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East Midlands Chamber News

DNCC Responds To Budget

Chancellor George Osborne (Licensed by The Prime Minister's Office under CC BY-NC-ND 2.0)Commenting on Chancellor George Osborne’s 2013 Budget, George Cowcher, Chief Executive of the Derbyshire and Nottinghamshire Chamber of Commerce, said: “A number of measures announced in the Budget were business-friendly and welcome, including the National Insurance Contributions cut for employers, Capital Gains Tax relief and reductions in Corporation Tax, the increase in R+D credits, further assistance for start-ups, financial support for working parents and the new voucher scheme to enable small businesses to get support.

“The freeze in Fuel Duty, incentives to help house buyers and moves to significantly increase Government procurement from small firms are also welcome.

“However, there were many other issues which weren’t addressed and should have been. The Chancellor had a golden opportunity to ease the financial burden placed on many firms by scrapping damaging increases in business rates, but that didn’t happen. Whilst the announcement of a further £3bn annual funding for new transport and infrastructure projects is a positive move, the UK needs that investment now, not in 2015-16 as proposed.

“And it is also disappointing to see the Government pushing through further increases to Air Passenger Duty, which will make the UK less competitive and less attractive as an investment prospect.

“The Chancellor and his Cabinet colleagues need to keep front of mind that it is business that drives the economy, creates jobs and wealth, generates economic output and raises the revenue needed to pay for public services and they still need to go further to support enterprise and growth, and to implement their policies quickly and more effectively.”

Header image on news page Licensed by HM Treasury under CC BY-NC-ND 2.0

Commenting on some of the specific measures unveiled in today’s Budget, George Cowcher, Chief Executive of the Derbyshire and Nottinghamshire Chamber of Commerce, said:

On fiscal policy and government spending:

“The Chancellor has tried hard to shift spending towards growth with some success. However, the Coalition as a whole should have taken the tough political decision to remove ring-fences around health, overseas aid and universal benefits, which would have allowed more immediate investment in road maintenance, house building, business access to finance and support for exporters.

“Derbyshire and Nottinghamshire businesses will welcome the Chancellor’s move to redirect money from Government departments to infrastructure over the medium term.

“However, local firms would have liked to see an even bigger shift in spending towards priorities that unleash enterprise, which in turn deliver jobs, prosperity and the tax revenues needed to shrink the deficit and eventually the national debt.”

On ‘monetary activism’ and a new remit for the Bank of England’s Monetary Policy Committee:

“The Chancellor’s decision to review the Monetary Policy Committee’s remit – to give it more latitude to support growth – is a welcome one. The devil will be in the detail with this one, but the principle of targeting inflation while doing everything possible to support growth is right.”

On Business Rates:

“Heavy taxes on inputs like property drag down business profitability, so DNCC would urge the Chancellor to take further action on business rates without delay.

“Companies across the country have been crying out for relief from relentless annual rises in business rates for years, but the Treasury has put off action until the Autumn Statement. Unless a company’s premises are the size of a double garage, or if a firm is building speculatively over the next two years, there’s little relief on offer.”

On employment and the new Employment Allowance:

“The Chancellor’s move to help our smallest companies take on staff by cutting their employers’ national insurance bills by £2,000 will give many businesses an important boost of confidence.

“Small companies should be able to focus on growth rather than worry about getting hit by employment taxes.”

On Growth Vouchers:

“DNCC supported the British Chambers of Commerce’s proposed voucher scheme to help businesses access growth advice when it was first mooted in September 2012.

“The Chamber is pleased that the Chancellor has accepted this proposal and committed £30m to help companies around the country get the advice they need to grow, on their own terms.

“DNCC now looks forward to working with the Government to bring the scheme to life and enable businesses to get the specialist assistance they need, whether on finance, employment law, or other areas.”

On business access to finance:

Business bank:

“DNCC has long-supported calls for the establishment of a business bank, and for it to be of sufficient size and scale to provide the sort of support to new and growing businesses seen in Canada, the USA, Korea, and Germany.

“A British business bank requires a vision and proper resourcing. Unless it has both, it can’t back the dynamic companies that have failed to get patient growth capital in this country for decades.

“Whilst we will await further detail on the business bank’s start-up activities, we would have liked to have seen a radical increase in the initial funding on offer.

“The Chancellor has, however, given greater flexibility to the Bank of England to support growth. So we will urge the incoming governor of the Bank of England to underwrite or capitalise the business bank using the BoE balance sheet.”

Funding for Lending:

“The Chancellor mentioned that the Treasury is working on improvements to the Funding for Lending scheme, which has helped the mortgage market but has done little or nothing to solve the issues businesses face when trying to access finance.

“While DNCC supports any idea that could help boost the scheme’s effectiveness for business lending, Funding for Lending can ultimately do little beyond lowering the cost of finance for companies already considered by banks to be ‘safe bets’.

“Only greater competition in the banking sector and a properly capitalised business bank, which would drive up appetite for risk, can deal with the very real frustrations we see in the business community across the UK.”

On housing and the mortgage market:

“The Chancellor’s efforts to grease the wheels of the mortgage market are significant and positive. However, DNCC would argue that moves in the mortgage market should be complemented by direct support for the building of new houses. Direct support for construction creates jobs and supply chain activity, and boosts business confidence fast.”

On transport infrastructure:

“Businesses appreciate the Chancellor’s personal commitment to improving Britain’s transport infrastructure and his efforts to reverse the damaging cuts to transport spending that we warned all parties against.

“His £18bn shift from current spending to capital investment over the next Parliament is welcome. However, by its very nature, the switch announced in the Budget will only have an impact in the medium-term.

“As part of a wider reprioritisation of resources on measures to boost confidence, jobs and growth, the Chancellor should have gone even further and used this Budget to divert unproductive current spending into road maintenance and repairs today.

“This would have had immediate effects on business confidence, construction sector jobs, and the effectiveness of our transport network.”

On energy infrastructure:

“DNCC welcomes the Chancellor’s commitments on energy, as they contribute to our overall energy security and resilience. It is hoped that these announcements, together with the confidence generated by planning permission for new nuclear facilities, will reduce the political risk that has dogged private investment in energy infrastructure.

“Ministers also need to get more creative to take the risk out of investment in these major projects. The Bank of England could play an important role here, by offering guarantees that help to reduce infrastructure investment risks for pension funds, institutions and sovereign wealth funds from across the world.”

On international trade and export support:

“If Britain is in a global race, as the Prime Minister is so fond of saying, we must pull out all the stops to support our exporters.

“More can still be done to provide export support for British companies. There is a need to provide even more practical help in overseas markets for companies wanting to export.”

On corporation tax:

“All companies will cheer the news that Corporation Tax will fall to 20% by 2015. This is an important fillip to business confidence, particularly among global investors.

“The Chancellor may, in future, need to consider even further tax cuts of this nature if there is no sign of resurgent growth over the coming months.”

On public sector pay:

“The Chancellor is right to restrain public sector pay, especially in light of continued pay restraint in hard-working businesses across the UK.”

To view the Budget 2013 Policy Changes grid, click here.

To view the Budget 2013 Economic Summary, click here.