Business leaders sing out in chorus of approval

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The Independent Online
BUSINESS leaders last night overwhelmingly endorsed Kenneth Clarke's first unified Budget, saying it paved the way for continued economic recovery and further reductions in interest rates.

Relief that the Chancellor had avoided excessive additional tax rises on top of those already in the pipeline was combined with strong support for his tough stance on public spending. There was also backing for the equalisation of retirement ages at 65, the increased insurance cover offered to exporters, and his pledges on transport investment.

The loudest plaudits came from the small business sector - which stands to gain most from the tax breaks and unravelling of red tape pledged in the Budget.

The one note of dissent came from the manufacturing sector, which criticised the absence of measures to stimulate investment by industry.

Howard Davies, director-general of the Confederation of British Industry, said: 'Given the problems the Chancellor faced, there is much in this Budget for business to welcome, particularly small businesses. He has avoided further large tax increases in the short term, and has taken tough decisions on public spending, which we applaud.

'The Budget should provide a sound base for continued non-inflationary recovery, particularly if - as we expect - interest rates soon fall further,' he said.

The British Chambers of Commerce welcomed the combined Budget and Autumn Statement as a 'sensible' package with a long-term perspective that would prove broadly helpful to business.

Christopher Stewart-Smith, president of the chambers, said: 'All in all, it is an astute balancing act which responds to many of the concerns and needs of business. We like the emphasis on containing public expenditure and government overheads, without cutting infrastructure investment. We like the backing for work-based training and the private finance initiative. We like the help for small firms and the proposals to tackle the late payment of business debt.'

The Institute of Directors expressed relief that the Chancellor limited the additional tax increases to under pounds 2bn a year. Peter Morgan, the IoD's director-general, said: 'Tax increases on this scale should not damage the recovery.'

The Forum for Private Business referred to 'one of the best Budgets of recent years for small businesses'. Its spokesman, David Harrop, said: 'Our members got six out of the seven things they asked for, including the 'son of BES'. Our members will also like funding for more policemen on the beat, since 45 per cent of our members have suffered from crime in the last 12 months. We're thrilled to bits with the move on statutory interest on late payment - we've been campaigning for that for 10 years.'

But the Engineering Employers' Federation said: 'This is not the Budget for investment which the economy needs.' The Machine Tool Technologies Association also criticised the absence of higher investment allowances, saying the package was a 'missed opportunity' for small and medium-sized manufacturers'.

The general reaction from industrialists in sectors ranging from cars and construction to chemicals was approval. Ian McAllister, chairman of Ford of Britain, said: 'The Chancellor delivered a skilful Budget which will boost confidence and sustain economic growth.'

Despite worries that the building industry would be badly affected, Joe Dwyer, chief executive of Wimpey, said: 'On the face of it, this appears to be a relatively neutral Budget for construction - no worse and perhaps slightly better than expected.'

Sir Denys Henderson, chairman of ICI, said: 'This is a skilful Budget and I believe it should be welcomed by industry. The substantial phased reduction in the PSBR should give confidence to the markets and limit the risks to recovery, against the background of the earlier cut in interest rates.

'The measures to encourage small businesses are to be welcomed, particularly the scheme to increase venture capital investment. I also welcome the higher spending on education, the apprenticeship scheme and the training scheme for adults.'

Neville Bain, the chief executive of Britain's largest textiles company, Coats Viyella, said: 'He has done a good job. He has raised taxes, but in a relatively painless way, bearing in mind the constraints of public finances.

'There was a lot of frightening stuff being touted beforehand about increases in tax. To the extent that those fears broadly proved to be unfounded, it is a good Budget. A lot of people have been putting off spending decisions waiting for the Budget, and they should now feel more comfortable.'

Peter Jarvis, chief executive of Whitbread, the brewers and food retailers, said: 'I think people have been holding back on spending, and I hope that this Budget has done a lot to dispel their fears about higher taxes.'

Mick Newmarch, chief executive of Prudential Corporation, Britain's largest life insurer, said the Budget was 'at least as good as we could have expected. It's a pretty solid, workmanlike proposition. There's nothing here to cause me any alarm - indeed, I'm quite reassured. All the alarms and scares about the attack on long-term savings have come to nought.'

Mr Newmarch said the Government's model of the economy suggested there would be scope for reducing interest rates in the early part of next year.

Arthur Hayes, general manager and director of Sun Alliance, said: 'He seems to have squared the circle, found ways and means of not having to increase income tax and VAT. If one believes the new projections of PSBR, etc, I would have thought it's quite good news.'

Barrie Holder, finance director of General Accident, said: 'He's done a reasonable job and it's come over fairly well. Most of the pain has been taken on government spending rounds and the like. He's done quite a good job.'

Sir David Lees, chairman of GKN, said: 'All in all it has been a pretty satisfactory package - directionally it is absolutely right. The one regret is that there is no direct stimulus for investment by business.

'A lot of businessmen said that he should not address the public borrowing problem by tax increases alone but by controlling public spending, and he has done that.'