Budget: Securing growth and investment remains a challenge, business leaders warn
BUSINESS leaders in the region today broadly welcomed the Chancellor’s Budget statement, but with warnings that
John Dugmore, chief executive of Suffolk Chamber of Commerce, said the Chancellor’s commitments to contain the deficit and reduce Corporation Tax would be welcomed warmly by business.
However, many small- and medium-sized companies would feel the measures overwhelmingly benefited the biggest businesses” he said, and smaller firms would be disappointed George Osborne did not do more to support confidence and growth in the real economy.
“While there is a 1% cut in Corporation Tax, companies will still be hit with a 5.6% rise in business rates from April,” said Mr Dugmore. “Businesses face lower allowances for investment in new plant and machinery in most areas, and will see no further incentives to create employment, particularly for young people.”
He added: “The Chancellor reiterated promises on reforming infrastructure, planning, employment law and boosting exports, which will provide enterprises with some reassurance.”
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But he warned: “Business needs to see radical and meaningful delivery of these measures, from the overhaul of transport and broadband networks, to helping firms look for new markets overseas.”
Andy Wood, chairman of New Anglia Local Enterprise Partnership, said: “This budget has a number of positive pro-business elements which we welcome. The cut in Corporation Tax is good news, although we’d like to have seen a greater cut.
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“We’re particularly pleased to see an extra �270million being created for the Growing Places Fund. New Anglia has secured �12m fund to kick-start stalled infrastructure projects from this fund. This will make a real difference to business growth in the LEP area and we will aim to secure more funding in this area.
“However, there is a great deal more to be done to support businesses in our region and we we will continue to take active steps to listen to businesses and learn what our business community needs to grow and thrive.”
Richard Tunnicliffe, East of England regional director for the CBI employer group, said: “Family budgets have been under great pressure, and by putting more money in the pockets of ordinary people, the Chancellor has provided a much-needed confidence boost.
“The Chancellor has also painted a clearer vision of how the UK will earn its living in the future and, by seizing the opportunity to make sure our corporate tax system is more internationally competitive, he has sent a powerful signal to companies to invest, do business and create jobs in the UK.
“An extra one per cent off Corporation Tax this year could make a big difference to investment intentions. Plans to reduce the top rate of [income] tax to 45p by April 2013 will show our top and aspiring talent that this Government wants them to create wealth here.”
And Mr Tunnicliffe added: “With many calls on the Chancellor to spend money he didn’t have, the best news for businesses is that he stuck to his guns and delivered a fiscally neutral programme.
“If businesses were looking for more, it was in the area of deregulation. For smaller businesses, things may not feel very different on the ground. It would have also have been a huge relief if the Chancellor had taken the opportunity to get rid of the currently unworkable Carbon Reduction Commitment.”
Paul Winter, Suffolk chairman of the Institute of Directors, said: “Clearly, the reduction in Corporation Tax for larger businesses is good news, and the move on research and development tax credits is also a step forward.”
The cut in the top 50p rate of Income Tax would also be welcomed by directors, and made sense in view of the figures showing that it was generating hardly any revenue for the Treasury.
Mr Winter said he was not surprised that a top rate was to be retained, at 45p, as it would have been “politically impossible” for the Chancellor to have abolished it in a single step. However, he believed it was possible that Mr Osborne would seek to remove the top rate entirely and extend the current higher rate of 40p in a future Budget.
However, Mr Winter said he would have liked to see a further concession on fuel duty, with high petrol and diesel prices currently “crippling” many businesses and having a particularly severe impact in rural areas such as Suffolk.
Terry Scuoler, chief executive of EEF, the manufacturers’ organisation, said: “The Chancellor began positively by setting out his thoughts for a new economic model. But, by the end of his speech, the task of rebalancing our economy looked as daunting as ever.
“Whilst there are some helpful measures, they fail to send a strong enough signal to growing manufacturers that now is the time to bring forward their investment plans and to do it here.
“The Corporation Tax cut is welcome but, on its own, it is not the silver bullet that will unlock the business investment our economy urgently needs.”