Budget: Regional reaction

REPRESENTATIVES of the region’s business community have reacted relatively positively to George Osborne’s first Budget.

Andrew Palmer, CBI Yorkshire & Humber Director, said: “The Chancellor has achieved his twin objectives of setting out a credible plan for the public finances and producing a convincing growth strategy for the longer-term.
 
“Mr Osborne is close to achieving his 80:20 ratio of spending cuts to tax increases, which is so important to sustaining long-term growth. He has struck a sensible balance on Capital Gains Tax, limiting the impact of the increase on entrepreneurial activity and long-term savers.
 
“The five-year route map for Corporation Tax provides much-needed consistency and certainty. Taken together with proposals on foreign profits and intellectual property, these will help prevent and could even reverse the flow of companies overseas.
 
“There was clear recognition in the Budget of the role that business needs to play in getting the economy back into shape, and generating the jobs and wealth needed to sustain economic recovery.
 
“The Chancellor has sensibly taken measures to secure public support by offering extra help to cushion the impact on low-income families.
 
“This Budget is the UK’s first important step on the long journey back to economic health. The autumn spending review, and the re-engineering of public services, will be equally challenging.”
 
Richard Kendall, Policy Executive at the Chamber, said: “This Budget introduces some major changes and the consequences for our economy will be far-reaching.  The early signs are that on balance it will be a good Budget for businesses in our area, but as always the devil will be in the detail and there are more announcements to come.

“The Chancellor certainly seems to have got the message that the recovery can only be driven by business, so the measures to support growth will be welcomed by companies in this area.”

President of Bradford Chamber, Harold Robinson, said:
 
“We welcome the decision to cut corporation tax for the next four years, although we do feel that it could have been allowed to go lower than 24%, perhaps down to 20%.  We knew that the spending cuts and tax rises were coming and agree with the Chancellor that some of these measures were unavoidable.  We’ve now all got to work hard to ensure the economy recovers and gets back on its feet again.  The mounting deficit had to be addressed while at the same time ensuring that businesses can help the economy grow and get more people into work again.  Some of these measures will support those aims although the expectations of a 25% cut in some government department budgets over the next four years will also have a big impact.”
 
Chamber member Alison Rodwell of Headway Recruitment said of the announcements:
 
“It’s pleasing that the threshold at which employers start paying NICs is to be increased.  We had appealed for VAT to be considered as an alternative to the previous government’s plan for a 1% NICs hike, so although we appreciate that it’s a big hike, it’s preferable to a tax on jobs.  The £5,000 NICs break for new staff will help in that area too.  Any measures to get the job market going again are to be welcomed.”

Metro Chairman Councillor Ryk Downes has welcome the announcement by the Chancellor in today’s budget that improvement to trans-Pennine rail links will go ahead.

“Improving rail service linking Leeds and Huddersfield with Manchester and Liverpool is key to making the route a real alternative to the M62,” he said.

Cllr Downes also said he was pleased that Mr Osborne had announced that priority would be given to capital projects that provide a ‘significant economic return to the country’ and that  a Regional Growth Fund to finance regional capital projects ‘that have the greatest impact on innovation and jobs’.

“The Department for Transport has already acknowledged the value-for-money benefits that the planned NGT trolleybus network would achieve, including the creation of 4,000 long-term jobs, so I can’t see how the Government would not give it the go-ahead after its spending review,” he said.

The new southern entrance to Leeds Station had also met Department for Transport requirements, Cllr Downes continued, and a £4m private sector contribution to the cost of building vital new stations at Apperley Bridge and Kirkstall Forge represented extremely good value for money.

“I hope that the Government will be as good as its word and give us the opportunity to progress these important schemes which are designed to help the region and the country grow the way out of the recession in exactly the way the Chancellor has outlined in his budget.”

“I look forward to meeting with Ministers to remind them of the benefits of our proposals so that we can get them moving as soon as possible.”

Gordon Millward, Regional Chairman, Federation of Small Businesses, said:

“The measures announced in the Emergency Budget will go a long way to reducing the deficit and will please the 93 per cent of FSB members who called for a clear plan on tackling the country’s debt.

“The increase in VAT to 20 per cent will however, hurt small firms who will have to pass the increase on to their customers, unlike big business which can absorb the cost.

“We welcome moves to give a national insurance holiday to start-up firms, but are concerned that with 70 per cent of firms operating below capacity, those businesses already trading will not be helped. We need to see a full reversal of NICs increases to fully offset the ‘tax on jobs’ which the previous administration initiated.”

Phil Orford, chief executive of The Forum of Private Business, believes cuts to small business corporation tax, together with the hike in entrepreneurs’ relief on capital gains tax, will make a measurable difference to the fortunes of small and medium-sized enterprises.

Mr Orford said: “I think many small business owners will be pleasantly surprised by today’s Budget.
 
“Not only did the Chancellor make all the right noises about supporting enterprise and smaller businesses, he backed it up with a number of crucial tax changes.
 
“The 1% reduction in small companies’ tax is obviously more than welcome – it’s something we and the SME community have long called for. It also represents a 2% cut in real terms as the previous government had planned to increase small companies’ tax by a further percentage point.
 
“The rise in CGT had proved controversial with business owners ever since the idea was first put forward, but the 28% rate is a gentler increase than many people were expecting. More importantly, the rise in the entrepreneurs’ relief threshold to £5 million is more than we could have hoped for and it should ensure that most small business owners aren’t penalised too heavily when they come to sell their companies.”
 
Mr Orford added: “The moves to limit rises in National Insurance, introduce NI exemptions for some new employers and raise the income tax threshold were also positive, even though they were watered-down from the Conservatives’ original pre-election promises.
 
“What we need now is are some guarantees on how the white paper on local economic growth Mr Osborne mentioned will focus on innovation and jobs in regions that are likely to be affected by public sector job cuts.

Hayley Johnson, speaking on behalf of Leeds, York and North Yorkshire Chamber of Commerce, said: “The Chancellor’s Budget goes some way towards healing the wounds inflicted upon businesses throughout the recession and will help restore investor and business confidence in the UK.

“Nobody can deny that this is a bold budget, with the rebalancing of the economy towards the private sector at its heart. The Chancellor has laid all of his cards on the table. Businesses need certainty and they will welcome that the majority of deficit reduction will come from cuts rather than tax hikes – which would have had a negative impact on recovery.”

Nick Tovey, president of Sheffield Chamber of Commerce, said: “We were expecting an extremely tough budget from the Government, but in reality there are a number of positives we can take from it.

“The Sheffield Chamber continues to be concerned on how the cuts in public sector funding will have a knock-on effect on the supply chain in the private sector. Therefore, we will be working hard to ensure that the Sheffield city region can cope with any rebalance in the public sector and assist areas for growth in wealth creating private sectors, such as manufacturing, retail and creative industries.”