Midland businesses doubt Alistair Darling can repair the economy
Nov 24 2008 by Alun Thorne, Head of Business
have to be paid for. The pre-Budget report may therefore prove to be a ‘Robin Hood’ event where the government tries to redistribute wealth. Common sense tells us there must be tax increases for certain groups of taxpayers.”
Terry Cooper, director in the private capital group at Cobbetts LLP, was pessimistic about the Government’s ability to make sugnificant changes.
“Given the state of the economy, it’s doubtful that the Government will be able to do anything favourable at all,” he said. “If they want to do something really beneficial, the Government should make as few changes as possible in order to maintain the status quo and help everyone ride out the storm.”
Owen Trotter, investment partner at Key Capital Partners in Birmingham, was equally unsure of Government’s ability to lift the economy out of recession.
“If the Chancellor is planning to introduce any significant measures in his Pre-Budget Report, they must be aimed at easing cash flow pressures for smaller businesses. For instance, a VAT or PAYE holiday would be a very welcome introduction. But while such proposals would help growing businesses to survive the recession, the challenges facing our economy are tied up with investor and consumer confidence, neither of which will be altered by the decisions that Alistair Darling announces on Monday.”
Richard Harpin, CEO of Walsall-baseddomestic emergency insurance business Homeserve Plc, believes the government should radically overhaul the R&D tax credits scheme and broaden its scope to create an ‘innovation tax credit’ system.
“A major issue is how to give real incentives to large businesses to invest more in innovation. A more tax-efficient regime could do this, or a system that enables listed companies to invest in innovation without stifling their profit growth,” said Harpin.
Christine Oates, head of tax at Ernst & Young’s Birmingham office, said the availability of cash was still the key issue. “The Chancellor could focus this PBR on addressing the timing of tax payments rather than just rates of tax, for example the Chancellor could defer VAT payments for a period so businesses hold their cash for longer.”
John Truslove, a commercial property consultant from Redditch, said if the Chancellor did nothing else, he must reintroduce empty property rates relief. He said: “The abolition was highly unpopular when it came into force and the subsequent recession and collapse of the construction market has made it the equivalent of kicking the dog when it’s under the table.”
