What I want from the Budget
Article Date: Apr 17 2009
Does Alistair Darling's smile bode well for business?
Businesses desperately need a Budget that helps them through the pain of the recession. We asked entrepreneurs and experts for their wish lists for Chancellor Alistair Darling.
Andrew Jupp – Head of tax, Tenon
I’d like to see entrepreneur’s relief on capital gains tax (CGT) extended so it covers gains of up to £5 million. At present the lifetime threshold is £1 million, so if you’ve already sold your business for £10 million, why would you reinvest your money in risky start-ups and pay CGT of 18 per cent when you could put it in more liquid assets such as the stock market or property and pay the same?
Another useful thing would be to abandon the planned increase in the smaller company rate of corporation tax, which is 21 per cent, up from 20 per cent last year and planned to increase to 22 per cent this April. This wouldn’t be a big giveaway and would help struggling companies.
Thirdly, I’d advocate an employer’s national insurance contribution (NIC) holiday, but with strings attached. If you recruited somebody who is currently registered unemployed, employer’s NIC liability would be reduced to zero for the first two years of employment.
My prediction is that this will be a very neutral Budget with very little tax raising and very little tax giveaway either. It’s more about confidence than substance: people are looking for a feeling the government is in control.
Riccardo Segat – CEO, Amplio Partners
In the US, tax rebates have been introduced for green projects. That needs to be mirrored in the UK if we’re to have any hope of meeting government carbon reduction targets for 2020.
At the moment, equity and bank debt have dried up and large corporates like BP and Shell have pulled away from renewable energy projects. For investors in this sector, if the debt is not there, it is challenging to make decent returns on a project level.
That said, there are good opportunities in the sector. The price of turbines and solar panels has come down a lot in the past 18 months, technologies are proven and cash flows are assured for the long term. But fundamentally, if the money is not there to build projects, they won’t happen.
I’d also like to see last year’s changes to CGT reversed. The cancellation of taper relief is making it even more difficult to attract investment.
Ben Habib – Chief executive, First Property (fund manager)
The biggest problem I have with investing in the UK at the moment – and I would dearly love to invest in the UK – is grappling with how this country will repay the massive debt the government is now taking on.
It is not, in my view, good enough to say that the correct policy response is monetary easing without also talking about how you are going to repay the debt. You must do both in tandem.
The government also plans to increase the higher rate of tax from 40 per cent to 45 per cent for people earning more than a £150,000 a year. Unfortunately, it’s not the high rate tax-payers who earn the revenue required to finance the government. Such a raise is pure political lip service and will not address the issue.
Richard Jeffery – MD, AOM International
As a director of an internationally focused company, I do think the government should be encouraging overseas trade. In the 80s, the government did a lot to attract capital and talent to the City of London. The Chancellor should encourage businesses to get out and engage internationally so we can trade our way out of the recession. Measures to help could be quite simple, such as treating an overseas income slightly differently from a tax perspective than indigenous income.
Another area where a difference could be made is to improve the access of small and medium-sized enterprises (SMEs) to government markets. The only growth area at the moment is the state sector and the cabals and the procurement process make it too difficult for smaller businesses to enter. The big players have always got a way of saying that they can provide any given service. Again, the answer could be simple enough – requiring the big ticket contractors like Capita or IBM to subcontract an element of their work to a local SME.
The public sector is the biggest market out there and it is incredibly difficult as a small entrepreneur to access it.
Martin Myerscough – Chairman, GreenBottle (recycling company)
For someone starting up a green company, there is an awful lot of talk out there but very little practical help for entrepreneurs. If the future is going to be green, there needs to be practical and real assistance to help innovative businesses receive grants and backing.
Innovation comes from the small companies which are having a crack, and there needs to be more incentives to encourage groundbreaking ideas. It isn’t good enough to say the country is going to go green in the future and then decide to bail out Jaguar. Why are we bailing out a company that creates big, gas-guzzling cars? The funds should be targeted at companies seeking to generate the next generation of commerce.
All of the burden on innovative, eco-aware companies could be eased by the government if a few practical measures were taken.
What do you want from the Budget? Vote now.
