More fudge, Darling?
Article Date: Dec 10 2009
Darling: dodging the real issues?
Alistair Darling dodged pressing business issues in his pre-Budget report (PBR), according to entrepreneurs and economists.
Roger Bootle, economic adviser to professional services firm Deloitte, believes the PBR was a non-event. ‘It left the key economic and fiscal forecasts exactly as they were in April's budget. There were some eye-catching measures, but any help this may have given to reducing the forecast budget deficit was nullified by increased spending on a variety of initiatives. The net effect was just about zero,’ he says.
There was also concern among businesses that the planned 0.5 per cent increase in national insurance contributions for 2011 would impede economic recovery, particularly when it comes on top of the 0.5 per cent rise already announced.
Juliet Davenport, CEO and founder of renewable energy company Good Energy, says, ‘The measures announced for businesses don’t address our concerns as an SME. The [national insurance] rise is a big negative because it’s an incentive to reduce overheads in terms of the number of people you have, which is a shame when the goal is to get people back to work.
Businesses did welcome some limited relief provided by delaying the 1p increase in corporation tax for profits under £300,000, extending empty property rate relief for properties of a rateable value of £18,000 and continuing the ‘time to pay’ scheme, which allows companies to spread tax payments. It also announced a 50 per cent tax on discretionary bank bonuses of more than £25,000.
Paul Webb, a tax partner at accountancy practice Robert James Partnership, says while the PBR was ‘nothing to get excited about,’ it could have been worse for businesses. ‘Luckily he didn’t apply the bankers’ brush to normal entrepreneurs…. It was as good as could be expected given where we are in the economy,’ he says.
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