Where is your big idea, Chancellor?

Apr 23 2009 by Evening Gazette

TEES VALLEY business leaders have given a lukewarm and cynical response to the Budget - with the Chancellor’s report offering no big ideas to catapult the economy out of the doldrums.

While Alastair Darling has offered some opportunities for the region to grasp, James Ramsbotham, chief executive of the North East Chamber of Commerce, said it lacked any "blockbuster initiatives" to make a substantial difference.

"He could and should have gone further," he said. "There was no room in the Budget for a short-time working directive and no space for re-instating the staff hire concession. Add to this a complete absence of any intention to scrap empty property rates and this all amounts to a sizeable foot on the brake of our economy."

Sarah Green, regional director, CBI North East said the Chancellor’s Budget had failed to set out a "credible and rigorous" path for restoring the public finances to health.

"On the fringes of this Budget, there are some worthwhile micro measures, including support for businesses struggling to access trade credit insurance, and for car makers through a time-limited scrappage scheme.

"With exporters and the automotive sector being key parts of the North-east economy, the region should reap some benefits from these measures."

Alastair Thomson, Dean of Teesside Business School, said the Budget showed just how little room for manoeuvre the Government had - with public borrowing set to soar to a record £175bn in the current year.

HERE Tees Valley firms give their response to some of the key issues - and what the Chancellor left out.

GREEN INDUSTRIES
Overall response: good

John Barton, project director at Renew

“Clearly it’s good to finally see some real focus on green issues. What’s not so clear is what new money has been made available.”

Ian Waller, Stockton consultancy Five Bar Gate

“It’s difficult to find fault with the headline, it’s like asking people to vote for motherhood and apple pie. The devil will be in the detail.

“A 34% cut in is a stretch target. There will be implementation issues to resolve.”

Alwyn Hughes, CEO of Ensus

“It’s disappointing there is nothing on the RTFO - our ambition is to invest further in the North-east but we need market mechanisms such as this.”

Richard Nickels, CEO, Biofuels Corporation

“If the £400m for low carbon and green manufacturing stimulus is available now, that’s fantastic news. We have the skills and the infrastructure, the Tees Valley is where it should be directed.”

Dr Graham Hillier, director of low-carbon energy, CPI

“It’s important to support turning UK research into real products instead of spending money on overseas technologies. It’s positive the Government is recognising we need to do something.”

CAR INDUSTRY
Overall response: good

Ross Clarkson, Northgate Vehicle Hire

He welcomed a vehicle scrappage scheme, which, together with a doubling of the capital allowances to 40% for one year, should encourage small businesses to invest in lower carbon, more efficient vehicles. It’s now up to business secretary Lord Mandelson to sort out the detail and Mr Clarkson urged him to include used commercial vehicles up to one year old.

“The people this will affect most is the builder or the plumber who doesn’t buy new. If they extend the scheme to cover used vehicles it will encourage them to move from an old van which is probably costing them money, not fitted with the latest safety equipment and clearly fuel inefficient.”

LOGISTICS
Overall response: poor

Gordon Mitchell, Mitchell Trucking Company

The 2p a litre fuel duty rise in September will put an extra £200 week at current prices on his diesel bill. At the same time, he has been told there is no Government support in the form of soft loans to help him fit energy saving adaptors to his fleet. He supports the Road Haulage Association’s call yesterday for an essential user rebate on VAT for truckers.

“The Chancellor is going to crucify British haulage. Forty per cent of our costings are fuel. Transport delivers everything we use in daily life - it’s time the Government got fair with us.”

HOUSING MARKET
Overall reponse: mixed

Paul Fiddaman, group finance director of Fabrick.

The Middlesbrough-based housing association was concerned that the Government’s £15bn of efficiency savings would be clawed back partly from previous pre-Budget commitments to the social housing sector. However yesterday, the Chancellor topped them up instead with an extra £80m for the shared equity scheme HomeBuy Direct.

“I absolutely welcome any additional resources that they are able to give to HomeBuy Direct. It’s an important part of recovery.”

Michael Poole, Tees Valley agent and vice chairman of the National Association of Estate Agents North-east

The Budget offered nothing to kick- start the property market and continuing the stamp duty extension - previously raised from £125,000 to £175,000 until September - was a waste of time, he said.

“It’s an extension of only a couple of months at a time of year when the market is quieter anyway.”

