Business reaction to Budget 2008

Following what many commentators describe as a "dull" Budget speech, the major business organisations have had a chance to digest the impact on small businesses. We've included a selection of those responses here.

Institute of Directors

The Institute of Directors (IoD) was relieved by the apparently low key nature of the Budget, "which is what business needed after the recent ill considered announcements on Capital Gains Tax and non-doms."

Miles Templeman, Director General of the IoD said:

“Business will be relieved by the apparently low key tone of this Budget, which is welcome after the recent ill considered and damaging announcements on CGT and non-doms. We welcome the decision to postpone the proposals on income shifting, which would have imposed an impossible burden on thousands of small businesses. The policy needs a fundamental re-think. More generally, the tax regime still needs to be simplified and made more business-friendly. The new enterprise agenda is taking us in the right direction, but as ever, everything depends on delivery.”

Confederation of British Industry

Reacting to the Chancellor's Budget speech, Richard Lambert, director-general of the CBI, said:

"The Chancellor didn't set the Thames alight, but then he didn't have anything to set it alight with.

"On the surface there are no nasty surprises, but his growth assumptions are optimistic and leave him with no room for manoeuvre should things take a turn for the worse.

"For business, although there may have been no further big shocks in today's speech, we mustn't lose sight of the whole raft of tax rises announced in the previous Budget and the Pre-Budget Report. These are scheduled to kick in from April, putting a further squeeze on firms at this already turbulent economic time."

The Forum of Private Businesses

The FPB saw the Budget as being "more about what has not been done to help smaller businesses, rather than an announcement of any genuinely proactive and positive measures," according to its Chief Executive, Phil Orford. "While there are some welcome initiatives, they do little, if anything, to offset the tax burden due to be implemented in April. The Chancellor has missed a golden opportunity to convince the small business community that he is on their side."

The FPB welcomed some measures outlined in the 2008 Budget, such as an initiative to enable more smaller firms to procure public contracts, pledging an additional £12.5 million to assist female entrepreneurs start businesses and extra Capital Allowances to help firms introduce more environmentally-friendly commercial vehicles. However, the Chancellor’s statements do not back up his desire to "do more to support small and medium-sized enterprises, now and in the future."

"This has done nothing to address the increasing tax burden on smaller businesses, imposed by the 80% rise in CGT, the attack on family-run firms through the proposed rules governing income shifting and the already-announced increase in small firms’ corporation tax contributions," said Mike Benson of Murray Smith, a firm of chartered accountants, based in Northwich, Cheshire. "These extra taxes will in no way be offset by minor improvements in share incentive schemes, for example."