INDUSTRY- and engineering-related organisations and business groups have viewed the UK’s pre-election budget with mixed results.

The theme central to the interests of engineers and chemical manufacturers is finance minister Alistair Darling’s efforts to introduce a number of measures to boost the success of small to medium enterprises (SMEs).

Big focus on small businesses

From Q2 onwards government departments will have to increase by 15% the work they award to small firms.

Phil Orford, ceo of the Forum of Private Businesses says the scheme will only be of value if it is administered correctly. “Many small firms are put off by bureaucratic processes involved in bidding for public sector work, so there is a danger that this could simply involve more contracts going to the same number of companies.”

This surge is calculated to result in a £3b ($4.4b) windfall – though there is no indication of a deadline by when the target has to be met.

More money is also expected to flow to SMEs through the banking sector as state-rescued Lloyds TSB and the Royal Bank of Scotland will increase lendings of £38b in the last 12 months to some £56b in the next. Branches of these banks will also be sold off and new banking licenses awarded which Darling says will make it easier for small enterprises to secure credit.

Additionally, the government plans to create a ‘credit adjudication service’ for companies to appeal to if they feel they have unfairly refused access to credit.

Improving cash flow, reducing taxation

Cash flow will also be improved through a new target demanding government departments pay 80% of their invoices inside five-days. Furthermore, Darling plans to extend by four years the Time to Pay scheme that allows businesses to spread the cost of tax payments.

Orford noted the importance of the extension, saying it can often provide a lifeline for companies struggling with cashflow.

On the side of taxation, Darling unveiled a number of methods to sure up SMEs. He is doubling the investment allowance to £100,000 allowing most companies to deduct investment in plant from taxable profits. Darling is also proposing a cut in business rates that will result in less tax for 500,000 small businesses – with 345,000 paying no business rates at all.

The threshold for capital gains tax will be doubled to £2m – presently tax for entrepreneurs leaps from 10% to 18% once earning pass £1m.

Steve Elliott, ceo of the UK business group the Chemical Industry Association described the scheme as “welcome news for capital intensive sectors such as chemicals and pharmaceuticals.” But adds: “However, we urge the government to be bolder by increasing the rate further ad extending its reach to larger companies.”

Darling also announced a lower rate of corporation tax for income generated from innovations patented in the UK but this isn’t scheduled to come in until 2013.

On the negative side, no one had a good word to say about the 1% increase in national insurance tax and the 2.2% increase in minimum wage, which it was decried would offset many of the positive efforts the budget had made to improve the lot of SMEs.

The sustainable technologies community will be buoyed by the announcement of £2b green investment bank that will be used to fund renewable technologies and help stimulate further growth from the private sector in the likes of wind and wave farms.

Andy Atkins, ceo of environmental group Friends of the Earth described the news as fantastic saying “it should be a crucial building block in the creation of a safe, clean and prosperous future.”

Danny Stevens, policy director of the Environmental Industries Commission is less enthused saying the announcement has come too late: “By now the UK should be well advanced in making the transition to a low carbon, resource efficient economy.”

Higher education

When it came to universities Darling promised £25m for commercialisation activities and committed to fund 20,000 additional places for science, technology, engineering and mathematics subjects.

Elliott welcomed the new money, saying “The future of science-based industries in the UK depends on high quality graduates.”

The news was also greeted by Nick Dusic, director of the Campaign for Science & Engineering, though he was cautious about the government’s silence on the cuts to budget necessary to reduce the countries massive debt. “Unfortunately, there was no clarification about how the government would reconcile the planned £600m cuts to higher education, science and research budgets.”