We all know the economy is in emergency care - and business needs a shot in the arm now. But what medicine did the Chancellor give us?
A cut in corporation tax – by one percentage point to 21% in 2014 – a new Business Bank to provide a £1 billion boost to businesses and a tenfold rise in the annual investment allowance meaning businesses can invest up to £250,000 a year with full tax relief in plant and machinery.
Not be sniffed at, but is the dose big enough to get businesses back on their feet and the unemployed back to work? This is the only real measure of success and, given the bleak economic forecasts, the only meaningful way to stimulate growth and demand.
So let’s delve behind the budget blarney and look at those headline announcements again.
Nobody can argue that a fall in the headline corporation tax is good. But it is only good for larger businesses (yes and that includes Starbucks, Amazon, Google et al - if they ever get around to paying any UK tax). And in any case why on earth do businesses have to wait to 2014 for a cut?
The smaller companies rate of 20% is not being cut. This means millions of small and young businesses - the sort the Government claims to want to nurture - get nothing.
The business bank gets a thumbs up from entrepreneurs, but why doesn’t the Government stop talking and pull its finger out now. And nobody can argue that investing in infrastructure such as new schools and transport links is not a good thing but let’s start building right away if we want to lay any sort of solid foundation for growth.
In other words a lot of these measures are jam tomorrow - but businesses are in a real jam today.
Investment allowances have yo-yoed in recent years - leaving businesses unsure of whether they are coming or going - just the wrong sort of circumstances to encourage long term investment. So some stability here please George.
High street collapse
As always the biggest business scandals are the things Osborne didn’t mention, skirted over or avoided all together.
Osborne is fiddling while High Streets burn up and down the country.
He proudly announced extending business rate relief for another year - but this only affects very small retailers. The real story is that most businesses will see rates rise by another 2.6% next April - on top of a whopping rise this year.
The fire sale and insolvency of shops - Clintons, Game, Peacocks, JJB, Comet et al - is likely to continue, with plenty of jobs going up in smoke.
Getting Britain working
Turning to jobs, there was little mention of the ‘lost generation’ of more than a million unemployed young people and how to find them work. A national insurance holiday for businesses employing 16-24 year olds would have provided a much-needed ray of hope amid the employment gloom.
An opportunity wasted – as will the lives of so many of our school leavers if we don’t do something about it quickly. And without new work and wages just where is a resurgence in demand and economic growth going to come from?
Now the talk is of Britain’s credit rating being downgraded because the economy is doing far worse than George predicted – which could be another blow for businesses.
So George – credit where credit’s due – you talked a good game. But when it comes to real help for businesses you didn’t walk the walk.
Andy Yates is an experienced entrepreneur, business mentor, advisor and angel investor and helps a portfolio of businesses reach their potential including Huddlebuy, Europe’s largest business money saving website.
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- Budget, Tax & Economy