What will the budget hold for you?
PUBLISHED: 00:02 16 March 2011
Our six wise men take a look at what next week's budget might hold
•John Woods, chairman of Moneyfacts: There are around four million small to medium sized businesses (SMEs) in the UK. They employ a little over 50pc of all those working in the private sector.
The figures are quite simple. If just half the SME’s in this country were to be able to take on one more employee we would have no unemployment and more to the point no deficit.
To put that the other way round. If just half of the SME’s in this country were each to lose one member of staff, unemployment would double and we would never recover the deficit.
We hear a lot about the current woes of the public sector but many small businesses have now been having a bad time for several years. They have got used to not expecting much in the way of help.
What could this budget do to change that? I think most businesses would be happy just seeing no more tax increases, no more duty increases, no more VAT increases, no more employer NI increases, no more attacks on private pension schemes, no more regulation, no more employment legislation and no more silly ‘schemes’ and ‘initiatives’ for business which sound impressive but never make any real difference and cost more to administer than anything they ever achieve. To get the economy really going will take more than that but it would do for starters.
•Charlotte Cooper, Cooper Lomaz: I feel anxious about this Budget as there is a lot at stake and the government needs to do all it can to make it a budget for jobs.
There should be a concerted effort to mitigate red tape, reduce the tax burden, have clearly thought through strategies, and offer real support to businesses to create the right environment for sustained growth and job creation.
The tax burden should be reduced by reversing the planned NIC increase, possibly looking at a years NIC holiday where companies are actively participating in job creation, a win-win for both job seekers and businesses.
The government needs to halt or reduce the impediments to labour market flexibility. The Agency Workers Regulations due in October for example are a nightmare with much speculation as to how they will be implemented and work in practice. All we can see is huge amounts of paperwork with cost increases where there are already tight margins.
There should be clearly thought through strategies rather than the very public u-turns experienced with immigration policy, reduction of housing benefit for long term unemployed and sale of woodlands. Some of these were poor ideas that should never have gone so far down the road with the resultant enormous waste of time, money and effort before sense prevailed.
If the private sector is to stand any chance of meeting the government’s forecast of absorbing the public sector job losses the Chancellor needs to make real investment where it sees the greatest employment opportunities.
Our LEP, “New Anglia”, should have resources provided to attract investment into the region.
•Caroline Williams, chief executive Norfolk Chamber of Commerce: The Government’s rhetoric on growth has not yet been matched with real action to deliver a strong environment for the private sector to flourish. Norfolk businesses are not looking for handouts but are looking for George Osborne to deliver a budget to create the climate in which they can grow. This would mean taking some pro-growth steps which will boost business confidence, encourage investment and rekindle the spirit of enterprise. Norfolk Chamber would like to see included:
Reduced Employment Red tape - Delay or scrap the implementation of all new employment legislation and introduce a moratorium on additional employment regulations for the remainder of this parliament
Incentivise Youth employment –Suspend or lower the Youth and Development Rates of the National Minimum Wage or provide employers with a NI incentive to take on young people.
Simpler Planning Decisions – Reduce and simplify lengthy bureaucratic planning processes to enable businesses to expand and extend their premises
Resource for the Local Enterprise Partnerships – Clarify their role and function and provide financial resource to support the business community to drive forward the LEPs to create jobs.
Support for Norfolk Exporters – retain and increase assistance and support for exporters to help them access trade finance and break into new markets.
Increased Business Investment – Small firms may miss out on reduction of the headline rate of Corporation Tax. Businesses should be able to carry forward unused relief to enable them to invest in new plan and grow their operations.
If government provides a radical framework, business will do that it does best – create wealth and jobs for Norfolk.”
Peter Wilson, chief executive Norwich Theatre Royal: It’s time to assure Norfolk that the huge economic jolts we’re experiencing on all sides are both necessary and strategic.
Over 25,000 of Norfolk’s 28,000 VAT-registered businesses employ 8 people or fewer. They depend on good communications, a fluid employment regulatory framework, an encouraging economic climate, and active support from – especially – local authorities for a range of special jobs and contracts.
