In 2008 FLA members financed £90 billion of new business. Almost £30 billion was provided to the business sector and UK public services, representing almost 28% of all fixed capital investment in the UK last year (excluding real property and own-account software).
For further media information, please contact:
Russell Hamblin-Boone, FLA
T: 020 7420 9656 E: russell.hamblin-boone@fla.org.uk M: 07810 374110
Helen Saxon, FLA
T: 020 7420 9664 E: helen.saxon@fla.org.uk M: 07918 766 993