This is an initial statement on today's (22 June 2010) budget from the Chief Executive, Rob Johnston of the Cumbria Chamber of Commerce.

"These are, as we all know only too well, very difficult times and we all need to take our share of the medicine, so this was never going to be a budget where we could expect big giveaways. But from a business perspective this is not a bad budget - and this is really important, because it's businesses that will pull our economy through its recovery so its vital businesses are helped to develop and grow. Significantly, it should encourage businesses to take on staff.

As we set out earlier in the year, our five point plan for recovery includes minimising the tax burden on business; a reduction in the regulatory burdens on business; enabling more successful, growing businesses; policies to support significant expansion of international trade, turning the vision of an export-led recovery into reality; and underpinning all of this with a credible plan and timetable to reduce the country's budget deficit - without spending cuts to vital infrastructure. In more detail this means:

-          A clear deficit reduction plan, setting out detailed cuts, and including a freeze in the total public sector wage bill and fundamental reform of public sector pensions.

-    A reduction in employers' National Insurance Contribution. The revenue lost by a reduction of 1% could largely be offset by a 1% increase in VAT, which would be less damaging to the productive economy.

-    A reduction in fuel duty, particularly important in a county such as Cumbria where transport costs are so significant to business.

-   With new employment legislation and tax over the next four years set to cost business more than £25bn, a three year moratorium on new employment law.

-    Actions to ensure our whole workforce, and especially our young people, have the skills businesses need for the future.

-   Further support for international trade. Here in Cumbria businesses of all sizes are increasingly seeing the opportunities available through international trade and with the new UKTI contract starting this month we'll be working even harder over the coming year to support them in doing that.

-   Sustained investment in our transport, digital and energy networks, underpinning growth and forming the foundation of our future competitiveness.

We've yet to look in detail at planned public spending cuts but we are pleased to see action on employers NIC and on public sector wages and pensions."

Commenting on specific measures Rob goes on to say:

Reductions in Corporation Tax:

"The reduction in corporation tax from 28% to 24% over the next four years is really good news, benefiting business directly. It's particularly good that rates have been announced for the next four years, helping businesses to plan, which makes a big difference when looking at borrowing.

The reduction in the small profits rate of corporation tax to 20% from April 2011 instead of the planned increase to 22% is also good news."

National Insurance cuts

"Raising the threshold for employers NIC  by £21 per week from April 2011 will make it cheaper for businesses to employ people. And exempting new businesses outside the South East of England from up to £5000 of employers' NIC payments for each of their first 10 employees  is good news for us here in Cumbria, providing a further significant boost and encouraging new businesses to take on staff."

Capital Gains Tax

"The entrepreneurs' relief life time limit will rise from £2m to £5m, which is great news - encouraging investment in businesses.

Increase in capital gains tax from 18% to 28% for higher rate taxpayers while still an increase  doesn't go as far as some suggested, which we believe would have been bad news. Evidence suggests a rise above 28% would be self defeating."

Enterprise Finance Guarantee

"The increase by £200m to support £700m of additional lending until March 2011 is also good news, providing additional support for small businesses finding it difficult to access normal commercial loans."

VAT and Personal Taxation

"The increase in VAT from 17.5% to 20% from January 20011 is not unexpected, and indeed we have been calling for an increase in VAT for some time. While clearly it does hit consumers, evidence suggest that it will not significantly affect spending, and it does raise significant funds, making it the best option from a business perspective.

With the increase delayed until January retailers may even see a boost to spending over the rest of this year.

It's good news that items such as food, children's clothes and books will remain zero-rated, helping to cushion the blow, and providing some measure of protection for lower earners. Index linking of the state pension and increasing the personal income tax allowance for basic rate tax payers under 65 by £1000 from April 2011 will also help."

Public sector pay freeze

"The two year public sector pay freeze for all staff earning more than £21,000 a year is a positive move. Private sector businesses and those working within them have gone through pain in recent years, with limited or no pay rises - or indeed pay cuts. It's important that the public sector also shows restraint and will also help reduce inflationary pressures."

Public sector pensions

"The cost of public sector pensions is a huge issue for the country's resources and it's good news that there is to be an investigation in time for next year's budget, although clearly action sooner would be preferable."

Fuel Duty

"While on the face of it no new increase in fuel duty looks like good news - but this is no new increase - the increases already announced of 1p in October and 0.76p in January will take place as planned, particularly bad news in a county like Cumbria. There is talk of rebates for remote rural areas and we'll continue to lobby for this."

Regulation

"We look forward to the announcement in July of detailed plans to reduce regulatory burdens on businesses, including a one-in-one-out system and a review of employments laws."

Regional Growth Fund

"The create of a Regional Growth Fund in England to support business employment and growth, particularly in those areas most affected by public spending cuts, is clearly good news as private sector growth will be vital if public sector jobs are to be replaced".

Regards

Lesley Robinson Marketing & Communications Coordinator lesleye@cumbriachamber.co.uk

Cumbria Chamber of Commerce - the Ultimate Business Network