Business cautious on Budget's 'modest but helpful changes'

Business groups have given a mixed reaction to yesterday's Budget, Alistair Darling's last of this Government.

In what many commentators see as a finely balanced, political budget ahead of this spring's general election, the chancellor extended support to small firms through increases in business rate relief and capital gains tax thresholds.

However, he raised fuel, tobacco and alcohol duty, and did little to detail the spending cuts that will be needed to rein in the deficit.

Responding to the Budget, the British Retail Consortium said that restoring consumer confidence was the key to growth and jobs, but that by failing to detail the inevitable spending cuts - the "pain to come" - the chancellor was "damaging demand".

Director-general Stephen Robertson welcomed the decision to exempt firms with a rateable value of less than £6,000 from business rates for a year. But while he described this as "useful assistance for the smallest shops", he said that it would make no difference to established retailers, and that business rates should be more affordable for all retailers.

However, the group reacted angrily to a separate announcement that the national minimum wage will be increased in October, from £5.80 per hour to £5.93. Describing the increase as "irresponsible" at a time when many employers were freezing wages to save jobs, Robertson noted that "a measure of this magnitude should have been in the Budget speech."

Local Shops

The Association of Convenience Stores was more pessimistic about the chancellor's announcements, expressing disappointment at increases in alcohol and tobacco duties. Chief executive James Lowman also said that the changes to business rate relief did not go far enough.

"Many local shops operate from premises that are well above the thresholds that entitle them to the benefit the chancellor has announced," he added.

"He should have gone further to make the rate relief automatic for all those entitled, and to increase the thresholds to ensure that more local shops would benefit."

However, the Budget received a more balanced welcome from the Confederation of British Industry. The group described it as "a series of modest but helpful changes" for businesses, and welcomed what it saw as a "moderate" minimum wage increase which would protect jobs.

Meanwhile, Phil Orford, chief executive of the Forum for Private Business, reacted cautiously to "a Budget for an election", adding: "It would have been more encouraging to see some real political responsibility and measures to address difficult issues... which we need to tackle in order to keep the UK competitive."

Fuel fears

He added that small firms would have been "dismayed" by the decision to go ahead with increases in fuel duty. Although a 3p increase scheduled for 1 April has now been staggered - with a penny levied on 1 April, a penny on 1 October and 0.76p in January 2011 - the Petrol Retailers Association said that from April, halted relief on biofuel production would add an additional penny to the price of a litre of petrol.

Finally, there was some good news for business car drivers who opt for ultra-efficient vehicles in the future. The chancellor announced a rate of 5% benefit-in-kind for cars emitting less than 75 grams of carbon dioxide per kilometre. However, the first car likely to qualify for the rate is Toyota's plug-in Prius, which is due no sooner than late 2011.

IMAGE: PA/PA Archive/Press Association Image

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