Green shoots undamaged, says industry

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The Independent Online
INDUSTRY figures were in agreement yesterday: it was a clever, if cautious, Budget, write Topaz Amoore and David Bowen. The general consensus was that the Chancellor had managed to avoid running his lawnmower across the green shoots of recovery.

As Geoffrey Maitland Smith, chairman of Sears, said: 'It is interesting the Chancellor was in a positive mood - but then he had to be.'

'The Chancellor had a difficult problem,' Sir Antony Pilkington, chairman of Pilkington, said. 'Like the head of a family, he has to manage the country's affairs and not go running into debt. There was little to damage individuals' or business confidence.'

Clive Thompson, chief executive of Rentokil and CBI chairman in the South-east, agreed. 'The Chancellor had to try to balance public borrowing requirements and not squash the recovery. It was a clever Budget, with nothing to cause a negative effect on the economy.'

'To have done more was to have risked more,' said Ken Minton, chief executive of Laporte, the specialist chemical group.

'He has the opportunity in his next Budget in six months' time to take stock of what has happened and take any corrective action then. I think he got it just about right at this stage.'

Nigel Rudd, chairman of Williams Holdings, said that the decision to phase in some of the measures 'signalled to the currency markets that we are serious about tackling the deficit.

'Laying out plans for two to three years ahead ought to be seen as a very positive move.'

All welcomed the changes to advance corporation tax. Neville Bain, chief executive of Coats Viyella, said it was of enormous benefit to international companies. '(ACT) is bigger than people realise, although the trick for the analysts will be to calculate which companies benefit most.

'That could have a very marked impact on companies that are being double taxed. They will pay a lower rate on their dividends and in the long run it may mean companies like us will never have to pay unrelieved ACT again: we have been paying up to pounds 20m, and if the rule is changed it will go straight to the earnings.'

Sir Antony Pilkington said he thought it would be over-optimistic to imagine that companies would be able to claim back all their surplus ACT. 'Our tax charge is extremely high because 80 per cent of our business is outside the country. At least now the emphasis is on doing something about it.'

The incentives given to small businesses were received well. 'Small businesses are the engines of growth,' said Mr Thompson.

Unsurprisingly, Sears welcomed the unchanged uniform business rate. 'This was the best news for us,' said Mr Maitland Smith. 'A rise could have meant a lot of money for us. Shops have been affected by the UBR more than any other industry. We were very relieved.'

At Allied-Lyons, feelings were mixed on the subjects of spirits and beer. 'I was very pleased about whisky,' said Tony Hales, chief executive. 'I hope it's the first stage towards recognising that the differential with other countries is so big, and that the tax ought to be reducing.

'I felt relief on food, with no VAT, but disappointment on beer, where the tax in Britain is 30 times higher than on the Continent: 10 per cent of the take- home market is now coming in across the Channel.'

Wimpey, the housebuilder, was less impressed by the announcements on transport improvements. The Heathrow- Paddington link was already known about, it said, while the others were just on the Chancellor's 'wish list'.

There was even a welcome from one quarter for the controversial removal of VAT zero rating on domestic fuel bills. Pilkington makes the complete range of home insulating materials, including loft lagging and double glazing, which are already subject to VAT. 'We may see people starting to save energy,' observed Sir Antony.

(Photograph omitted)