Technical Moves Blog

Budget 2011 reaction

Reaction to Chancellor George Osborne’s budget has been mixed but with his hands already tied to the deficit reduction programme a “fiscal neutrality” budget was never going to have lots to offer.

The Chancellor did however manage to introduce a number of measures designed to help businesses and ended his speech with a politically minded decision to cancel the planned 4p rise in fuel duty in what he has billed his “Budget for growth” A further 1p will be cut from pump prices immediately – all paid for by a £2bn tax on oil companies, designed to “fuel the British Economy”.

A full breakdown of the key decisions can be found on the BBC website here

Key points at a glance

In this post we report a summary of reactions to the budget from our own governing body the REC, Technical Moves and finally an interesting reaction from the Oil and Gas industry:-

The Chancellor’s ‘Budget for Jobs’ welcomed by business, but must go further says REC (Recruitment Employment Confederation). In his initial reactions to the Budget statement, REC Chief Executive Kevin Green said:

“Recruiters will be pleased to see the concrete steps announced to help businesses grow and take on new staff. We are delighted that the Chancellor has listened to recruiters and the wider business community and taken faster action on dropping corporation tax, which will be welcomed by firms across the country.

“We are also pleased to see that the Government has prioritised youth employment with a new £300 million package to help young people into work, and it is good news that 40,000 new apprenticeships and 100,000 work experience opportunities are coming on-board.

“However, we urge the Chancellor to consider further fiscal incentives to help employers take on young people, such as a National Insurance holiday of at least one year for SME’s who take on additional young people.”

“Despite the positive direction of travel in this budget, there are areas where more must be done. We were disappointed to see the Chancellor has maintained the planned increase on National Insurance contributions, which drive up the cost of taking on new staff, and has failed to look at current barriers in the benefits system that prevent unemployed people from taking on short-term job opportunities.

“The Chancellor could also have provided assurances that Government will do all it can to limit any negative impact of the Agency Worker Regulations, and reject calls for further gold plating. It would also have been helpful to outline a full plan for the Employment Law review, to give businesses certainty on what areas will be looked at during this Parliament.”

Technical Moves Comment:-

“As a small business we welcome the Governments decision to freeze any new legislation for SME with less than 10 employees for the next 3 years. The £100m investment in science will also be of direct benefit to both Cambridge and Norwich and should help support a key growth industry in this region and we cautiously welcome the relaxation of planning regulations.”

“While we also welcome the cuts in the burden of corporation tax, which will be worth around £2bn per annum when implemented over the coming years, these are likely to be particularly beneficial for big multinational companies and we would have liked more support for small companies which make up such an important part of the UK economy.”

“Overall we broadly welcome the decisions made in the budget but with the OBR’s own report highlighting that these initiatives will have little impact on growth in the UK economy we feel that there is still a lot of work to be done. The pressure felt from international events and the effects of the planned cuts made under the comprehensive spending review will have far more significance on the direction the UK economy takes over the next two to three years than the announcements made in the budget yesterday.”

The BBC has reported today on Oil firms reaction to the tax hike, with a warning that jobs will go. “Tens of thousands of jobs in the UK will go as a result of a windfall tax on North Sea oil producers announced in the Budget, the industry has warned.

Mike Tholen, economics director of Oil and Gas UK, said the change would also damage long-term energy security.

But Oil and Gas UK – the trade association for the offshore industry – warned jobs and production will be lost – which would mean the UK would eventually have to import more oil.

Mr Tholen told the BBC: “What you see is the the UK’s reputation as a global player in oil and gas industry falter because of this. Many companies from abroad are looking at whether to invest in the UK, to help us get the new oil and gas reserves out of our waters. What we see is that image yet again shattered because of the tax change.

http://www.bbc.co.uk/news/business-12844157