By Doug Godden
Head of Economic Analysis at the CBI
The Chancellor has at last started to restore his business friendly credentials.
The possibility of future tax increases remains
Despite having little room for manoeuvre he avoided a further increase in general business taxation, and even announced a few measures to benefit investment and productivity.
The extension of the tax credit on research and development is good news.
It will now cover some costs not previously allowed, such as those of agency workers.
Proposals for further consultation on the definition of Research & Development, hold out the prospect that more 'development' activity can qualify.
Smaller firms will benefit in particular from the increase in the size of firm
eligible for the enhanced first-year capital allowance, and the extension of the
small firms loan guarantee scheme to sectors not previously eligible.
Doug Godden, Head of Economic Analysis at the CBI
They could also benefit from the decision to lift the threshold for paying stamp duty on commercial property deals to £150,000.
More generally, abolition of stamp duty
on all commercial properties in 2000 'Enterprise Areas' is also good news.
Fast-track planning approval and the prospect of enhanced capital allowances
could also have a significant impact on future development in these areas.
We very much look forward to contributing to discussions on cutting down 'red
tape', and welcome allowing public sector pay awards to reflect differing
But, we know that both de-regulation and flexibility are easier to talk about than achieve, and will be looking for real results.
But I have two major concerns.
Though we are promised a consultation, a change in stamp duty treatment of leasehold property is set to come into effect this December.
The proposals, as they stand, would still seriously increase costs for some.
For sectors such as retailing, property leasing is integral to the way they do business.
The Chancellor also spoke of a new universal right to paid time off for training.
But the pilot schemes, which have taken place so far, have not shown this to be the answer.
These schemes are best tailored to the
needs of individual firms.
Having watched so closely this week let's not forget the impact of last year's
speech is only now being felt.
The Chancellor did not address the immediate problems of pension provision and business insurance costs, nor more
longstanding issues such as stamp duty on shares.
And the possibility of future tax increases, to fund the government's ambitious spending plans, remains.