Mid Yorkshire Chamber urges Chancellor to focus on growth in budget
The Mid Yorkshire Chamber of Commerce is calling on the Coalition to take positive action to re-launch the economy with business-friendly measures which will stimulate growth.
Last week, we expressed our concerns in a letter to the Chancellor George Osborne and copied to the Business Secretary, Vince Cable, urging Mr Osborne to take action in the Budget to accelerate the UK’s economic recovery. Our main points include:
Business Rates Relief – In April, the 5.6% up-rating of Business Rates will severely aggravate already uncertain business cashflow and impose hefty new costs without offering any real improvement in business conditions. The Mid Yorkshire Chamber is calling on the Government to scrap the 5.6% up-rating, which should be regarded as anathema to our shared efforts to promote growth. Business should not be seen as the cash cow to pay for the Government’s decision to freeze council tax, and the fact that the September 2011 RPI figure was the highest for over 20 years brings focus to the unfairness of relying on one figure for up-rating. In addition, we strongly opposed the lowering of the threshold for Empty Property Rate Relief, and urge Government to reinstate the former £18,000 threshold.
Capital Allowances – The Mid Yorkshire Chamber believes that the Government must do more to use the tax system to encourage sustained business investment, particularly amongst manufacturers and other capital-intensive industries. This approach rewards enterprising firms willing to put their own resources on the line for growth. We recognise that this is a long-term undertaking. However, in view of current conditions, we propose that the Government create an incentive to businesses to bring forward (and in some cases prevent the cancellation of) large-scale investment, and propose the implementation of a time-limited Special Investment Allowance of up to £1m per firm, with an overall limit of £1bn in allowances, for medium-sized companies in the financial years 2012/13 and 2013/14.
The Government has already identified medium-sized businesses as playing a vital role in the future growth of UK plc, but it is essential that action is now taken. Our own Quarterly Economic Survey has illustrated how uncertain business conditions are - leading to firms postponing capital and employment investment. Providing a two-year window for medium-sized companies to make crucial investments would create a real incentive for businesses to take advantage of the opportunity.
Youth Employment – Unemployment is damaging to people of any age, but the effects are particularly negative and persistent for young people. Unemployment between the ages of 16 and 24 appears to result in higher unemployment and notably lower wages later in life. The business community is extremely concerned about this issue. Many unemployed young people at present are already detached from the labour market, and so represent a risk to a business who takes them on due to a lack of demonstrable work experience and skills. Consequently we have called for changes to the education and skills system in the longer term, whilst supporting the Government’s Youth Contract in the short term.
In addition, our Chamber proposes that the forthcoming Budget should consider making changes to Employers’ NI Contributions by removing this major disincentive to job creation. The Government should reduce or cut entirely the burden of National Insurance Contributions for employees aged 16-24. It is perverse that at a time of rising youth unemployment, which risks creating a demographic shift to long-term joblessness, we continue to tax the creation of jobs.
Furthermore, the Mid Yorkshire Chamber records its continued commitment to investigating new ways to fund business start-up for young people and the unemployed, and notes the ongoing fine efforts of the Chamber’s sister company The West Yorkshire Enterprise Agency in this regard.
Exporters – The Chamber of Commerce network has supported the Government’s calls for a rebalancing of the economy. Clearly a consistently growing trade deficit indicates that more must be done to support Britain’s exporters. Exports continue to fall at a faster pace than imports so it is evident that current support is inadequate. On this basis we propose that the Budget should facilitate additional support for exporters. A particular incentive to explore new markets could be provided in the form of targeted tax relief for exporters, either on any specific profits derived from International Trade or in discounted Corporation Tax.
As ever, there are wider business issues that need to be addressed that are worth reiterating. Trade must be rebalanced and it is imperative that greater support should be given to Exporters in order to facilitate this. The Government has made a commitment to reducing Red Tape through the ‘Red Tape Challenge’ yet we have continued to see the introduction of unnecessary regulations - for example, Automatic Pension Enrolment, and the UK’s ready acquiescence to the EU Agency Workers Directive (which includes that after 12 weeks in a given job, Agency workers now have the same employment entitlements as full-time employees). Reforms to Employment Law and Planning Regulations must be significantly accelerated, and construction work immediately commenced on promised infrastructure projects. Regulations must be slashed, access to finance improved so as not to choke off recovery, and business needs a favourable and encouraging tax regime. Without concerted action in these areas, businesses’ growth potential will continue to be severely restricted.
The Mid Yorkshire Chamber of Commerce will be discussing our policy recommendations in more detail at our next Joint Area Council Meeting on 28th March. This will provide members with the opportunity to reflect on the Chancellor's budget statement (which will have been announced on 21st March) and to discuss how the budget may impact upon businesses across Wakefield, Calderdale and Kirklees.
For more details see here or speak to our Head of Policy Steven Leigh on 07809658533.