It follows that the “Norwich in 90” and county-wide high speed broadband campaigns are important to every local business. If there were a preference it would be for the latter, because people who run small businesses are increasingly dependent on rapid response and have little time for travel.
Plainly the rights of employees must be protected; equally it should be made more attractive for freelancers to provide services to a range of clients. And especially for people who have marketable skills to be fully involved in the job market.
If monetary controls are to change it must be in the context of a planned and gradual increase within which we can all budget properly. The government has shocked us enough. Now, if they want support, they must sooth, mend and cultivate.
There has been excellent support from local authorities for the notion that contracts of all sizes should be awarded locally and evenly. This can be encouraged by government without extra expenditure.
Finally, the arts cost little and generate much. This government must restore the people’s faith in their ability to see and express themselves spiritually.
•Richard Larner of Brewin Dolphin: Many households will be waiting anxiously to see what George Osborne, the chancellor, has in store for them on March 23 when he opens the iconic Budget red box and makes his speech to the House. The omens do not look good.
Many consumers are already experiencing an age of austerity. What’s more, the coalition has previously warned that its measures to reduce Britain’s huge deficit would not be a quick fix and that we face a long road ahead to get our balance sheet in order.
Investors will also be keeping an eagle eye on the small print of the budget.
Our perennial call to reduce stamp duty for share trading, which has remained unchanged since 1986, is likely to fall on deaf ears.
Sophisticated savers who look to venture capital trusts (VCTs) and enterprise investment schemes (EIS) for portfolio and tax planning will be concerned that these attractive tax perks are under the microscope. They were part of a review this month, by the Office of Tax Simplification (OTS), which is looking at ditching various tax reliefs to simplify the tax system.
And this report coincided with remarks by Mr Osborne querying the merits of VCTs. We can only hope that he leaves these tax incentives in place as recognition of their contribution towards encouraging small businesses which are being seen as an important factor in offsetting the adverse impact of public spending cuts on the economy as a whole.
Other measures expected to be confirmed in the budget which we very much support include a new “Junior Isa” or an ISA for kids. Meanwhile, the annual Individual Savings Account (Isa) allowance will rise in line with inflation to £5,340 for cash Isas and £10,680 for stocks and shares Isas in the new tax year. This is quite a generous provision bearing in mind the current strain on public finances.
Mr Osborne will undoubtedly put on a brave face on March 23 and insist that the nation is on the mend. Yet he has little room for manoeuvre, and for that reason there is unlikely to be too much in the way of good news.
•Bob Rose, senior partner Larking Gowen: Following the recent report by the Office of Tax Simplification, small businesses will be looking for positive commitment that the chancellor will adopt some of the proposals for simplification. High on the agenda must be a desire for certainty; constant changes in tax legislation can severely restrict ongoing business decisions. Employees who use their cars for work will want a substantial increase in the tax-free mileage payments they are allowed and all taxpayers may wish for more efficient communications with the tax man.
It would be helpful to see an easing of some of the more complex areas of VAT and an increase in the scope of existing simplification measures to ease the administrative burden; for example, raising the partial exemption de minimis to a realistic level, well above the current annual limit of £7,500. It would be good to see another amnesty for late registration cases as this was so successful last time. True annual accounting (without interim payments) would be beneficial for smaller businesses, as would be doubling of the capital goods scheme threshold - £250,000 is too low.
As we are all well aware, not only are current trading conditions challenging, but cash is hard to come by. Restricted lending by the banks affects the whole business community and cash flows are not as they should be. In these circumstances, HM Revenue & Customs could be much more supportive of companies which have difficulties paying their tax liabilities. The Business Payment Support Service is a welcome step, but the response from that unit can be patchy and uncertain. Let’s have a system which we can all rely on.
Budget day will be interesting and I look forward to hearing what the chancellor says and whether any (or all!) of the above are included.