The Budget - help or hindrance?

27 April, 2009

There have been mixed reactions from business organisations following the Budget announcement last week. The Food and Drink Federaion (FDF) welcomes a number of the initiatives announced, but the Federation for Private Business (FPB) has said the government is not doing enough to help small businesses.

Among the changes announced is an increase in Fuel Duty of two pence on 1 September, followed by an increase of 1 pence per litre each year from 2010 - 2013, which the government claims will save two million tonnes of CO2 (MtCO2) per year by 2013–14.

In terms of help for businesses the Chancellor announced a £5bn credit insurance top-up scheme, to help businesses whose cover has been withdrawn by their providers. The government has offered to match private sector trade credit insurance provision if insurers reduce cover to any UK business, but only for a temporary period.

According to the latest figures from the Association of British Insurers (ABI), quarter four of 2008 saw the number of credit insurance claims shoot up 51%, from 5,540 in Q4 of 2007 to 8,366.

The Food and Drink Federation (FDF) has said it is pleased with the concept of the ‘carbon budget’ announced by Alistair Darling, but said not enough detail was given on the specifics of it.

“To meet our aspiration for a 30% reduction by 2020, Government needs to work more closely with us on all aspects of the energy efficiency and climate change agenda,” commented Melanie Leech, director general of FDF.

“We welcome the targeted fiscal initiatives announced in the Budget – particularly the Chancellor’s promise to support a top-up trade credit insurance scheme,” she continued. “But other aspects of the Chancellor’s budget – notably his decision to increase fuel duty by 2 pence per litre in September – will do little to improve our competitive position.”

The FPB has voiced its concerns that the Budget has not adaquately addressed many of the issues facing small businesses, and has ignored many of its pre-budget proposals.

In a post-budget report, the FPB found that many small businesses believe nothing has been done to ease the burden of costs they face and 94% feel that the Budget did not address the issues threatening the survival of their businesses.

However, UK Trade and Investment Minister Lord Davies of Abersoch said the £10m boost in the budget for trade would help businesses to export.

“This is a budget for business and a budget for trade. UK companies that take the strategic decision to export can prosper in a global marketplace. Firms that take up this help will be better positioned to grow when the world economy picks up,” said Lord Davies.

The extra £10 million, which will be spent over the next two financial years, represents an additional 5% on top of UK Trade & Investment’s (UKTI) current annual programme budget of £91 million.

Another positive announcement in the Budget was the extension of the Business Support Service, which helps those having difficulty meeting payments.

It means that from 22 April, 2009, any viable business that anticipates it will make a trading loss in the current tax year will be able to have the anticipated loss taken into account as part of any rescheduling of its Corporation Tax or Income Tax payments.

Extended time to pay arrangements can be agreed for the previous year’s corporation tax and/or income tax if the business is genuinely unable to pay immediately or enter into a reasonable instalment time to pay agreement, and if it is likely to make a trading loss in the current year.

There is now a new temporary rate of 40% for capital allowances - first year allowance for expenditure on general plant and machinery, which will affect bakeries investing in plant and machinery between April 2009 and April 2010.

Corporation Tax rates for the financial year 2010-11 will remain unchanged with the main rate at 28% and for the financial year 2009-10 the small companies rate will be 21%.





Site Search

Webinars 

    Insights from the Bakery Market Report 2016

    You can now purchase the Bakery Market Report 2016, which offers insight into the retail bakery trade in the UK.