Time to take our medicine

L eading financial figures in northern Lincolnshire have got to grips with what has been deemed a good Budget for business.

First off the blocks to give their take on the announcements were the AP Robinson & Co team, with a Budget breakfast in Grimsby the morning after Chancellor George Osborne gave his maiden presentation.

Then, earlier this month, came a day of presentations by Forrester Boyd, in Grimsby, Scunthorpe and Louth, as the outcome for firms was determined from the detail that emerged.

Kate Brown, an associate with AP Robinson & Co, said: "It was an interesting Budget to see what came out of it from the Conservative and Liberal Democrat manifestos.

"Undoubtedly there were some tough decisions, with the outgoing Labour Government having left a note saying 'good luck, there's no money'."

The headline grabber was seen as the raise in VAT from 17.5 to 20 per cent from January, which comes on the back of a recent reduction to 15 per cent to ease people back to the high street.

Mrs Brown said: "When it comes to it, it is important to administer the changes properly, and what matters is the date of supply, not the date of invoice. It would be very sensible to make sure invoices are completely up to date before the end of the year. HM Revenue And Customs will be very live to the fact it could be manipulated."

Having seen his team go through various changes at the Humber Royal Hotel, including the National Insurance break for new businesses, which Sarah Skelton said was an interesting element and worthwhile for firms setting up as it carries the possibility of £100,000 of wages being able to be paid before NI clicks in, managing partner Andrew Robinson said: "George Osborne said this was a tough but fair Budget. There doesn't seem to be an awful lot of pain here. Corporation tax is favourable, capital gains tax wasn't as punitive as expected, with a little bit in National Insurance and VAT, which is going to hit. A lot of things for business are quite reasonable."

With a split between taxes and cuts in public spending at four to one, he said it was the latter part that would be where the pain will hit as a five-year plan to reduce the deficit from £149 billion to £37 billion begins.

"There is going to be welfare and benefit reform, we know about that, and that is going to take money out of the economy," Mr Robinson said.

"People are not going to have significant sums to spend and that will have an effect on business. So too Government spending, with departmental cuts. Businesses trading with government organisations, local councils, etc, that are not ring-fenced, may have problems with cuts in spending, either cutting contracts or being put under pressure to renegotiate. It is something that needs to be considered."

Stating that the Government believes growth will soak up the spending cuts and taxes, Mr Robinson added: "Some commentators say we are going to have a double-dip recession. I don't know if that is right. My feeling is we simply cannot continue to spend money we don't have. We have to address these problems and I think this budget does do that.

"Good businesses will continue to look at costs, capital investments and the way they are run, and this budget will not change that.

"We have got lots of clients in the area and outside the area doing well in spite of the economy, in spite of the recession and in spite of the government."

Speaking to Scunthorpe business owners at the Wortley House Hotel, Peter Fearn, partner with Forrester Boyd, said: "George Osborne's first Budget was the unavoidable deficit reduction plan, and the reason is that for 2010/2011 the Government's receipts are £548 billion, with estimated spending of £697 billion. It is not sustainable. If that was how we ran our businesses, they wouldn't last very long."

Highlighting the VAT increase, he said: "It has been forced upon the coalition. It is the elephant in the room, but it will bring £13.5 billion a year into the Exchequer."

Of the drop in corporation tax from 28 to 27 per cent, and then by another percentage point a year until 2014, Mr Fearn said: "This is about trying to get multi-nationals to come back on shore, trying to make the UK more competitive."

Back in Grimsby, referring to the corporation tax cuts, Sarah Bainbridge of AP Robinson said: "The reduction is a signal the economy is open for business and we hope it will encourage start-up businesses and growth."