Business reaction to the Queen’s Speech

The business community has offered the Queen's Speech a welcome.

The Speech covered a range of issues affecting businesses, including tax and employment.

John Walker, national chairman of the Federation of Small Businesses, said: "The first Queen's Speech of the new Parliament has some welcome initiatives which allow small firms to grow to help strengthen the recovery. Cutting the deficit is of high importance to a large number of small firms and we welcome the introduction of the Office for Budget Responsibility.

"Small firms are already flexible employers, employing more women and more part time workers than big businesses and plans to remove barriers to flexible working must acknowledge this. Changes to the one per cent increase in employers National Insurance Contributions will help safeguard 57,000 jobs, continuing to strengthen the recovery."

Jane Bennett, head of campaigns at the Forum of Private Business, commented: "Hopefully, the measures outlined in the Speech will go some way to getting the nation's finances back on track without jeopardising recovery.

"The compromise reached over National Insurance Contributions isn't ideal and will still create a bureaucratic burden for smaller firms. However, it is preferable to the larger increase previously proposed by the last government.

"The proposals for the right to request flexible working shouldn't prove too onerous for SMEs, providing the employer's right to refuse a request with good reason remains. And the proposal for a referendum on any future EU treaty is also likely to prove popular with smaller businesses, who resent many of the regulations imposed on them by European law.

"In summary, the speech didn't appear to contain anything smaller businesses should be unduly concerned about. However, business owners will be in something of a state of limbo until June 22, when the Chancellor will hopefully outline fully detailed taxation and spending policies in his Budget."

David Frost, director general of the British Chambers of Commerce (BCC), also applauded the government's commitment to tackle the budget deficit and the fact that it has chosen to avoid placing additional regulatory burdens on wealth-creating businesses.

Mr Frost said: "Over the coming weeks, we will be judging the government's performance against the delivery of a clear plan to enable business growth. The age of the public sector has come to an end - and the Government must now focus on measures that enable private-sector growth, which will return the British economy to health."

On specific proposals, Mr Frost noted as a positive move the decision partially to roll-back the NIC increase but urged the government to go further and to scrap it in its entirety.

He said that if "an independent Office of Budget Responsibility enables clear forecasting and transparent and swift action on the deficit, businesses will support it".

Referring to the Financial Reform Bill, Mr Frost continued: "As the government moves to reform financial services, it must ensure that there are no unintended effects on British companies, which depend on a stable banking system for credit and financing. Moves to improve access to finance for smaller firms - the engine room of our economy - will be welcomed by many within our membership."

But he called on the government to introduce safeguards to its plans for capping migration: "Business's top priority is to ensure that it can hire appropriately skilled workers when they are needed - a critical factor in Britain's future economic growth. An arbitrary cap on economic migrants would have consequences for businesses that need specialist skills at a specific time. We urge Ministers to exempt highly-skilled workers from any migration cap, so that British companies can hire the best possible staff to promote growth."

John Cridland, the CBI's deputy director-general, said: "The coalition is right to put deficit reduction and securing economic growth at the heart of its first Queen's Speech.

"The programme that has been set out is ambitious and far-reaching with a clear sense of renewal. Businesses recognise their responsibilities and look forward to playing their part."

On the tax and benefits system, Mr Cridland commented: "Businesses are greatly encouraged by the prospect of a five-year roadmap for reform of the corporation tax system. Certainty, clarity and simplification would be welcomed."

He went on to say: "We have been calling for an independent body to oversee the government's economic and fiscal forecasts for some time. The creation of the Office for Budget Responsibility will help inject additional credibility and transparency into the government's forecasts.

On proposed planning measures, Mr Cridland had this to say: "Business needs a planning system that is predictable, clear and can deliver decisions in a timely manner. The government has some innovative ideas to incentivise local authorities to accept development.

"However, as the UK needs a major renewal of its infrastructure over the next few years, the challenge will be to persuade local communities to accept major developments, such as new power plants and transport links."

He also had a warning over the possible impact on business rates of changes to local government financing: "It is important that the proposed review of local government finance does not lead to the relocalisation of business rates. Business rates are a significant cost for companies and as such should be standardised to provide clarity and certainty for financial planning."

Mr Cridland also said that the CBI supports "the idea of creating a single welfare-to-work programme where providers are given the freedom to tailor a package of personalised support to meet a client's unique needs rather than taking a one-size-fits-all approach".

Miles Templeman, the director general of the Institute of Directors, insisted that ministers stick to the implied commitment in the Conservative manifesto of a 4 to 1 ratio of spending cuts to tax rises.

He said: "We believe the UK has a problem of too much tax already and have argued throughout that the deficit should be tackled with the vast majority of the emphasis on public spending reductions. This is the best way of securing recovery.

"We welcome the commitment to a 'simpler' tax system and look forward to seeing the government deliver. An obvious simplification measure that could be implemented now is a lowering of the headline rate of corporation tax financed by the removal of some capital allowances."

But Mr Templeman expressed concerns over the government's plans on flexible working rights and measures to tackle pay gaps.

He concluded: "These are not areas where the state should be intervening and we wonder how new regulations would be squared with a commitment to introduce 'one in one out' regulatory budgets. However, we reserve judgment on these proposals until we see more detail and look forward to discussing all these points with ministers."