Partner Article

Budget broadly welcomed amid bleak growth forecast

Cutting employers’ National Insurance bills, focusing on skills and training and axing the fuel duty rise were all Budget announcements welcomed by Shropshire businesses today.

The Chancellor’s budget for an ‘aspiration nation’ was built around tax cuts for companies and a “Help to Buy” scheme to shore up the housing market, with little good news amid the UK’s growth forecasts.

Manufacturers and service sectors companies today gave their verdicts on Mr Osborne’s speech, with many saying the headlines announcements would need closer scrutiny.

Ian Davies, of Shropshire accountants Tranter Lowe, said businesses would welcome the new Employment Allowance but he was sceptical how much else there was in the Budget for small businesses.

He said: “The new Employment Allowance will reduce employer national insurance costs and so will be widely welcomed by many small businesses. But the detail will have to be examined carefully and the relief does not come into play

until next year. With employers paying 13.8 per cent national insurance, and employees 12 per cent, this represents a huge employment cost.

“The extension of the SEED investment scheme is good news for small company financing, but other than that many of Shropshire’s micro and small businesses may well think this Budget was just tinkering around the edges.”

Commenting on the wider economic outlook, Mr Davies said the growth and borrowing forecasts were very disapopinting but largely expected.

“Business has had some of the toughest conditions to operate in for decades and a recovery seems to be very slow in arriving. Investment in infrastructure and the Help to Buy-shared equity schemes and mortgage guarantee should help the construction sector get moving – and this is a big economic driver.

“The alignment of corporation tax to 20 per cent will hopefully attract or retain major companies in the UK, but that will depend on them declaring profits to take advantage of the tax rate cut.”

Businesswoman Nicole Howarth, managing director of shipping company Global Freight, in Telford, welcomed the freeze on fuel duty.

She said: “Around 800,000 British families now spend a quarter of their income on running a car. Given that two-thirds of the pump-price of petrol and diesel is tax, Mr Osborne really had no other choice but to axe fuel duty or face mass outrage, not to mention losing votes come the next election.

“By cancelling the 3p rise in fuel duty due in September, the Chancellor has shown he is listening to hard-working families across the UK who said that this increase would have caused hardship.

“The cost of petrol and diesel is already contributing to the squeeze people are experiencing on their incomes. Scrapping the fuel duty increases is a popular move which will help stem higher price inflation and a respite which could be crucial to cash-strapped drivers and companies.

“The Chancellor needed to make this a cost of living budget, and freezing this duty will make a difference to millions of people across the UK. Of course, it would have been very hard for him to justify going ahead with the rise, when the Government is already securing increased VAT revenues on fuel prices.”

Citadel Industries, based on Telford’s Halesfield trading estate, manufactures a range of products for physical security and leisure facilities.

Operations director, Chris Brydges, said: “We’re delighted to see the Chancellor say that education and skills, including apprenticeships, are at the heart of the Government’s long term growth strategy in today’s Budget speech.

“At the end of 2012, more than 18 per cent of 16 to 24-year-olds were unemployed. Businesses want to employ more young people but they need support from the Government to help with training, whether via apprenticeships or other

vocational schemes. People are the heart of any successful business. We have been investing heavily in our staff and their training and it’s crucial to British industry that young people are given the best opportunities to build their skills and join the workforce in a productive way.

“Mr Osborne’s commitment to education reform and creating better links between businesses and education will help to ensure that we can grow a workforce equipped for our manufacturing future.”

Richard Hilton, managing director of Telford manufacturer Fabweld Steel Products, added:

“For manufacturers the biggest priorities for growth are reducing the burden of taxes and regulation; making it easier for companies to find the finance and skills they need to grow their businesses. Whether this can be achieved by today’s announcements made by the Chancellor, will be interesting to see.

“In the 2011 Budget, Mr Osborne talked about a ‘Britain carried aloft by the march of the makers’, he said Government would back British manufacturers who were key to economic recovery. But two years on, this has not really happened.

“Today he acknowledged that research and development was ‘absolutely central’ to Britain’s economic future, endorsed Doug Richards’ report on making the most of apprenticeships, and cut corporation tax. All this, if followed through and really supported by the Government, could make the difference which was promised two years ago.

“It goes without saying that we’re delighted that a bank levy will be introduced, to stop the banks benefitting from the corporation tax cut.”

This was posted in Bdaily's Members' News section by Be Bold Public Relations .