Budget 2006

Business groups give their reaction to Gordon Brown's 2006 Budget

Business groups have reacted with disappointment to Gordon Brown's Budget speech, saying the Chancellor has failed to deliver on his commitment to create an enterprise culture.

Among the Chancellor's announcements was a pledge to spend �100 million on doubling the amount available in Enterprise Capital Funds. The Forum of Private Business' (FPB) chief executive, Nick Goulding welcomed the initiative but said: "When we look at the problems that small businesses face, this is thin gruel indeed. The Chancellor talks about encouraging enterprise, but he has done little to address the pressing concerns of small businesses that want to grow."

In his speech, Brown pledged to reduce the burden of red tape on firms by enforcing a policy of risk-based regulation. However, according to Goulding, there is widespread scepticism that the Chancellor's promises to cut red tape will bear fruit.

"While Gordon Brown was predictably upbeat about the economy, he failed to point out that since 2000, any growth in employment has been fuelled entirely by the growth in the public sector, as private sector jobs have been squeezed out and the red tape burden has spiralled," said Goulding.

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Disappointment

Bill Midgley, president of the British Chambers of Commerce (BCC) echoed the FPB's disappointment in the Chancellor's failure to reduce red tape. "We wanted to see a reduction in the overall regulatory burden which now stands at �50 billion since 1998, with targets and timescales announced for individual government departments," said Midgley.

"Employers are fed up with paying for government regulation, let alone the time they have to divert away from actually running their businesses," he added.

Commenting on the Chancellor's pledge to introduce a national enterprise network – including enterprise summer schools and doubling the available training for working women – Carol Undy, the Federation of Small Businesses' (FSB) chairman said: "The Chancellor's statements on employer involvement in further education are welcome.

"Small businesses need employees that have basic levels of education as well as valuable business skills. It remains to be seen whether the contents of the Budget speech are actually translated into practical improvements in skill levels."

Support

CBI director general, Sir Digby Jones said: "Steps to reduce red tape, expand R&D tax credits and boost UK trade and investment have our wholehearted support.

"The extension of the more generous R&D tax credits to firms of up to 500 staff will provide a real boost for innovation amongst growing enterprises. This is vital as the UK moves towards an increasingly value-added economy under the pressure of globalisation. That said, the process would still benefit from simplification."

Peter Penneycard, national tax director at accountants PKF echoed this view: "All he's done with the R&D tax credits is double the size of company that will qualify for the upper credit of 150 per cent. It's not the simplification of red tape that small firms wanted. For most the system is too complex for them to bother with. There was a lot of hot air in the speech, but in reality very little for small firms."

� Business Hotline Publications Ltd 2006

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