Responding to the Chancellor’s budget today, Rob Johnston, Chief Executive, Cumbria Chamber of Commerce says

“This budget sets out a credible package for business, backing business expansion and is good news for small businesses. It’s the most focussed budget on SMEs we’ve seen.  After two years of economic downturn, the Chancellor has clearly recognised the need to place business at the heart of this budget. Doubling the annual investment allowance, help with business rates, and allowing entrepreneurs to keep more of their gains will prove especially popular.

That said, the Chancellor could have done more to set out a clear plan for the reduction of the budget deficit, which continues to threaten business confidence and investment. We look forward to seeing more detail on this.”

Commenting on the macro-economic points in today's budget, Suzanne Caldwell, Cumbria Chamber’s Enterprise Development Manager, adds

"The Chancellor's GDP forecasts for 2010, though slightly stronger than the Chambers’, are realistic. But, the official forecasts envisaging very rapid growth in 2011 and beyond are much too optimistic.

As the Chancellor's medium-term predictions for public finances are based on growth expectations many analysts would see as unrealistic, he may struggle to persuade the markets that his deficit-cutting plans are achievable without further measures.

Borrowing in 2009-10 and 2010-11 is very likely to be lower than the Chancellor predicted in December’s Pre-Budget Report. But the Chancellor's borrowing forecasts for subsequent years appear too optimistic and more detail will be needed to ensure that Britain's AAA credit rating is secure”.

Commenting on specific measures Rob goes on to say:

On the NICs increase going ahead:

“The Chancellor has missed a golden opportunity to boost to job creation and business growth by scrapping the planned NICs rise. Substituting the employer NICs hike – a tax on jobs – with a 1% increase in VAT would have largely offset the lost revenue, and it would have been less damaging to the productive economy.”

On the staggering of the fuel duty increase:

"It’s disappointing that the duty increase imposed in December has not been removed but staggering the planned fuel duty increase will offer some comfort to businesses and their employees. Keeping fuel costs stable doesn’t just help road hauliers, but all businesses in keeping their costs manageable.

With petrol prices spiking in recent months, the Government must tread a very careful path between sorting out the public finances and the real pressures facing businesses.

But in a county like Cumbria travel costs are a significant issues and anything that increases these further hits us particularly hard”

On new lending targets for RBS and Lloyds:

"Bank lending is not a black and white issue. While many of the most serious issues around bank lending have been addressed in recent months, businesses still report some problems - and we must ensure that credit-worthy firms receive the financing they need to help drive economic recovery.

If using gross targets helps to clarify how much money is actually getting to the businesses that need it, then it should be welcomed.”

On a credit adjudication service:

“This is a good move that will improve transparency in lending to small and medium sized businesses, especially where complaints and concerns still remain.”

On the creation of UK Finance for Growth:

“This initiative will help provide these firms with alternative routes to finance – the first step in stimulating more high growth companies. The key will be a simple range of financing options so that business takes up the help on offer.”

On increasing SME access to Government contracts:

“It’s good to see a commitment to increasing the share of public contracts for SMEs. The challenge will be to turn this commitment into a reality and we need to make sure that SMEs get the support they need to be able to tender successfully.”

On measures to support business investment:

“We have campaigned for more support to promote business investment. The Treasury has clearly heeded our warnings on this issue.

The doubling of the annual investment allowance will provide a shot in the arm for private investment this coming year, and it will be seen as one of the Chancellor’s better budget moves.

Not only is it a valuable measure for the businesses investing in equipment but it should encourage businesses to pull forward investment plans, benefiting those producing that equipment.”

On an increase in capital gains tax relief for entrepreneurs:

“Allowing entrepreneurs to keep more of their gains over a lifetime in business will help foster a spirit of entrepreneurship at a time when we desperately need more focus on developing private enterprise.”

On a green investment fund:

“We support the creation of a green investment fund, and the principle of trying to bring together public and private money to finance infrastructure at a time when the public finances are in such a poor state. However, this fund should only be the initial step towards a larger national infrastructure bank, which would become a much more viable option for securing both our future transport and energy infrastructure needs.”

It is vital that in the early stages of a new Parliament the next Government sets out a clear plan for the attraction of more private finance into infrastructure provision.”

On business rates:

This is a good measure and will make a big difference to significant numbers of existing SMEs and new starts.”

On rebalancing the economy towards exports:

“After a decade of growth driven by the public sector and consumption, a fundamental rebalancing of the UK economy is required. Britain needs to export far more goods and services than it currently does and the Budget did little to aid this transformation.

The Government should have used this opportunity to introduce a state-backed short-term export credit insurance scheme to ensure our exporting businesses can compete more closely with comparable trading nations like Holland and Germany. Just co-locating UKTI and the export credit guarantee department is not enough.

Here in Cumbria businesses of all sizes are increasingly seeing the opportunities available through international trade and with the new UKTI contract starting in April we’ll be working even harder over the coming year to support them in doing that.”

On a consideration to abolish the Default Retirement Age (DRA):

“It is the medium-sized companies that are most concerned at the prospect of losing the default age, which only triggers a conversation between employers and employees. These businesses are the engine room of the UK economy, and they must be allowed to get on with creating jobs and driving recovery without the constant threat of tinkering to employment law.”

On civil service relocation:

“Moving more of the public sector away from the capital could save money and help regional economic growth. We need to wait and see whether Cumbria will benefit from this. However, these need to be substantial in size and scope to prevent unnecessary competition over a small number of jobs. This should not mask the fact that the public sector is too large.”

On time to pay arrangements:

“These arrangements have proved very useful to a number of businesses and, given the point we’re at in the economic cycle, it’s great that they will continue.”

Regards

 

Rob

 

Rob Johnston

Chief Executive