Osborne backs enterprise but stands firm on business rates

THE Chancellor of the Exchequer yesterday vowed to back “the entrepreneural forces in our society” with more cuts to corporation tax and a surprise new scheme to slash the cost of hiring people.
Chancellor of the Exchequer George Osborne seen on TV screens during the BudgetChancellor of the Exchequer George Osborne seen on TV screens during the Budget
Chancellor of the Exchequer George Osborne seen on TV screens during the Budget

George Osborne said the new Employment Allowance is his Budget’s largest tax cut and will be worth up to £2,000 to every business in Britain,

He will reduce the main rate of corporation tax to 20 per cent by 2015 to create “the most competitive business tax regime in the world”.

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Mr Osborne also set out plans to increase incentives to invest in research and development, abolish stamp duty on shares traded on the Alternative Investment Market and extend incentives for investors in early stage businesses.

Industry leaders were broadly supportive of the growth measures, but criticised the Chancellor for resisting calls to reduce business rates.

Suzy Brain England, chairwoman of the IoD in Yorkshire, said the Employment Allowance will help more people into work. She said: “The private sector has done a huge amount to improve employment figures, particularly in Yorkshire, and it is right that they are rewarded for doing so.”

The Treasury estimates that 450,000 small businesses – one third of all employers in the country – will pay no National Insurance contributions under the scheme. Mr Osborne said: “98 per cent of the benefit of this new Employment Allowance will go to SMEs.”

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Stuart Cottee, head of tax at Deloitte in Yorkshire and the North East, said Mr Osborne is banking on employment as the source of future tax revenues and is “doing his best to make Britain competitive on corporation tax”.

Lee Hopley, chief economist at manufacturers’ organisation EEF, said enhancements to tax credits on research and development will help push the UK up the rankings as an investment location for large employers.

She added that the new credits “should help to attract and grow innovation activity in the UK, which is vital for cementing our long-term industrial competitiveness”.

The Quoted Companies Alliance said the removal of stamp duty on Aim and ISDX shares will create “more fuel for the engines of growth”.

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Tim Ward, chief executive, added: “The UK economy desperately needs equity markets that are fit for purpose in helping companies raise finance, grow and create jobs.”

The majority of Yorkshire’s quoted companies are listed on Aim.

Doug Richard, the entrepreneur and angel investor, welcomed the decision to extend capital gains tax relief for the Seed Enterprise Investment Scheme for another year.

He said the scheme “will continue to make the UK the country of innovation”.

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The Forum of Private Business said most firms will be “hugely disappointed” after the Chancellor made no concessions on business rates.

A spokesman said: “Ask any small businesses what they wanted to see from this Budget and many will have said ‘action on business rates’. We said that Government couldn’t keep clobbering businesses with hike after hike, and unfortunately we haven’t seen that sentiment acknowledged by Mr Osborne.”

John Cridland, director general of the CBI, echoed the concerns. He said: “We also need to remember the impact of business rates on the hard-pressed high street.”

In Yorkshire, chambers of commerce gave a lukewarm reaction to the Budget.

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Stephen Wright, president of Bradford chamber, said: “The backdrop of the deficit reduction plan and dismal growth forecasts has to mitigate our enthusiasm somewhat but help has been offered in some straightforward but hopefully effective ways.

“However, some of the measures don’t come in for a year or two – we needed urgency and immediacy.”

Richard Wright, director of Sheffield chamber, said: “There are a number of positives for businesses in the Budget, but overall it is not exciting and does not go far enough to change confidence in the private sector to stimulate growth.”

Paras Anand, head of European equities at Fidelity Worldwide Investment, said: “While characterised as a budget for working families, I would argue that the greater focus was on pushing the UK’s relative attractiveness as a location for international companies and encouraging the development of small businesses, especially those with high level of intellectual property.”

Anger at rise in air passenger duty

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AIRLINE industry leaders slammed the Government’s decision to press ahead with rises in air passenger duty.

The chief executives of British Airways, easyJet, Ryanair and Virgin Atlantic said: “We are very disappointed that the Government’s tax on flying, already the highest in the world, will increase yet again this year and next.

“These rises show the emptiness of rhetoric on boosting exports to emerging economies and building the most competitive tax system in the world. Increasing this alarmingly uncompetitive tax on business, trade, and inbound tourism beggars belief when the evidence clearly suggests that abolition would deliver growth.”