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EDITIONS
Wednesday, 27 November, 2002, 19:03 GMT
UK business approves light touch

Not much news in this year's pre-Budget report is good news for UK business.

Chancellor Gordon Brown's statement contained a string of measures targeted at business, but instead of new taxes there was a lot of talk about boosting small firms and deprived areas.

Small companies can look forward to less red tape in policing VAT, more government-backed loans and yet more special tax zones.

Business lobbies such as the Engineering Employers Federation were speaking of a "breathing space" for manufacturers.

The big picture

The chancellor's biggest present to UK plc is the overall macroeconomic situation - low inflation, low unemployment and the most successful economy amongst the world's major economies, said Digby Jones, boss of business lobby the CBI.

From next April, about 650,000 small firms will no longer be required to report every single VAT transaction - a measure announced earlier this year.

Mr Brown now promises to consult business about "extending and improving this scheme". And medium-sized have been promised less VAT red tape as well, they will be exempted from statutory audits.

The government's small firm loan guarantee scheme will be extended to firms with a turnover of up to 3m a year.

More Enterprise Areas

And in an attempt to bring the decision-making process closer to local economies, the business support services for the North-West, East Midlands and West Midlands will be devolved to the regions.

Continuing his "war on unemployment", Mr Brown is promising another 2,000 Enterprise Areas.

They can look forward to the abolition of stamp duty on business property transactions, a 25% investment tax credit and a lighter touch on approving planning permissions.

But businesses are still bracing themselves for higher National Insurance contributions from next April.

Consultation before taxation

There is one tax, though, that will hit business from 2005-6. Already steeped in a tradition of "green taxes", Mr Brown wants to force people to recycle by raising the landfill levy by 3 per metric ton per year.

However, he promises to consult business before introducing the measure, and promises that it will be "revenue neutral".

The British Chambers of Commerce for one is already calling for businesses to receive support for recycling their waste, and predicts an increase in fly-tipping if that does not materialise.

The CBI's Digby Jones said it was a welcome change to have consultation before a new round of taxation - describing it as a first step in the right direction.

'Don't come back to business'

The chancellor's final present to UK industry was the promise of another consultation exercise, a review of Employers Liability Insurance.

Surging insurance premiums have hit many companies hard. The Association of British Insurers says a "fundamental review" of the status-quo is necessary.

Engineering firms are hoping for a scheme that "rewards companies for improving their management of risk".

The key issue, though, is whether the Chancellor can keep his promise not to raise taxes again.

If the economy fails to recover, he may just have to do that, and "we don't want him to come back to business for more taxation", says the CBI's Digby Jones.


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