Action needed in Budget to boost business

The Chancellor must deliver a Budget aimed at job creation if the Government's plans for a private sector-led recovery are not to founder, a leading business group has said.

The British Chambers of Commerce (BCC), in its pre-Budget submission to George Osborne, argued that Government rhetoric on the need to stimulate growth will be worthless if it is not backed up by concrete action designed to boost UK enterprises.

The BCC said that the 2011 Budget, which is due to be delivered on 23 March, represents a critical opportunity to set out unequivocal plans to support businesses.

In its submission, the BCC detailed a number of areas where policy needs to change.

On employment, the Government should make it easier for firms to recruit employees. This, the BCC said, can be done by delaying or scrapping the implementation of all new employment legislation, and by introducing a moratorium on additional employment regulations for the remainder of this Parliament.

The youth and development rates of the national minimum wage should be suspended in order to combat unemployment levels among young people. Failing that, employers should be provided with a National Insurance incentive to take on younger workers.

On the question of regional development, to help businesses expand their premises without falling foul of lengthy bureaucratic planning decisions, the Government needs to look at creating opportunity zones where high-value firms can grow with the backing of tax breaks and a relaxation of planning laws.

Much greater clarity is also required on the role and resourcing of the newly established Local Enterprise Partnerships.

Given that the recovery will, in part, depend on the ability of UK firms to find new markets, the BCC believes that insufficient numbers of British SMEs are exporting their goods and services abroad.

To bolster those firms that are struggling both to break into emerging markets and to gain access to trade finance, the Government needs to make greater efforts to extend the work of the Export Credits Guarantee Department amongst smaller businesses.

The £25 million cut from the UK's trade promotion budgets must be restored so that British exporters have an overseas presence on the same scale as the country's continental and US rivals.

On business investment, the BCC wants to see better local and regional support for businesses from the major banks. The business group also pointed out that since smaller firms will not be gaining from the phased reduction of the headline rate of corporation tax, they should be allowed to carry forward unused relief, helping them to invest in new plant.

David Frost, the director general of the BCC, commented: "The Government's rhetoric on growth has not yet been matched with real action to deliver a strong environment for the private sector to flourish.

"Business is not seeking handouts but needs the Government to create the climate in which they can grow. That means less not more employment legislation, a greater focus on boosting British exports and keeping pressure on the banks to ensure that businesses can get access to finance.

"It is time for the Government to take some pro-growth steps. A 'Budget for Growth' will be judged by whether it boosts business confidence, encourages investment and rekindles the spirit of enterprise. If the Government provides a radical framework, business will do what it does best - creating wealth and jobs, innovating to deliver strong companies and providing the much needed growth for this country."