Budget 2014 passes the business test, says BCC
20th March 2014
Giving his reaction to the Budget 2014, John Longworth Director General of the British Chambers of Commerce (BCC) said: -Business wanted a Budget that was disciplined, focused, and geared towards the creation of wealth and jobs and that's what the Chancellor has delivered.
-With a huge confidence gap still separating employers from young job-seekers, we are very pleased to see the Chancellor heed our call to help firms take on and train tomorrow's workforce. Overcoming that confidence gap means more investment in young people, more apprenticeships, and more jobs, which are critical with more than 900,000 16-to-24-year-olds still out of work. -Osborne's focus on investment, exports, house-building and economic resilience passes the business test. By making a better business environment his top priority, the Chancellor has recognised that successful and confident companies are the key to transforming Britain's growing economic recovery into one that is felt in homes and on high streets. -As with any Budget, there were some populist measures that were not at the top of business's wish list. Luckily, these were far outweighed by considered measures to support business growth and wealth creation. -Many of these measures are excellent for now, and for the future. Yet the nurturing of a truly great economy requires more action than one Budget can deliver. At the upcoming General Election, Britain's entire political class must commit to a long-term programme that delivers better infrastructure, a stronger skills base, access to finance for growing companies, even more export support and a clear, consistent tax environment. Otherwise some of the Chancellor's welcome moves might not have the desired effect in years to come. Commenting on the new forecasts published today by the Office for Budget Responsibility in conjunction with the Chancellor's Budget, David Kern, Chief Economist at the British Chambers of Commerce (BCC) said: -The OBR's upgrading of its December economic forecasts was widely expected. Our own economic forecast released just last week tells a similar story. The pace of growth over the coming years will be satisfactory, but slightly below the pre-recession historical average. -On the public finances, we agree that there will be gradual falls in the budget deficit, but we believe that the pace of the reduction will be slightly slower than the OBR envisages. It is too ambitious to take the view that the UK will generate a budget surplus in 2018. We believe it will take one or two additional years to eradicate the deficit, because tax receipts have suffered from a fall in oil and gas production and problems in the financial sector. -The government must continue with its plans to streamline current public spending, to ensure that the public finances improve over the medium term, and the private sector can generate a lasting recovery. Commenting on specific announcements within the Budget, BCC Director General John Longworth added: YOUTH EMPLOYMENT -We told the Chancellor very bluntly that he needed to extend the Apprenticeships Grant for Employers if he wanted to see companies creating enough apprenticeship places to meet demand. His actions demonstrate that he was listening, to the benefit of businesses and young people alike. Helping companies take on apprentices is one of the best ways for a Chancellor to invest limited resources in Britain's future. BUSINESS INVESTMENT -Consistent allowances help companies invest with confidence. Given that business investment remains far below its pre-recession level, it is fantastic that the Chancellor has responded to our call to extend the Annual Investment Allowance, and that he has doubled the amount covered to £500,000 from 2015. That will give many growing and medium-sized companies the confidence to push ahead with investments they've long wanted to get off the drawing board. SUPPORT FOR EXPORTERS -Export finance problems stop many companies from getting their goods and services into new markets. To support our exporters, Britain's export finance support must match that of our global competitors. The moves made by the Chancellor to increase the support available, and to lower the interest rates charged to companies, are a big step in the right direction. Ensuring awareness of this support amongst the growing and medium-sized firms that stand to benefit is crucial, however, to this policy's success. Chambers of Commerce will continue to work closely with UKEF to help businesses get their goods into market with the best possible finance support. -While finance for international transactions is important, so is the level of support for businesses looking to expand into new and fast-growing markets. Moves to improve international transport connections through regional airports, and to simplify Air Passenger Duty, are a good start. Yet we could do even more, particularly through the Overseas British Chambers and business groups that BCC and UKTI are linking together to form the first-ever global British business network. ENERGY -The Chancellor's Budget clearly recognises the damage that unilateral measures can do to the competiveness of British businesses. Our members will welcome the cap in the Carbon Price Floor, which will help all companies, and the extension of compensation for energy intensive industries. -Furthermore, by taking forward all the recommendations contained in the Wood Review of Offshore Oil & Gas, the Chancellor has made a significant step toward maximising oil and gas recovery in the UK as part of a diverse energy mix. -Looking ahead, it is crucial to ensure that energy does not contribute ever further to the rising cost of doing business in the UK so continued attention and investment are required. INFRASTRUCTURE -The BCC has long called for more funding for road maintenance a key bugbear for so many businesses and welcomes the new pothole fund announced in the budget. Incremental support for other capital projects and flood defences are also positive. Yet, as ever, infrastructure projects both large and small are judged on how quickly they are delivered on the ground. Infrastructure delivery is the key business priority, so the government must move swiftly from announcement to action, on road repairs, house-building, flood defences and more. PENSIONS AND SAVING -The unexpected and radical modernisation of pension rules and ISAs will be welcome news for many businesspeople and their employees. Greater flexibility and choice, combined with an end to some of the arbitrary and punitive tax rules that undercut prudent savers, favour aspiration, enterprise and long-term planning.