Business and the Budget

Alistair Darling’s second Budget promised support to struggling industries and emerging technologies, but is it enough? We asked six readers of Business XL for their verdicts

Paul Webb, tax partner, Robert James Partnership

The only comfort is that they haven’t put tax up. I can’t see the extra 20 per cent tax relief on capital expenditure above £50,000 really encouraging much more investment: the existing threshold [on which you get 100 per cent relief] already covers the vast majority of businesses. If they’d put that threshold up to £100,000, it would have encouraged companies to change their spending patterns. The sting in the tail, for those drawing a salary from their business, is the new 50 per cent tax rate. We’re likely to see a trend towards business owners leaving money in their company with a view to selling it or winding it up in a tax-efficient way. It’s also disappointing that the planned rise in national insurance hasn’t been reversed.

4/10

Simon Campbell, CEO, ViaPost

The government is starting to make the right noises, earmarking money for emerging technologies and organisations that help to lower a company’s carbon footprint. The uncertainty is around the channels that will be used to make the funds available. In the past, government money has been hard for businesses to access; half of it can disappear in administration costs. Another issue is the balance between supporting old industries, like car manufacturing, and innovative sectors. If industries become unprofitable for long periods of time, by pumping more money into them you’re just postponing the inevitable job losses, rather than putting the funding into businesses that can create jobs.

6/10

Martin Myerscough, chairman, GreenBottle

Anything low carbon is a good idea, so the Budget measures were really fantastic news. But it’s all a question of how it is going to be distributed, and whether it will get to companies. The trouble with funding packages is you have to go through a lot of hoops to get them: for example, no one seemed to be able to access things like the Enterprise Finance Guarantee scheme. It would have been good to have seen a PAYE holiday or reduction in business rates, as they would have very quickly improved companies’ cash flow positions. More direct measures are far quicker in delivering benefit to businesses that are struggling to stay afloat.

7/10

Riccardo Segat, CEO, Amplio Partners

From a green perspective, the Budget’s very positive. It’s encouraging that £525 million has been allocated to offshore wind; together with the £4 billion from the European Investment Bank, it’s a powerful combination. However, from a general business point of view, I’m less impressed. It’s disappointing to see that the government’s emphasis is on easing mortgage lending rather than getting corporate credit flowing again. The property market has been artificially inflated by cheap debt and rather than propping it up, the government should be focusing on getting banks to lend to good businesses, protecting jobs and incomes. If that doesn’t happen, it is going to be difficult to meet any kind of targets by 2020: if the bank debt is not there to fund renewable energy assets, they will not get built.

6/10

Adrian Mole, tax partner, Mazars

There was very little for growing businesses. There was the £50,000 for losses relief being carried back for three years, which has been extended over a two-year window. But that is of limited value as it won’t change people’s behaviour. That, plus the capital allowance changes which will bring back first-year allowances for plant and machinery purchases, may be of assistance but even so, it’s not enough in itself to encourage people to invest, grow or do anything else. With tax rates now at 50 per cent for relatively modest earners at £150,000 – and at £100,000 you start to lose your personal allowances – one could argue that these changes hit the smaller and aspirational businesses. What the chancellor has done is put restrictions on an area of potential growth and profit.

2/10

Simon Daniel, CEO, Moixa Energy

The government’s ambition to cut the UK’s carbon emissions 34 per cent by 2020 is admirable, but based on current performance, the odds are against them achieving it. The chancellor says the goal will be ‘legally binding’, but that should imply a commitment to tax rubbish and carbon properly as well as targeting those wasting resources, for example by leaving lights on when their premises are closed at night. We also need to think more creatively to reduce our carbon emissions. For example, installing direct current (DC) power sources into homes would allow consumers to get rid of bulky and inefficient AC/DC adaptors and save significant amounts of energy without reducing performance. Unfortunately, what’s lacking
is the vision to implement such ideas.

4/10