Budget 2009: Regional reaction
REPRESENTATIVES of Yorkshire’s business community today said said Alistair Darling had delivered an optimistic Budget for reshaping the economy but would fail to achieve his fiscal targets.
Property experts also bemoaned the lack of measures connected to the commercial property sector and Mr Darling’s avoidance of the empty rates issue.
Andrew Palmer, regional director of the CBI in Yorkshire and the Humber, said: “The key question for this Budget was whether it set out a credible and rigorous path for restoring the public finances to health. The CBI’s preliminary judgement must be that it does not.
“The Chancellor’s economic forecasts for next year and beyond look optimistic. By pushing out the horizon for balancing the books as far as 2018 the Government is running too much of a risk.
“On the fringes of this Budget, there are some worthwhile micro measures, including support for businesses struggling to access trade credit insurance, and for carmakers through a time-limited scrappage scheme. The changes on investment allowances and the ability for firms to carry forward losses are also welcome.”
Richard Kendall, policy executive at Hull & Humber Chamber of Commerce, said: “The Budget announcements for businesses are mostly underwhelming and will do little to restore confidence. The Chancellor made some optimistic forecasts about a return to growth but the support he has offered will not do much to help businesses achieve that.
“Businesses’ experiences of Government support during the recession so far have been decidedly mixed. Reaction to HMRC’s payment support service has been good, but schemes such as the Enterprise Finance Guarantee are too difficult to access. For the new support to be effective it has to come quickly and be easy to take up.
“Cashflow remains one of the top priorities for businesses. The credit insurance scheme we have been calling for is urgently needed to ease the pressure on businesses. We have yet to see the detail but the early signs are that the Government’s proposals will not go as far as businesses had hoped.”
“The lack of action in the Budget on empty property rates is very disappointing and runs contrary to the Chancellor’s pledge to help the construction industry. We need to get our regeneration plans back on track but the Budget could have done more to help.”
George Ayliffe, Yorkshire chair of chief exectuive of chief executives organisation Vistage International, said the SME sector had been largely ignored.
Mr Aycliffe said: “Darling’s assertion that economic recovery is set to happen over the next six months flies in the face of the world’s economic thinkers and bodies. His self-delusion creates a noose around the neck of UK businesses as they try to cope with worsening economic conditions with little support from government – and little reform of needless bureaucracy and red tape.
“The Chancellor’s announcements for businesses merely tinker at the edges. Companies require long-term strategic policies that offer greater rewards for success, reductions in red-tape associated with employing people and encouragement to innovate, without the need for lengthy and complex application procedures.
“Darling has shot himself in the foot by refusing to introduce measures such as National Insurance holidays or tax breaks for smaller companies that would help them to maintain employment levels and sustain them through the lean times ahead.”
Richard Farr, director of property consultants Sanderson Weatherall in Leeds, specialising in rates management, said the Government had “missed a great opportunity” to stimulate capital investment and regeneration in the commercial property sector.
Mr Farr said: “By not addressing the ‘empty rates’ issue, he has discouraged any speculative development and has put a further squeeze on current owner-occupiers who rather than mothball facilities maybe forced into drastic action .
“Central government has stated that it is keen to promote regeneration but landbanks will remain undeveloped.
“The majority of regeneration schemes are joint ventures between the public and private sector. The private sector is risk averse and will not entertain schemes if there is the prospect of significant holding costs upon completion.
“By failing to lift the burden of empty rates the Chancellor has missed the opportunity to stimulate the capital investment he has mentioned elsewhere in his address.
“The Chancellor also missed the opportunity to raise the 100% relief on empty properties with a ratable value of less than £15,000, introduced for year 2009/10. This low value will be totally ineffective in high value areas or on large manufacturing properties.”
Roger Woolhouse, head of property consulatnts Atisreal’s Leeds office, said: “The Chancellor has pretty well spurned the property industry today.
“The continuation of the stamp duty relief is a small sop to people when passing the test for a mortgage remains hard. Letting empty rates eats away at cash flow when property companies need every penny in order to get refinancing from the banks and stop them fore closing.
“It also stores up problems for the future, with speculative development non-existence and empty stock being de-commissioned; when the pick-up begins we are going to see an entirely unnecessary inflationary boom in rents.
“The Chancellor has failed to recognise and respond to the negative drag that property debt has on the investment that we are going to need to get the economy moving.
“It’s good to see some help for the construction industry, but let’s be frank; it will only make a severe recession slightly less severe.
David Couch, director of development and residential consulting for the North of England at Atisreal, welcomed Mr Darling’s measures aimed at the housing sector but sounded a note of caution.
“The Chancellor’s £1bn package of measures aimed at boosting house sales and building is very welcome and I am pleased to see that housebuilders and local authorities are to get £500m of extra finance to kickstart stalled housing projects.
“However, who is going to buy these homes if credit is still tight? Will there be any regulation so that they are much needed houses rather than oversupplied flats? And what about social housing? As usual, we must await the detail before we can judge how well thought-through these measures are.”
Miles Templeman, director general of the Institute of Directors, said: “As a nation we have to face up to some very difficult choices. We either squeeze public spending or higher taxation squeezes the life out of the economy.
“Whilst today’s Budget does reduce the rate of growth of public spending the scale of the fiscal deterioration in the UK means that extraordinary measures are required. The IoD has called for a real terms freeze in spending which extends for more than one Parliament – once the recovery is underway.”
He added: “The increase in the top rate of income tax to 50% sends out all the wrong signals. The increase will affect very few IoD members but it will have a damaging impact on the wider economy and undermine the UK’s attractiveness as a place to invest.”
