Government measures to revitalise the economy by boosting investment and sparking growth were met with mixed reviews from British business.
Moves to boost recruitment and stimulate investment were broadly welcomed by business groups, but a lack of policies to alleviate looming tax and energy bill increases left many despondent.
Martin McTague, national chair of the Federation of Small Businesses (FSB), said that the tens of thousands of small firms and operators would be feeling “shortchanged” by the Budget, arguing that they had been “overlooked and undervalued yet again”.
There was also a mixed response to Chancellor Jeremy Hunt’s plans to boost business investment with a new three-year incentive that will allow companies to offset 100 per cent of their capital expenditure against profits.
The plan, a less generous scaleback of the soon-to-end current “super-deduction” tax incentive, amounted to a “step in the right direction”, according to Shevaun Haviland, director general of the British Chambers of Commerce (BCC).
The Government claims that the “full expensing” scheme was the equivalent of a corporation tax cut worth an average of £9bn a year for the three years it is in place.
The Office of Budget Responsibility (OBR) said the change would not cushion all of the pain for companies, as a leap in the corporation tax rate next month will represent the heaviest burden on businesses since the levy was introduced in 1965.
The OBR estimated that the move will increase business investment by 3 per cent a year. But Ms Haviland said the “jury is out” on how much it would help companies.
She added: “Almost half of businesses have told us they will struggle to pay their energy bills from April, and they cannot invest when they are fighting to survive. There is little that will provide comfort to these firms.”
The Institute of Directors (IoD) applauded the move but urged Mr Hunt to make it permanent. Kitty Ussher, a former Labour MP and Treasury minister who is now the IoD’s chief economist, said: “Our economy has been held back in recent years because people running businesses have felt nervous of committing to investment when the climate is so uncertain.”
The Confederation of British Industry was also supportive. Matthew Fell, CBI interim director general, called it a “strong second act in the Chancellor’s plan for stability and growth”
“The CBI called for action on people and productivity and the government has delivered support for both. Measures to help households and businesses will secure the growth we need to boost living standards for all.”
Small business groups were openly critical of the lack of help for them. Mr McTague predicted that its members would feel that the Budget “helps households but not small firms”.
He said: “On business taxes, it spends £27bn extra on big businesses, arguing that small businesses are already catered for. This will leave to a feeling of being left behind instead of being considered equal partners in economic recovery.
“While there are some positive words in the Budget, the Government’s lack of support for small firms in critical areas is glaring. The Chancellor stressed that the UK is one of the best places to do business and we’ll avoid a technical recession this year – but small businesses need more ambition and more focus. Action is what counts if we are to reverse the 500,000 small businesses lost over the last two years.”
Helen Dickinson, chief executive of the British Retail Consortium warned ministers needed to do more to help.
She criticised the failure to improve the Apprenticeship Levy system help employers better train staff. “It is vital that Government allows businesses to use their hard-earned Levy funds for a wider array of skills courses. Without spending a penny, the Chancellor would increase investment in our workforce, helping businesses to prepare the UK economy for the skills it needs,” she said.
The broken Business Rates system remains a drag on business investment, jobs, and economic growth. Rates must be paid in full whether firms are making a profit or a loss.
“This makes Business Rates the final nail in the coffin for many struggling stores; shutting shops, costing jobs and preventing new stores openings. The Chancellor should make good on the Conservative 2019 pledge to reform rates and lay out a clear roadmap for future reforms.”