Member Article

Budget fails to impress North East

Business commentators in the North East have offered their responses to Alistair Darling’s first budget, and the reaction has been mixed…

The North East Chamber of Commerce (NECC) welcomed the Chancellor’s decision to delay the introduction of a planned 2p increase in fuel duty to October. But it warned that Alistair Darling was running the risk of causing confusion for business owners by tinkering with a range of different taxes.

Andrew Sugden, NECC director of membership and policy, said: “This was a Budget that was both unspectacular and unsurprisingly thin on substance when it came to improving the environment for business growth.

“Small and medium sized firms were handed tax relief aimed at boosting SME investment which will be beneficial. Again, though, it comes in the wake of a tax hit when Mr Darling tinkered to disastrous effect with Capital Gains Tax. “Unfortunately, what we are seeing is continued confusion for the business community at a time when greater stability is needed. What firms are gaining on the swings, they are losing or have already lost on the roundabouts.”

CBI not impressed

Sarah Green, regional director of the Confederation of British Industries, said: “On the surface there are no nasty surprises, but his growth assumptions are optimistic and leave him with no room for manoeuvre should things take a turn for the worse. “Borrowing also looks set to rise by a further £20 billion over the next four years, which is a cause for concern. And by 2010/11, the impact of this Budget will be to raise total tax take by nearly £1.9 billion.

“The government has much to do if it is to win back its enterprise credentials, but the measures announced today are a credible first step on the road. Although the anger over capital gains tax is still simmering, entrepreneurs and smaller businesses will recognise that the government has made an attempt to listen.

“For business, although there may have been no further big shocks in today’s speech, we mustn’t lose sight of the whole raft of tax rises announced in the previous Budget and the Pre-Budget Report. These are scheduled to kick in from April, putting a further squeeze on firms at this already turbulent economic time.”

‘Ticking off boxes’

The North East’s academics weighed in on the issue as well, with Durham University’s Dr Thomas Renstrom claiming that Mr Darling was simply “ticking off boxes”.

Dr Renstrom, Lecturer in Economics, said: “At first it looks as if the budget is aimed at addressing issues of major importance: global warming, antisocial behaviour, child poverty. In general, the policy measures introduced to tackle major issues are too narrowly focused, and in many cases will have little effect on consumers’ behaviour. The measures seem to reflect the agenda of narrowly focused pressure groups. It looks as if the government wants to claim they have done something on each issue.

“The budget addresses major issues by minor instruments. It is an easy escape for the government to claim they have done something on major issues, by rather “ticking off boxes” in the easiest way, such as charging for plastic bags.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .