The Budget was a “damp squib” that showed the economic crisis had left Alistair Darling with little room to manoeuvre, Birmingham Chamber of Commerce and Industry chief executive Jerry Blackett said.
His comment summed a generally lukewarm reaction to yesterday’s fiscal package aimed at boosting the tax flows of companies reeling from recession from business in the West Midlands.
Mr Darling said more than 100,000 UK companies employing well over half a million people had taken up the option, unveiled in the November pre-Budget report, to defer their tax bills while about 800,000 smaller enterprises will be helped by the delay in the increase in corporation tax, also announced previously. Additional measures announced yesterday included an extension of the scheme that enables loss-making companies to reclaim taxes on profits made in the previous three years.
Mr Darling claimed that more than 100,000 businesses would see their current losses wiped out.
The Chancellor also announced a top-up trade credit insurance scheme to match any provision withdrawn by insurers.
Mr Blackett said, though, the Budget “gave little hope to beleaguered businesses”, adding: “We were surprised with the Chancellor’s high optimistic assessment of the economy.
“We appreciate there are no quick fixes but we felt the Budget was a damp squib because an opportunity to benefit the West Midlands was missed.”
The proposed top-up trade credit insurance scheme on the face of it “doesn’t go nearly far enough to help exporting businesses in the region.
“Many firms have been affected by a wholesale withdrawal of trade credit insurance. And Mr Darling’s assessment that his Budget will protect up to 500,000 jobs in the UK wears a little thin in the West Midlands where there are 223,000 people out of work as revealed in today’s unemployment figures.
“All of our indicators show that there is little prospect of recovery this year, as forecast by Mr Darling.”
Mr Blackett, however, welcomed the Government’s targeted support for low carbon technology development (“in which Birmingham leads in some areas”) and the tax relief measures.
Louise Bennett, Mr Blackett’s counterpart at Coventry and Warwickshire Chamber of Commerce, said the reaction of small and medium-sized companies “was not positive”.
She said: “We fell that while there are quite a few measures such as deferring and reclaiming tax which can be welcomed, there are precious little new measures which will be of real help.
“There was some electioneering involved and while the investments in green technologies are important and potentially valuable over the long term, business was looking for shorter term help which would deliver meaningful aid.”
Black Country Chamber president Peter Mathews said the Budget had some good news for business but a lot needs to be done to restore confidence in the economy. It contained proposals that will take too long to come into effect or will be so small as to be irrelevant.
Peter O’Grady, from the engineering industry body EEF in the West Midlands, said: “Given the most difficult economic conditions for a generation, the Chancellor has gone some way towards alleviating the short term pressures facing companies.”
Birmingham manufacturer Russell Luckock, chairman of A E Harris based in the Jewellery Quarter, said that overall the Budget did contain “something for the manufacturer to get to grips with”.
He said the car scrappage scheme, aid for North Sea oil exploration and the plans to boost housebuilding could provide work for metal bashers in the area.
But he added: “The huge problem caused as a result of the credit crunch is the vast amount of debt, totals of which are really frightening for the thinking business person.
“This country is forecast to be in hock for years to come, which also means high taxes for the foreseeable future.”
Chris Sharpley, UK head of tax at Ernst & Young in Birmingham, said the Budget “perhaps shows the Chancellor waking up to the importance of manufacturing in the economy” although the failure to reinstate empty property rate relief would cost UK companies more than £10 billion in extra tax.
The Federation of Small Businesses said the Budget largely ignored the small businesses that were at the heart of job creation and economic recovery.
David Caro, FSB West Midlands Policy Unit chairman, said: “It is what is not in the budget that is really the most disappointing for small businesses. Automatic application of Small Business Rate Relief would not have required any new money because this allowance has already been budgeted for, but the help it would have provided to small businesses would have been significant. The lack of any increases to National Insurance thresholds or anything about a short-time working subsidy are another two areas that would have provided a very real boost for small businesses.”