For Ian Malcolm, managing director of ElringKlinger (GB), the optimism of the Autumn Statement was tempered by a sense that the foundations of recovery were less solid than George Osborne would have liked.
The head of the Teesside-based automotive parts manufacturer said: “In terms of growth . . . there’s a feeling that things are getting better.
“But I have a view that this is a PPI-led recovery,” he added, referring to the money awarded to people mis-sold payment protection insurance. “An awful lot of people are getting cheques in their hands – that’s free money to them. It is unsustainable.”
Mr Malcolm gave a guarded welcome to moves to help rebalance the economy. “The significant thing for us was the commitment, if it can be called commitment, to manufacturing. It’s still on the agenda.”
He was also pleased with the emphasis placed on jobs and apprenticeships. “There was a positive sign for getting young people into work – the scrapping of employers’ national insurance for under 21s will start to make a difference.”
As the boss of a German-owned company, Mr Malcolm was also in a strong position to weigh up Mr Osborne’s claim that the UK was growing faster than any other major economy. “There’s a feeling in Germany that we are. We’re in a better place because we’re not part of the euro. Hindsight is a wonderful thing.”
Figures confirming that the economy is improving were the highlight of the statement for Mike Danby, chief executive of fast-growing distribution business ASC.
The Bradford-based company, which turns over £50m annually, has just invested £5m in a new fleet of trucks as it wins more contracts from retailers such as Go Outdoors, Matalan, Makro and George at Asda.
ASC has a partnership with Sinotrans, a logistics company in China, where many of its customers’ goods are made.
“The fuel duty freeze is welcome but I think it was more political than economic,” he said. “The chancellor has got a plan and he is sticking to the plan and it looks to me like the plan is working.”
A fan of austerity, Mr Danby said the “political” decision to back offshore wind power generation, rather than the cheaper onshore, “would cost us all money in the long run”.
Mr Danby, whose workforce has doubled in the past three years to 700, said the national insurance relief on employees under 21 was worth just £500 a year and would not tip the balance in their favour. “The problem with young people is not the cost. They are not trained well enough.”
Moves to allow employers to have control over what apprentices learn would persuade him to take more on, if it did not prove too bureaucratic. He said Ed Balls’ ill-tempered response confirmed that he did not want Labour in charge.
Taavet Hinrikus, co-founder of TransferWise, a peer-to-peer cross-border money transfer company, believed the chancellor’s measures to limit business rates would encourage more start-up ventures.
“I’m pleased to hear that business rates have been capped,” said Mr Hinrikus, who has been involved in technology start-ups since 1997, having become the first employee of web telephony business Skype in his native Estonia.
Now based in London’s tech start-up community around Shoreditch, he suggested that the cap would make an immediate difference to small companies. “It is valuable relief for businesses and has the added benefit of encouraging start-ups and business ventures,” he said. “A lot of people were hoping for actual reductions in business rates, which would have helped enterprises even further.”
Although his business has already attracted backers including Valar Ventures, a US-based fund set up by PayPal co-founder Peter Thiel, Mr Hinrikus said he had hoped to see the chancellor announce more incentives for people to invest in peer-to-peer lending platforms – to give London’s financial technology sector more credibility.
He added that the decision to make expats pay capital gains tax when selling British property might also adversely affect perceptions of the UK as a venue for overseas investors.
Rob Charlton, chief executive of Space group, an architecture and technology business in Newcastle upon Tyne, felt the chancellor missed a chance to help the regions.
“It was a fairly balanced response, it’s good to hear we are making a recovery. There wasn’t a great deal he could do. He couldn’t give money away,” he said.
“The big issue was it was one size fits all. The south and London are booming. I was looking for a two-speed solution to help the north, to acknowledge recovery isn’t as fast in the north as in the south.”
Mr Charlton is well placed to see the national divide. His company has offices in several northern cities and a division, BIM Technologies, in London.
The group employs 100 people and has an annual turnover of £6m. Revenue is forecast to rise but, while for BIM that figure is 30 per cent, the architectural business focused on the north is expecting growth of only 10 per cent.
“Recovery in the south is probably hiding challenges in the north. London is really hot but the north isn’t recovering at the same pace,” Mr Charlton said.
“How could you get a bit more support to the regions? Tax breaks? Enterprise zones? If you are investing, you are going to invest in London.
“It needed more about quality jobs and investment in the north. This was one size fits all. There was nothing that’s going to make a massive difference.”
Tim Rix, managing director of Hull-based R Rix & Sons, was disappointed with George Osborne’s decision to cap business rates rises, insisting they should have been cut instead to reflect reduced property values.
Commercial property prices across the north of England have fallen up to 50 per cent since 2008, meaning rates are high, compared with rents.
“It [the cap] is fantastic for the southeast but not here,” Mr Rix said. His family business is a mini-conglomerate with activities ranging from port operations, warehousing and car sales through to fuel oil distribution, manufacturing and property development.
The company, which had a turnover of £494m in 2012, has begun to demolish properties it owns but no longer needs rather than relet them, because of the tax on empty premises.
Mr Rix said: “What concerns me is that, with the economy growing, the new businesses that start will have nowhere to go because property is being knocked down because of business rates.”
He welcomed the tax relief on shale gas. “We support anything that can bring energy costs down. We have the highest fuel taxes in Europe. It is critical to have energy costs as low as possible as we have to compete with the rest of world.”
Mr Rix, who employs 420 people, said the company would have to adapt to the higher pensionable age as many of its jobs were physically demanding.
“You might just have people pushed from a pension to unemployment benefit,” he warned.
In the Shropshire town on Bridgnorth, architect Vic Johnson commended the chancellor for introducing measures to help small businesses and the high street.
“I like the changes in national insurance which means companies like ours will be able to take on more young people,” he said. “The change in business rates relief is fantastic. I estimate it could save me £3,000-£4,000.”
As someone with experience of the building industry, he was less happy with initiatives such as the new £1bn loan scheme – which will see big housebuilders benefit from an injection of government cash to speed up construction on stalled sites.
“It is these businesses that have already benefited from the government’s planning changes. Surely it’s better to have fewer houses in more sites, rather than a lot of large housing developments,” he said.
Yet he was happy the decision to cap rises in rail fares. “As a train user – I have a number of jobs in London – holding fares flat in real terms will help me. Reductions in petrol costs through scrapping the fuel duty escalator is long overdue.”
On the subject of the rising retirement age, the 49-year-old was concerned with the growing divide between the public and private sectors. “I am a long way from retirement. But my fear is the government is creating two tiers of pensioners – those who retire on public sector pensions and the rest of us who are now expected to work until we’re 70 in the private sector. My wife’s a nurse and under her employment contract she can retire at 50.”
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