CBI reacts to the budget

CBI Director-General Digby Jones today (Wednesday) said: "The Chancellor has at last started to restore his business friendly credentials

"In a difficult business climate and with little room for manoeuvre, he has turned to more creative ways for improving the overall performance of the economy, especially productivity and investment. "His economic forecasts are more in tune with reality and he has resisted the temptation to slap more taxes on business, which would have delivered a serious blow to confidence. The fly in the ointment is the threatened increase in stamp duty on leasehold commercial property, which could be devastating for some high-street businesses." Measures the CBI welcomes: On the R&D tax credit, he said: "Firms will applaud this continuing drive to invest in innovation, which recognises the need to build for the future, despite short-term economic uncertainties." On measures for small firms, he said: "This is a further step on the road to a real enterprise culture. We are particularly pleased by extended eligibility for enhanced capital allowances and the reformed small firms loan guarantee scheme." On moves to cut red tape, he said: "This is a positive move in the right direction and the CBI looks forward to being involved in discussions on construction, transport and environmental services. But as always business will be looking for results, not just talk." On public sector pay, he said: "It is a huge step forward to allow regional public sector pay awards to reflect differing regional circumstances and inflation rates. The Chancellor has demonstrated his commitment to drive through this much-needed public sector reform, but flexibility is easier to talk about than achieve. On enterprise areas, he said: "The combination of fast-track planning approval and the prospect of enhanced capital allowances could have a big impact on future development in deprived areas." On the Climate Change Levy, he said "Firms will be relieved to see no increase in the Climate Change Levy, which ranks highly on the list of damaging business taxes." CBI concerns: On stamp duty on commercial property, he said: "Although there will be an extensive consultation period, it is clear that these proposals will seriously increase the cost of leased business properties for many companies. "On a typical high-street business lease the stamp duty cost would more than double under the Chancellor's new proposals. Property leasing is not necessarily a tax avoidance measure, something the Treasury fails to recognise. For many sectors, in particular retailing and catering, it is integral to the way they do business." On the training pilots, he said: "The pilots have not shown that a right to paid time off is always the answer. Such schemes are best tailored to the needs of individual firms. The worry is that the Chancellor has already decided to introduce a statutory right regardless of what employers need, and one size will certainly not fit all in this important area." MF