Chancellor Must Pull Out All The Stops And Deliver A Budget For Business
14 March 2012 in Chamber News
The British Chambers of Commerce (BCC) is today (Monday) urging George Osborne to deliver a Budget for business, which allows firms to drive growth, invest and create jobs. Just days ahead of its Annual Conference, the BCC believes the Chancellor should stick to Plan A, but use the wiggle room he has within the current spending envelope to bring forward substantive changes that will stave off stagnation and weak growth. The BCC believes that there is sufficient latitude within the fiscal rules to implement three specific initiatives to support business growth, at a maximum cost to the Exchequer of £4.2bn.
Scrap the upcoming business rate rise which is anathema to growth
In April 2012, the 5.6% up-rating of business rates will severely aggravate already uncertain business cashflow and impose hefty new costs without offering any real improvement in business conditions.
In addition, the BCC is calling for the restoration of the Empty Property Rate Relief (EPRR) to £18,000. The current threshold for EPRR creates perverse business incentives, deterring investment.
Introduce a time-limited £1bn capital allowance scheme for medium-sized companies
A ‘when its gone, it’s gone’ capital allowance scheme would provide an incentive to firms who have put large investment projects on hold
Providing a two-year window for medium-sized companies to make crucial investments would create a real incentive for businesses to take advantage of the opportunity.
Incentivise employers to take on young people
The BCC is calling for the Chancellor to double the amount of money available for employer wage subsidies and funded placements under the new Youth Contract (from £1bn to £2bn), or consider changes to employer National Insurance Contributions for young people.
This would provide a cost-effective way to prevent the alienation of young people, and assist businesses with the development of the skills base required to drive future growth. Furthermore, the BCC records its continued commitment to work with the government to investigate new ways to fund business start-up for young people.
In addition, the BCC is recommending the following low-cost or no cost changes to the business environment to allow companies to grow, export and take on staff.
Implement an effective credit easing programme, and consider the creation of a fully-fledged SME bank, which would be backed by the state at first and later returned to the private sector. This would go a long way to improving the follow of credit to viable businesses.
A speeded-up National Infrastructure Plan and delivery of the mechanisms promised in the Autumn Statement to increase private investment in infrastructure projects.
An aviation strategy that delivers both capacity for the South East and growth opportunities for Britain’s regional airports.
Delivery of radical reforms to the planning system in the National Planning Policy Framework to help businesses expand, invest and grow.
Help for SMEs trading internationally, through improved access to mentored outbound missions, smarter use of inbound missions and greater financial support for promotional activity and tradeshow attendance.
Real de-regulation that makes a difference to businesses on the ground. This should include the reform of dismissal rules, such as relaxing the collective redundancy rules and introducing a new no-fault dismissal route.
Commenting on the upcoming Budget, John Longworth, Director General of the British Chambers of Commerce, said:
“George Osborne faces one of the most challenging Budgets in recent years. He can either take bold steps to create growth in the economy by introducing measures to support business, or shy away and face the spectre of economic stagnation. He has to pull out all the stops to boost British business by providing them with a Budget for growth. Firms need an environment in which they can thrive, create jobs, and export our goods and services abroad.
“Without a strong and prosperous private sector, we will be unable to provide the public services we all want or need. The Chancellor must stick to Plan A, but use the wiggle room he has to scrap the 5.6% business rate rise that will cripple many businesses. Firms must be incentivised to invest through a capital allowances scheme, and encouraged to take on young people. The government can do this by doubling the Youth Contract to £2bn, or by making changes to employer National Insurance contributions.
“Business also wants to see reforms to employment law and the planning system significantly speeded up. Regulations must be slashed, and access to finance improved so as not to choke off recovery. Without concerted action in these areas, the potential for businesses to grow will be limited, and so will the economic recovery.”