back

Budget 2010: North West's business leaders give verdict
TheBusinessDesk.com | 24th March 2010

A BUDGET of 'financial stimulus' and 'mixed-messages' is how some of the North West's business leaders summed up the measures unveiled by the Chancellor today.

The announcement to take 345,000 small businesses in England out of the business rates system has been universally praised as has the increased loans facility of £94bn which RBS and Lloyds TSB will provide.

Bosses also welcomed the government's intention to shorten the time in which payments are made from local authorities to businesses from 10 days to five.

But dismay has been universal among business leaders regarding the 1% increase to National Insurance and phased 3p hike to fuel duty - with duty initially being raised by 1p next month.

And most bosses believe that the 'devil will be in the detail'.

Dr Brian Sloan, head of business and economic policy at Greater Manchester Chamber, said: "There were some unexpected announcements that will benefit SMEs, particularly the reduction in business rates which will undoubtedly help some of the smallest businesses.

"We also welcome the Chancellor's announcement that RBS and Lloyds will have new targets for lending to businesses totalling £94bn.

"The Chancellor's forecasts for 2010/11 remain optimistic and his spending plans lack clarity.

"The Chancellor wants the private sector recovery to create jobs. They could have done this more effectively by abolishing the 1% National Insurance Contribution increase."

The Federation of Small Businesses (FSB) agreed that business rates are the third highest outlay for small businesses and the proposal to take them out of the business rates system will come as a "huge relief to small businesses on the high street".

John Walker, national chairman of the FSB said: “This budget has provided welcome news on helping to improve small businesses cash-flow but the increase in the NICs will be bad for job creation.

“Small firms are key to furthering economic recovery as the UK’s largest employer and we are concerned that through continuing plans to increase employee National Insurance Contributions (NICs) will increase pressure on struggling firms meaning they will not be able to take on additional staff.

“Proposals to increase the Small Business Rate Relief threshold will be welcome news for those small firms in England whose cash-flow in hindered by big tax bills."

Damian Waters, CBI’s regional director for the North West, agreed that the Chancellor had missed a great opportunity to rule out the increase to National Insurance contributions in April 2011.

He added: "The CBI has been lobbying on the issue of National Insurance and thinks it is a mistake to impose a tax on jobs as we are recovering from recession.

"Speeding up the payment of uncontested payment to business to 5 days - the government hasn't come close to meeting its 10 day commitment so a 5 day commitment seems unlikely to be met.

"I was also interested in the £2.5bn support for small business for training and skills - we'll have to wait and see if that is new money and how it will be delivered."

Darrell Matthews, regional director of the IoD in the North West, was less optimistic about the financial outlook for the country.

He said: “The Chancellor's GDP forecasts are too optimistic and there is still no sign of a credible deficit reduction plan, but we certainly welcome the specific measures to support small and medium-sized businesses.”

Frank McKenna, chairman of business organisation Downtown in Business, said: "As expected the challenges in tackling the UK PLC deficit have been left for another day.

"The planned re-location of 15,000 civil service jobs from London also presents a real opportunity for North West cities.

"In addition, any help for businesses at the moment has to be good news so the small business loans, the boost to skills and innovation funding and the one year business rate cut from October, which will help around 500,000 businesses, are all welcome initiatives."

Imran Hakim, the Bolton-based inventor of the i-Teddy and co-founder of entrepreneurs' event RAW, said: “There was some excellent news for SMEs and enterprise, with the support promised for SMEs crucial to their growth and, alongside doubling the investment allowance, should encourage entrepreneurs to invest with confidence in innovation and small business, leading to growth in the economy.

"But the government still insists on directly taxing those who will bring the UK out of the economic downturn – the high earning entrepreneurs.
"The 50% tax was always on the cards, but whilst it will provide revenues, it’s a measure that will certainly hinder enterprise in the UK.

“There were a lot of great headlines for the government in the budget today but I think the real test will be turning those headlines into reality and delivering the results at ground level."

Len Collinson, founder of Private Sector Partners, the North West lobbying group said: "This was a mutton dressed as lamb budget designed for the election.

"There were some superficially attractive measures such as the business rates suspension, the doubling of entrepreneurs' CGT relief, and the extra money for science places at university.

"However, these are extremely modest and must not flatter to deceive. Britain is standing on an economic knife edge with public debt at its highest ever level.

"In this context the Budget was a profound failure. It did not tackle public sector overspending or substantially reduce public borrowing."

But Edward Rimmer, chief executive of Bibby Financial Services, said: "With so many businesses struggling at the moment, and little sight of a major economic recovery in the short term, it is vital the government provides a package of support to help all businesses, whatever their size, in order to sustain the lifeblood of the economy.

"Freeing up a greater proportion of public sector contracts (15%) for tender by small and medium-sized businesses should help a broader range of companies start to access this once-lucrative sector.

"However, speeding up of payments from the sector to a maximum of five days, while ideal, is also difficult to see how it will really work in practice.

"Finally, the extension of HMRC's Time to Pay initiative is simply a necessity at this point in time if Darling does not want to force large insolvencies among a number of barely-afloat businesses.

"That said, other measures to help businesses survive, such as the year-long suspension of business rates for 500,000 small firms, will no doubt be welcome - but again, this could go further."