Debbie Dunthorne, regional sales director, Miller Homes

Miller is already offering shared equity schemes under HomeBuy Direct - at Kingsmoor, Stockton; and Fairview Gardens, Norton.

“We believe the further £80m will also go a long way in helping to restore confidence among buyers.”

“The £500m to help kick-start housebuilding and enable developers to resume building on mothballed sites, is a crucial shot in arm.”

David Copland, Darlington Building Society

Downward pressure on house prices would do more to stimulate sales than stale Government initiatives.

“It infuriates me that the Government can announce things three or four times and make them sound new each time. The extension of the stamp duty holiday was welcome, but it’s hardly a huge incentive. Increasing it to £250,000 for a short period would have been better.

As for the extra £80m for shared ownership schemes, he said: “We have had a look at shared ownership schemes before but, to be honest, they are so complex and hamstrung with red tape that eligibility is near impossible.”

He did, however, welcome increasing the ISA savings allowance. “But from a purely selfish point of view, I’ll have to spend a fortune reprinting all the literature again!”

Ian McClelland, senior partner, Thirlwells estate agents

“Stamp duty is a Dickensian tax. It’s just another financial burden at a time when people are struggling to find the money for a deposit.”

He’d have preferred to have seen it substantially raised or scrapped.

COMMERCIAL PROPERTY
Overall response: poor

Richard Farr, director of ratings, Sanderson Weatherall

The Budget was “a missed opportunity” to bring much needed relief to the commercial property sector. He called for the reintroduction of pre-April 2008 empty property rates relief during post-Budget tweaking.

“Empty rates clearly have not worked. If owners can’t mothball properties at a reasonable cost, they will demolish them.”

He described the Chancellor’s previous decision to stagger the payment of business rates as a “bureaucratic nightmare with minimal gain to business”.

“Not many businesses are taking this up. The impact on their cashflow is very small. My heart goes out to all ratepayers in this country.”

JOBS AND TRAINING
Overall response: mixed

Keith Hunter, group MD, TTE Technical Training

TTE, the largest group training association in the UK, has been doggedly promoting apprenticeships in the process, science and engineering sectors for almost 20 years from its headquarters on Teesside. The Chancellor’s promise to spend more than “£260m of new money” on training and subsidies for young people was welcome.

“I would totally support that, providing it’s giving young people a broad opportunity to take the most appropriate form of study to them.”

Tim Bush, regional representative of Unite union

Raising statutory redundancy pay from £350 per week to £380 was a “move in the right direction, but doesn’t go far enough” for those joining the nearly 24,000 people out of work in the Tees Valley.

“Average earnings should be the indicator for calculating the payment.”

SMALL BUSINESS
Overall response: poor

Tony Sarginson, manufacturing organisation EEF’s external affairs adviser for the North-east

The £5bn of additional trade credit insurance for firms that have suffered reductions in their level of cover should help minimise the knock-on consequences for “healthy suppliers”.

“Whilst the measure is not a silver bullet, it will provide temporary relief that should see supply chains through until demand picks up and cashflow eases.”

Colin Stratton, Federation of Small Businesses regional chairman for the North-east

“We have a mish-mash of reformulated announcements and nothing that is fresh and helpful to the SME community. A lack of concessions for small businesses is apparent and the FSB will be seeking urgent meetings with the Department of Business, Enterprise and Regulatory Reform and the Department for Communities and Local Government to see why more was not achieved for the small business community within this Budget.”

Mike Farrell, founder of Hartburn-based Vetro Vivo

Doubling the main capital allowance for firms to 40% was a good move “in principle” but “what initially looks like a good deal, often turns out to be a different story.”

ENTERPRISE
Overall response: poor

Chris Beaumont, chair of the Tees Valley North East Chamber of Commerce

Penalising high earners with a top rate tax of 50p in the pound could deter wannabe Richard Bransons and stunt wealth creation.

“Entrepreneurial activity will be held back by this. People will think twice about taking the risk.”

Anthony Platts, director, investment manager Brewin Dolphin, Teesside

Investors needed a basic rate tax holiday on income from all savings for a year to help them “recover their positions and restore faith in investing in equities.

“By investing in companies, shareholders spark enterprise, fund innovation and help businesses grow. Without shareholders' capital, economies will grind to a halt and they have been given little encouragement in this Budget.”