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Directors call for SME productivity allowance

Business leaders are urging the Government to introduce a ‘productivity allowance', to help improve economic performance among small firms.

The allowance was suggested in a report by the Institute of Directors (IoD), and would take the form of an enhanced capital allowance for SMEs that invest in productivity-improving technology.

The IoD says this would create an additional incentive for small businesses to invest in best practice technologies, such as data analytics and cloud computing.

Incentives for investing in technology were the most popular choice among IoD SME members for boosting productivity in their organisation, with more than 40% favouring this initiative.

The report put forward a series of other proposals, including:

  • developing a more formalised national business support framework
  • broadening the apprenticeship levy into a wider training levy
  • supporting knowledge transfer between universities and small businesses.

Tej Parikh, senior economist at the IoD, said:

"Solving the productivity puzzle has been a defining challenge for the UK over the past decade.

"The success of our post-Brexit economy hinges on our ability to unlock the vast untapped potential among UK small businesses.

"Directors of smaller firms need the support and encouragement to spend more time working ‘on' and not just ‘in' their organisation, and to confidently adopt new management techniques and technology."

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