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Business investment is key to recovery, FLA tells Chancellor
The Finance & Leasing Association (FLA) has written to the Chancellor of the Exchequer in advance of next week’s emergency Budget, stressing the importance of helping business investment.
The FLA has pointed out to the Chancellor how the leasing industry can help British businesses invest for economic recovery.
A third of all UK businesses, many of whom cannot access other forms of lending, already use leasing to support investment in new equipment. It avoids the need to find the full purchase price, and helps ensure that businesses always have up-to-date and functional equipment.
Leasing can also play an important role in reducing the cost of public services. The Government’s Spending Review Framework, announced last week, made clear that options for non-state involvement in services should be considered by Government departments. Leasing should be part of this.
But a number of barriers prevent businesses and the public sector from making best use of leasing. The FLA has therefore called on the Government to:
- use the corporate tax system to support investment, not only by profitable businesses which can afford to buy equipment outright, but also by smaller businesses who would find leasing more cost-effective.
- ensure that any reforms to the corporate tax system at least allow the cost of equipment to be recovered over its economic life. Any substantial decrease in Capital Allowances could make it difficult for lenders to fund leases.
- simplify the current accounting and procurement rules which limit the ability of public services to lease rather than buy equipment.
Julian Rose, Head of Asset Finance at the FLA, said:
“The leasing industry can help economic recovery by directly funding the equipment needed by business and the public services. But to do that we need two things: a fair tax system that does not – as at present – favour the purchase of equipment over renting; and the removal of unnecessary barriers to the use of leasing by public services, so allowing public money to be spent cost-effectively on newer, energy-efficient equipment.”
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Note to editors:
In 2009 FLA members provided £72.5 billion of new finance to UK businesses and households. Almost £19.3 billion of finance was provided to businesses and the public sector, representing around a quarter of all fixed capital investment in the UK last year. £53.2 billion was in the form of consumer credit, including a third of all unsecured lending in the UK. And £16.5 billion supported the purchase of half of new car registrations in the UK.
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