Budget 2009
small-scale initiatives

Alleviating short term pressure on companies

There were relatively small-scale initiatives announced for business by the chancellor Alistair Darling during Budget 2009. The announcements included a new £750m strategic investment fund, reforms to the taxation of foreign profits, a boost to capital allowances to encourage new investment, plus a number of energy-related measures including incentives to advance production from small North Sea oil fields and to encourage offshore wind farms.

David Frost, director general of the British Chambers of Commerce, added: “There are some good measures for business at a micro level, but we still think Darling’s forecasts are over-optimistic. What has really taken people aback is the sheer scale of borrowing and worry about how it will be clawed back.”

Gilbert Toppin, chief executive of the EEF manufacturers’ federation, said: “Given the most difficult economic conditions for a generation, the chancellor has gone some way towards alleviating short term pressure on companies. However, the growth forecasts look overly optimistic and there is a serious danger that if these fail to come to fruition business will pay the price in higher taxes.”

Business is likely to be moderately pleased with a doubling of the main capital allowance for investment to 40 per cent in 2009/10. A two-year extension of provisions to allow companies to carry forward tax losses over three years was also announced.

In addition there will be a top-up scheme for companies that have had difficulty getting adequate trade credit insurance, but the chancellor ignored pleas from some business organisations for a scheme to subsidise the wages of workers on short time. Tax credits were already boosting the earnings of staff on shorter hours, he said.

He gave the motor industry a £2,000 cash incentive to trade in 10-year-old cars for new ones, but insisted that car companies must bear half the cost.