The good, the bad of the emergency Budget

Business leaders’ mixed response

Chancellor George Osborne’s emergency Budget has brought a mixed response from the Oldham business community.

Greenfield man Andrew Milnes, a partner at accountancy firm Hurst, said: “Everyone expected the VAT to increase, but a 20 per cent rate will make cash flow even tighter. However, our retail clients in Oldham will breathe a sigh of relief as it doesn’t come into play until next year. This delay will give us more time to come out of recession and hopefully mean a boost in sales over the Christmas period.

“The Chancellor spoke of an enterprise-led recovery and there were many measures to encourage entrepreneurialism and help small businesses such as tax breaks on NI contributions an employer pays for the first 10 employees.

“For Oldham businesses, the reduction in the main rate of corporation tax from 28 per cent to 24 per cent by 2014 will also be a welcome relief.”

Dr Brian Sloan, head of business and economic policy at Greater Manchester Chamber, said: “Given the scale of the task ahead of the Government to reduce the deficit and debt, Oldham businesses will view this as a positive Budget for the private sector.

“The Chancellor committed to maintaining capital spending, which for Greater Manchester means final confirmation of funding for the Metrolink expansion programme.

“Although the previous Government’s planned 1 per cent increase in employers’ National Insurance will go ahead, the threshold will be increased so that for employees earning less than £20,800 there will be effectively no increase.”

Gavin Wheeldon, chief operating officer of Applied Language Solutions in Delph, said: “I’m struggling to see how the vision of Britain being ‘open for business’ is reconciled with very few real export incentives, so there needs to be more clarity on how exports will play a greater role, which the Chancellor briefly stated.

“A reduced tax rate for year-on-year increased exporting revenues, for example, would give UK exports a massive boost.

“It was disappointing that, despite the change in government, our trade deficit still isn’t being addressed with the introduction of better export incentives.”

CAMRA, the Campaign for Real Ale, has predicted that the impact of a VAT hike to 20 per cent in January, 2011, will force the rate of pub closures to increase above the current 39 a week.

Chief Executive Mike Benner said: “In the New Year many pub goers will be hit with a VAT increase that will push up the combined taxation on a pint of beer to over a pound.

“This historically sad moment for the nation’s 15 million pub goers is compounded by the knowledge that this increase will cause yet more well-run community pubs to shut their doors unless the Government acts.

“Relentless tax increases on the nation’s pubs are contributing to pub closures, job losses and a decline in community spirit.”

Almost half the small businesses surveyed by the Forum of Private Business are “pleasantly surprised” by the Budget but some fear tax rises and other concerns could lead to a double dip recession.

In all, 47 per cent of respondents believe that policies announced by the Chancellor George Osborne are better than expected but 11 per cent feel they are worse and could plunge the economy back into recession.

Research Manager Tom Parry said “Concerns remain over bank lending, the impact on job creation of the National Insurance rise, public-sector cuts and areas of government support.”