Peterborough businesses react to budget

Alistair DarlingBUSINESSES in Peterborough have given their reaction to the chancellor’s last budget before the general election.

Colin Parnell, Peterborough branch chairman of the Federation of Small Businesses said, “This Budget has provided welcome news on helping to improve small businesses cash-flow but the increase in the employee National Insurance Contributions NICs will be bad for job creation.

“Small firms are key to furthering economic recovery as the UK’s largest employer and we are concerned that through continuing plans to increase employee NICs and not introducing a NICs holiday to firms employing less than 50 staff who take on more employees, it will increase pressure on struggling firms meaning they will not be able to take on additional staff.

“FSB and CEBR research shows that the one per cent increase would cost 57,000 jobs in the UK. It is a tax on jobs which will do nothing to aid economic growth.

“Proposals to increase the Small Business Rate Relief threshold will be welcome news for those small firms in England whose cash-flow in hindered by big tax bills.

“A third of FSB members have said that business rates are the biggest taxation obstacle to growth and today’s announcement will go far to help firms, especially local shops and businesses.

“The FSB welcomes the Government’s commitment to get the bank’s lending to small businesses, but feels the targets will have little impact if the banks do not begin to offer more affordable finance.

“An FSB-ICM survey of 10,000 members showed that a third (32 per cent) had seen the cost of finance increase over the previous 12 months despite the Bank of England base rate being at an all time low.”

“The government must now put pressure on the banks to lend affordable finance to small businesses so they can get on with the job in hand. The role of the new credit adjudicator will be key in this regard and the FSB looks forward to working with this new institution.”

A spokesperson for accountants Greenstones said, “While there were few surprises in the budget, the chancellor offered businesses, particularly smaller firms, some helpful measures. These included a temporary cut in business rates, a boost to investment allowances, extra tax relief for entrepreneurs, more support for firms struggling to access funding and the continuation of the Time to Pay tax scheme. The one per cent NIC increase, however, goes ahead.”

John Bridge OBE, chief executive of Peterborough Chamber of Commerce, said, “On the whole I believe that this budget is misrepresentative of the reality of the challenge of reducing the national debt. We are disappointed that that some of the savings made from the lower than expected borrowing this financial year and next are being diverted to new spending plans, rather than actually cutting the deficit.

“Crucially, we don’t have the detail needed to qualify the claim that the AAA credit rating will be protected. The Chancellor’s borrowing expectations are less than realistic, and he doesn’t seem able to say what he’s going to do to reduce public debt.

“In terms of the benefits for business, the increase in employers’ national insurance contributions planned for April 2011 is still going ahead, despite the fact that this step will place additional pressures on SMEs and do little to encourage the creation of new jobs. Fuel costs are still going to rise, albeit in a staggered fashion, and that is going to impact upon businesses of all sizes. Between 1 April this year and 1 April next year we will have seen 3.76 pence rise in fuel duty. Small reliefs are welcome but when they are balanced out by significant increases like these, they do not provide the help that many SMEs are currently seeking.”

Peterborough accountants Rawlinsons published their own report, which you can download here.

A copy of the entire budget can be downloaded here.

View the Peterborough Business report archive here.