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Osborne’s aspirational budget was short of inspiration

DEBATE: Shadow chancellor Ed Balls delivers his verdict on George Osborne’s budget during the debate in the House of Commons. To his right is Chuka Umunna, shadow minister for business innovation and skills

THE RESPONSE to George Osborne’s latest budget seems lacklustre at best. But the important question is will his package give businesses the boost they need to get the country growing against a disappointing economic backdrop?

Slightly overshadowed by the Cypriot banking crisis and the never ending woes of global stagnation, weak exports and lower tax receipts, the forecast may have made the financial markets confident but did it go far enough for the small business owners who are often the overlooked and mistreated backbone of the British economy.

Economists seem to agree that this budget will make little difference to the country’s business performance and prospects. It is felt that Osbourne certainly failed to provide the cutting edge solutions to improving public finances for the foreseeable future and he seems to be sticking to the same rhetoric even though his strategy seems to be failing to ignite a much needed boom.

Yes, there is reluctant appreciation of the announcement that small businesses will get a £2,000 cut in national insurance and a promise to raise the personal tax free allowance on salaries to £10,000; but will the struggling business on the high street feel Osbourne is doing enough to support enterprise and growth?

RECRUITMENT

The premise is that the employment allowance will encourage small and micro businesses to take on more staff, which will equate to approximately 450,000 small businesses not paying any jobs tax at all.

But if they cannot get access to cash from banks to grow their businesses how will this boost employment when even the Office for Budget Responsibility predicts the jobless rate to increase to 8 per cent in 2014.

Bidi Alabi, Managing Consultant & Senior Trainer at BusinessExcel UK™welcomes the Chancellor’s announcements around cutting corporation tax and the employment allowance, because it will help the business owner to seriously consider employing staff. Not only will this bring greater expertise and skills into the business it will help them to increase productivity and profits. This is good news coming off the back of the OBR predicting private sector employment to rise by 2.4 million offsetting a fall of 1m jobs in the public sector.

“For small businesses the biggest benefit is the increase in the threshold which means they can improve job prospects and take people on. Also there is a significant incentive for mothers who run their own business to take advantage of the childcare voucher. This will give them more scope to work on their business and increase their chances of being better mompreneurs!”

Pheona Matovu, Director of Radiant and Brighter which is a social enterprise organisation based in Scotland which supports both the indigenous community and ethnic minorities back into employment or self employment was less thrilled by the budget.

“The beer duty escalator  gets scrapped immediately but the Employment Allowance apparently worth up to £2,000 to every business, charities and community sports will become available in April next year once the legislation is passed and tax free childcare vouchers for working families apparently worth 20 per cent off the first £6,000 of your childcare costs for each child. This says to me, once again we look after the higher tax brackets and pay little attention to community issues and ignore the biggest barrier women face in business start up and employment. What really does any of this mean to mothers?

There’s no way you can work or do business, just forget it. Oh but we will deal with it next year!”

She is not the only one to feel like this. There have been criticisms that the childcare vouchers do not go far enough to tackle the issues of employment and enterprise for women. Rapidly losing ground with the female vote, Osbourne missed an opportunity to deliver a series of initiatives that would support, nurture and develop the brightest and talented women to start companies that will create much needed jobs across a variety of sectors (especially science and technology) and boost the economy.

“The budget is more of the same thing and where is the growth that we have been promised?” asks Sharon* a professional coach and communications consultant. “I won’t be rushing out to employ anyone because I have no confidence in the growth of my business. While I’d be keen to take on an apprentice, the whole process is still bureaucratic and the financial incentives are not big enough to deal with the paperwork!”

She goes on to say that the voucher system has been in place for a number of years, so Osbourne’s announcement will only make a small dent.

“If you are building your business and getting tax credits, the increased threshold will go up and your credits go down which means you will not see real benefits,” explains Sharon.

“It is the tax credits not the vouchers that help the female entrepreneur. Therefore, I do not believe this concession will help the masses. The budget needed to focus on generating growth, creating jobs and ensuring the economy grows.“

One has to wonder if the Chancellor is conceding the fact that he is unable to stimulate growth and is now relying on the Bank of England to boost growth in the UK. This will increase the remit and scope of new incumbent Mark Carney who will now have to work towards a rise in employment and control inflation.

To give the Chancellor credit, he has tried to break the pattern of simply blaming Labour for the mess the country has found itself in by branding this a budget for the aspiration nation; aimed at creating a nation of the prosperous, solvent and free. Let’s see what the next four years bring for the ambitious entrepreneur.

*Not her real name

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