Red tape pledge greeted with scepticism

The business community gave an almost uniformly positive response, expressing surprise that Gordon Brown had managed to combine business-friendly initiatives and an economically neutral financial package with an unashamedly electioneering speech.

The business community gave an almost uniformly positive response, expressing surprise that Gordon Brown had managed to combine business-friendly initiatives and an economically neutral financial package with an unashamedly electioneering speech.

There was a broad welcome, too, for the Chancellor's promises to slash red tape and to limit the burden of European regulations - but warnings that such promises will be measured against results over the next few years.

The Confederation of British Industry declared itself pleased that Gordon Brown had eschewed a much bigger pre-election giveaway. The CBI's director general, Sir Digby Jones, described the Budget as "measured", because the Chancellor had "avoided the temptation of pre-election risk-taking, targeting help only where it is needed most".

Sir Digby said: "I applaud the deregulation measures outlined. This must be at the heart of the UK's battle to be competitive. The delivery of change will be the acid test, but business will be heartened that for the first time increases in public spending will be tied to the achievement of specific reforms in specific departments."

Small business organisations, too, expressed concern that initiatives to cut the burden of inspections and simplify the way taxes are collected may not in the end be followed through. "Businesses have been promised bonfires of red tape in the past and they have never been ignited," said Carol Undy, national chairman of the Federation of Small Businesses, representing 185,000 firms. "Businesses are cynical because of past broken promises - 30 reports, seven White Papers and two Acts of Parliament during the past 20 years alone."

Martin Temple, of the Engineering Employers' Federation, representing manufacturers, said the Chancellor's acceptance of the Arculus and Hampton recommendations on regulation and enforcement was "the high spot for business of an otherwise election-focused Budget". He added: "Setting targets for the reduction of red tape must be rigorous and transparent, and will give government no place to hide if it fails to meet those targets in future."

Measures to extend credits for research and development were also welcomed, although many commentators wished the Chancellor had gone further. John Higgins, director general of Intellect, the hi-tech industry body, said: "Today's Budget is halfway to getting it right for the knowledge economy. However, the Chancellor must do more if we are to become the world's leading location for research-based, science-based and knowledge-based industries. This Budget has failed to provide UK firms with the incentives they need to invest in training and still fails to offer sufficient incentive to firms considering the UK as an R&D base."