East Anglia: Chancellor’s Autumn Statement receives broad welcome from business leaders
MOVES by Chancellor George Osborne to boost exports and investment were warmly welcomed by business leaders in East Anglia today.
Among the key announcements for business in the Autumn statement were a further 1% cut in the main rate of Corporattion Tax to 21% from April 2014 and a 10-fold increase in capital allowances for investment in plant and machinery to �250,000.
There will also be a �70million increase in funding for UK Trade and Investment (UKTI), enabling it to support more companies to export goods and services, and a �1.5billion export finance facility is to be created by the Government to support the purchase of British exports.
Other measures include confirmation of the launch of a dedicated “Business Bank”, a further one-year extension to the current level of rate relief for small businesses, to April 2014, and the scrapping of the planned 3p-per-litre increase in fuel duty scheduled for January.
John Dugmore, chief executive of Suffolk Chamber of Commerce, said: “Today’s Autumn Statement brought welcome news for business.
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“A further 1% cut to Corporation Tax in 2014, the cancellation of the 3p per increase in fuel duty and the confirmation of the British Business Bank to be launched with �1bn to help smaller firms to access finance will make a real difference.”
“The real challenge for the Government is to now make sure these measures get to business without delay. Jam tomorrow is not good enough and real investment is needed and needed now.”
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Mr Dugmore expressed disappointment that a package of Government investment in road and rail improvements included nothing new on the upgrade of the A14.
“Firms across Suffolk and the East will be frustrated that despite continued strong and robust cases being made for the A14 the Government continues to fail to recognise how important it is to address this major infrastructure issue,” he added.
Denise Rossiter, chief executive of Essex Chambers of Commerce, said “We very much welcome the announcement of support going to UKTI to support British Chambers overseas and the creation of a new �1.5billion export finance facility.
“With access to finance remaining an issue for many businesses the re-affirmation of support for a Business Bank is also welcomed along the further extension of the doubling of the Small Business Rate Relief scheme to April 2014.
“Finally we are delighted that Essex MP Robert Halfon’s campaign to cancel the increase in fuel duty has been successful helping both businesses and the wider public.”
Richard Tunnicliffe, eastern regional director for the CBI, said: “The CBI has been crying out for real action on infrastructure, investment and exports.
“�5bn on near-term infrastructure, like the tube to Battersea, half a billion a year tax relief for small firms, and �1.5bn extra export support should boost investment and create jobs.
“The Government now has everything to prove by delivering. Businesses need to see the Chancellor’s words translated into building sites on the ground.”
He added: “It is no surprise that after a difficult year the economic realities dictate that austerity and debt reduction will take longer.
“The Chancellor has stuck to his guns on deficit reduction, avoiding deeper cuts or more borrowing in order to retain international credibility.”
Paul Winter, chief executive of Ipswich Building Society and chairman of the Suffolk branch of the Institute of Directors (IoD), said: “The Chancellor’s Autumn Statement confirms that the UK continues to face real difficulties, following a year in which the economy has contracted and there is anticipated to be very little, if any, growth in the next year.
“It is disappointing that none of the money to improve roads will be spend in our local region where it improvements are badly needed.
“However there are some positives for business including the cut in Corporation Tax of 1% and the extension of the temporary doubling of small business rate relief scheme by a further year to April 2014. It is also welcome news to see funding earmarked to build new homes but as always the devil is in the detail.”
Graeme Leach, chief economic at the IoD, described the Chancellor’s statement as “a tricky job well done”.
“Faced with a weaker outlook for GDP growth, the Chancellor needed to raise business confidence whilst at the same time keeping the deficit on a downward path. And he largely succeeded, particularly with the surprise reduction in Corporation Tax,” said Mr Leach.
“Ideally, we would have wished for further and faster deficit reduction but political reality always made this unlikely. Our key concern is that the Office for Budget Responsibility’s growth forecasts will yet again prove too optimistic, with the result that the deficit in the out years will be much higher than forecast. Business confidence will be boosted by the Corporation Tax cut.”
Christopher Soule, Suffolk chairman for the Federation of Small Businesses, said the Chancellor appeared to have listed to the concerns of FSB members.
The 10-fold increase in capital allowances was “a sensational initiative” which would help businesses looking to invest in new equipment, machinery and vehicles while there would be a “sigh of relief” at the cancellation of the increase in fuel duty.
“Over half of small businesses believe that rising fuel prices are one of the main reasons for increased business costs. Government needs to take the politics out of fuel prices once and for all and look at ways of raising revenue that gives road users greater certainty as to what their overheads will be from one Budget to the next,” he said.
Mr Soule also welcomed other moves helping small businesses, such as the business bank and rates relief but expressed disappointment that the National Insurance Contributions holiday available to small firms in some regions had not been extended natinally.
“FSB research shows that if it were extended to all UK-wide micro firms it would create 45,000 jobs and add �1.3bn to UK GDP,” he added.
Phil Orford, chief executive at the Forum of Private Business, said the Autumn Satement “should provide some much-needed seasonal cheer for most SMEs”, particularly the cancellation of January’s 3p per litre rise in fuel prices, which would have been “economic vandalism”.
“We had urged the Treasury to commit to the concept of a fuel duty stabiliser by the end of the current Parliament, so what we have here is temporary relief instead of a serious policy change with real lasting benefits, but we can’t see many businesses bemoaning that just yet,” he said.
And he added: “The increase in the Annual Investment Allowance to �250,000 is welcome but a tacit admission that the decision to cut the same allowance to �25,000 this year was a wrong one.
“Given that UK businesses are currently sitting on �700bn of cash reserves, it could be argued that the earlier actions of the Chancellor created a disincentive to invest through 2012, at a time when business needs confidence to create growth.”
Mark Hayward, president of the National Association of Estate Agents, said the Chancellor’s statement offered “little reassurance” that the UK housing market was sufficiently high on the Government’s agenda.
“We had hoped to see an acknowledgement that the Stamp Duty Land Tax system isn’t working in its current format,” he said. “In reality, the Chancellor’s Statement was a missed opportunity to make this tax fairer for all.”
The Scottish Government’s plans to replace Stamp Duty with a more progressive Land and Buildings Transaction Tax, ensuring that the amount of tax payable is more closely related to the value of the property would be “a more reasonable alternative”, he added.
However, the Council of Mortgage Lenders welcomed the Government’s extension of the Support for Mortgage Interest (SMI) scheme, which had been due to expire in January.
CML director general Paul Smee said: “Today’s announcement provides a welcome extension of support for homeowners currently receiving income related benefits, as well as helping lenders to extend forbearance to those waiting to qualify.”
And Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveys, said: “We are delighted that the Government have acted on our recommendations and extended the empty property rate exemption for new build commercial premises from October next year.
“This will help take the break off speculative development, provide a badly needed boost to the wider economy and help to repair our struggling high streets.”
Stephen Robertson, director general at the British Retail Consortium, said: “We’ve been calling for more urgent action on growth. We asked the Chancellor to concentrate on delivering in a few robustly pro-growth areas that would really make a difference to customers and retailers. This statement goes a long way towards delivering this but not always quickly enough.
“There were welcome measures, on fuel duty, infrastructure investment and business and personal taxes but some of these are not due until 2014.
“Retail sales are flat. 2013 will be another tough year. It’s retail where many young people start their working lives yet jobs in non-food retailing are actually falling. Much more needs to be done to support the retail sector in its contribution to overall growth.”