Youth enterprises and limited minimum wage increases welcomed.
Chancellor George Osborne released the Budget yesterday, with a mixed reaction from the British Retail Consortium (BRC) and the Federation of Small Businesses (FSB).
The BRC’s director general Stephen Robertson said: "The Chancellor’s business friendly tone is reassuring but two years into this Government it’s not enough.
“[Osborne] is right to keep deficit reduction as his primary objective. He’s right to recognise that ultimately the only sustainable way to achieve that is to grow the economy by making the UK more competitive. The acceleration of Corporation Tax reductions sends the right signal but it’s not the only tax affecting retailers."
Robertson expressed disdain at Osborne’s avoidance of scaling back business rates, describing the evasion as “disappointing” as a 5.6% increase on business rates looms. This will add about £350 million to retailers’ costs in the UK.
"The opportunity, previously announced, to postpone part of the bill will help some but retailers use a lot of property and imposing an increase on this the scale is hugely significant for the sector,” he said.
However Robertson remained largely positive with a view to other Budget changes that will effect retailers and businesses in the UK.
With a view to Sunday trading and the possible changes to legislation ahead of the Olympics, Robertson said: "The Chancellor recognises the stranglehold regulation has on growth but the repeated red-tape-slashing promises of the last two years have yet to meet the reality.
“The Government has done some long-overdue clearing out of moribund rules but it must follow through on reform. One-in-one-out is a good principle but it must mean burdens being removed from retail for every new one added. Business is not a single life form. The relief must go to the same sector that is suffering new pain."
However he welcomed the changes to the national minimum wage, describing the Government’s move to increase the minimum wage by just 1.8% as “thoroughly wise”. This, Robertson argues, would be within the remit of most retailers and would allow them to both create and maintain positions. “Any larger increase would have piled extra pressure on retailers at a time of weak customer demand,” Robertson added.
He praised Osborne’s approach to easing credit for small and medium-sized businesses, noting that 92% of retail businesses haw fewer than 10 employees but said that capital allowances could have been better thought out.
"Stimulating investment in equipment and technology is crucial to economic recovery. With the growth in online sales, many retailers are looking to invest in systems. Encouraging this fast growing export sector through tax breaks would have produced great returns.
"The very limited capital allowance concessions applying in some Enterprise Zones doesn’t offer help widely enough. The Chancellor should have made similar incentives available in all regions and to businesses of all sizes,” said Robertson.
With a view to small businesses in the UK, the FSB’s national chairman John Walker welcomed Osborne’s budget speech and said the Federation was “pleased” with the actions to cut red tape, allowing more young workers into employment.
"We asked for a Budget with long-term measures to help to instil confidence, rather than a barrage of micro-measures that have a limited impact on the ground.
Especially welcome are the proposals to simplify the tax system for the country’s smallest companies. However, petrol prices remain a major concern for small businesses and we would have liked some further action on reducing the level of fuel duty to help struggling small firms,” said Walker.
"The key to nurturing the economy back to full health is by tackling the budget deficit and the FSB continues to support the Government’s debt reduction plan. The FSB welcomes the fiscally neutral budget and is pleased with the OBR’s positive revision to growth forecasts this year, along with forecasts for falling inflation.”
However Walker expressed discontent that the Government had not acknowledged the need for a Small Business Administration department to help small firms.
"We are disappointed that there were no plans to look into setting up a Small Business Administration. This is the missing link to ensuring that all initiatives have the maximum impact for small firms," he said.
However Osborne is set to consider the introduction of ‘Enterprise Loans’ for young people looking to start their own businesses, something welcomed by Walker. " More than three-quarters of 11-18 year olds would like to set up their own business so loans to help them do so will be a great help. The FSB has long said that Government should prioritise and support enterprise to young people in education so that setting up on their own is an option."
The Government’s Business Finance Partnership was also praised by the FSB, off the back of the news that two in five small businesses struggle to access finance from the banks.
"The £1.1 billion Business Finance Partnership is welcome as it will open up non-bank lending for businesses,” said Walker. “The further extension to the Enterprise Finance Guarantee will also be beneficial to small firms and the expansion of UK Export Finance will benefit businesses that want to export."