THERE was little evidence ahead of last week’s Budget that businesses engaged in the fragile, tentative recovery, or hard-pressed families could expect to be overly optimistic.
There was much lobbying to ensure this was an opportunity that the Chancellor would take to provide a much needed stimulus for business growth. The measures in last week’s announcements have received some welcome.
Reductions in Corporation Tax will always be welcomed by ‘big business’, the larger the business the greater the savings will be; investing in enterprise zones is something that was on the agenda of both Local Enterprise Partnerships in the North East and, once the detail becomes clear, it is hoped that this will provide some effective incentive to attract further inward investment.
Other measures in the Budget were less popular. The Carbon Floor Pricing announcement has raised serious questions about the sustainability of south east Northumberland’s largest private sector employer, Alcan, and sends a shudder through all high energy user companies, of which the region has a high proportion. Furthermore, the windfall tax on oil producer companies has led to a prediction of 10,000 job losses in the sector. The oil and gas sector has been booming in the North East and there is the obvious likelihood of a knock-on effect on Tyneside of the belt-tightening that will follow from the additional levy on the primary companies in that sector.
For hard-pressed families there was the well-trailed reduction of one penny per litre of petrol and the cancellation of a further price rise in a few months.
The problem was that this was so well-trailed that many retailers put up the price of fuel on Budget day so that the reduction in price has actually not been implemented.
The reality is that this budget offered very little. Most commentators were predicting that there was very little wriggle-room for the Chancellor and this certainly seems to have been played out. The fiscally-neutral outcome has resulted in very little help for anyone and quite a bit of pain for some.
There was a claim from the government benches that this was a Budget for growth. Time will tell, but initial analysis would suggest that there is certainly the potential for the growth in profits of some of the larger businesses in operation, through lower Corporation Tax, but there is little to inspire a belief that there will be a growth in business and employment as a result of the measures introduced last week.
Kevin Rowan – Regional secretary, Northern TUC