In George Osbourne’s sixth budget speech, he sought to show voters how the economic recovery has benefited them – and that this means the Conservative party deserves their vote on May 7th. However, there appeared to be little in the way of giveaways for business.
Here are assessments of the pre-election budget from some small businesses:
A specialist manufacturer welcomes tax simplification
The buckle on the Chancellor’s new briefcase, dispatched to his office on Monday, was cast by Abbey England. It’s a 50-person foundry business in the Black Country, in the West Midlands.
A leather and metal manufacturer specialising in ‘Made in England’ goods, Abbey supports skills in an area that used to be home to the UK’s steel mills.
The Problem
Richard Brown, son of founder Gerald Brown, says the business tries to give work to people with valuable skills, but is struggling to keep up with the paperwork. That makes it “difficult to take the business forward, especially when exporting to Europe,” he says. “It’s necessary for us to employ an accountant because we can’t keep up with all the rules.”
“A lot of the rules come from Europe but HMRC has to run them. We have to report almost weekly on our turnover. And reports required when you go above a certain turnover mean we have to give the weight and volume of each item.”
The knock-on effect? “Members of our family end up doing paperwork every evening and every weekend.”
Mr Brown says he has become used to complex rules, but would welcome anything that makes tax easier. “Monthly tax payments would be much simpler for us – that could at least help with cash flow management.”
The Verdict
Mr Brown welcomes measures for simplifying tax and hopes compliance will become even easier through negotiations with the EU.
“This simplification is greatly appreciated,” he says.
“We’re a trading nation, a trading company, and think a balanced negotiation with Europe would be far more preferable, but we should still not have to send copious forms to Europe for very simple transactions.”
A fabric producer voices their concerns about investment allowance
Around three decades ago Tony Attard set up Panaz, a fabric manufacturing business based in Lancashire. He started out with just a telephone and an eye for exports, but now employs 85 people and ships fabrics to more than 50 countries, with a turnover of £15million.
The problem
“The budget has to be strongly biased towards investing in new machinery,” Mr Attard says. “Growth in small companies is driving the economy. We need encouragement because investment in technology is a more significant undertaking for smaller companies than for a £500 million business.”
Mr Attard says Panaz is looking to expand by 25% in two years, but a scheduled reduction in the annual investment allowance subsidy for investment in plant and machinery means the future is uncertain. “We have just made a massive investment into new technology that we have accelerated to ensure we get tax relief, he says.
“Unemployment levels have gone down but so has productivity which means we are using people, where other countries are using machines. Letting the annual investment allowance drop from half a million to £25,000 gives the wrong message.”
The Verdict
Mr Attard’s advice to George Osborne is to raise the allowance from £500,000 to £1million.
He accepts the annual investment allowance will be decided in the autumn statement, but says that deciding now would have given manufacturers more certainty going forward.
“My view is that the chancellor is waiting to see how manufacturing fares over the next couple of quarters. If manufacturers are not putting in more investment then he might put it at a higher level in the autumn statement,” he says.
“Obviously he’s passing the buck a little bit by saying this is something for the next parliament.”