Budget Outlook Let's say this about the Budget. For the first time in a number of years, my email inbox was not swamped with complaints from business groups in the hours that followed the Chancellor's speech. Instead, there was relief that no unexpected tax rises arrived – at least not ones that were immediately obvious – plus a welcome for the "£2.5bn growth package" (despite some confusion about what exactly counted towards that figure).
The politics of the recession are now tempered in the debate about when to start attacking the deficit. It is a facile row – though both sides would have you believe something quite different, there is almost no difference between Labour and Tory plans on debt reduction – but one thing is sure. Once the taxpayer-funded stimulus to the economy is withdrawn, it is Britain's businesses, the private sector, which will have to shoulder the responsibility for delivering a sustainable recovery.
This is the context in which to think about the fiscal environment that businesses must operate within. We aim for a fair wind behind their backs not out of any reverence for captains of industry but because we need businesses to grow in order to provide employment and tax revenue. For that reason, the comparative quiet on the business whingeometer yesterday afternoon was a comfort. Still, the volume will rise.
Forget the Chancellor's speech, or the blizzard of documents that the Treasury publishes shortly after he sits down. The real story of every Budget is to be found in a single table towards the back of the "red book", the Treasury's report on the statement. It tells you what each Budget measure will raise or cost.
This year, the table shows measures specifically affecting business raise around £375m for the Treasury. Small beer, you might think, compared to that £2.5bn giveaway Mr Darling mentioned within minutes of standing up. Remember, however, that the £2.5bn is a one-off package. The tax rises, by contrast, apply every year: in 2011-12 they total £695m, followed by £565m in 2012-13. At this rate, it won't be long before the "growth package" is repaid.
But before you do those sums, take a look at the table on page 121 of the red book which reminds readers of the impact of the 2009 pre-Budget report. There, right at the top, is the £4.1bn extra in employers' national insurance contributions that business will have to pay every year from April 2011 onwards. Oh dear.
It would be naïve to think that business isn't going to have to take some of the tax pain in the years ahead. Remember too, though, that it will suffer from spending cuts – far fewer contracts from the public sector will be handed out. Despite what we heard yesterday, this is a long way from a fair wind.Reuse content