Pre-Budget report: Business panel

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FT.com has assembled a panel of business people from around the country to give their views on the pre-Budget report. We will be following our panel after the PBR to get their reaction to the measures announced.

Use the links to move up and down the page

  • The retailer
  • The entrepreneur
  • The manufacturer
  • The small businessman
  • The oil executive
  • The stockbroker
  • The technology executive
  • The venture capitalist

The retailer
Gary Grant, managing director of The Entertainer, the UK’s largest independent toy retailer

From the few things I have heard announced I would say this is a positive pre-Budget report from an Entertainer point of view, and I would hope that there are other things to encourage customers to fill their houses with children’s toys.

Nothing was said that has concerned me, such as extra costs or increases in National Insurance contributions.

From the perspective of a retailer that runs his own distribution operation, a freeze on fuel duty is a welcome relief because we feel costs have gone up significantly in the last 6 to 12 months.

The increase in first-year capital allowances on plant and machinery is a really positive thing for us, especially over the last 18 months when the going has got tough. When we open up new stores, we include the cost in capital expenditure. We have tended to put off some store refurbishments and this will encourage us to raise our capital expenditure.

I would give the chancellor seven out of 10 for this pre-Budget report.

What Gary Grant had wanted to see in the pre-Budget report:

I would like Gordon Brown to introduce measures to encourage shoppers back to the high street and cut the regulatory burden. It’s not the chancellor’s fault. But when the going gets tough, the retailer gets hit.

Stamp duty on commercial leases is going to cost us almost £40,000 for a new city centre site we’re looking to move into in 18 months time. This is an added tax burden that’s only been introduced in the last 24 months. The stamp duty on the VAT charged on the rent seems quite inequitable - its double taxation.

I would like the chancellor to end some of these hidden taxes and provide more help to cope with new regulations, such as those on waste disposal.

Since the waste regulations came in, what started off as a very small tax on waste has now become a huge burden on commerce. My advice to the chancellor is: “keep an eye on inflation, and the costs you burden us with should be in line”.
Jonathan Moules

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The entrepreneur
Martin Dewey, managing director of Square Pie, an upmarket pie and mash restaurant chain

I don’t see much in the pre-Budget report that is of benefit to our business. We looked into the R&D tax credit scheme, but found that the government definitions were too tight. We have created processes that simply don’t come into the government’s definition of R&D.

We get no benefit from VAT payments at the moment, so I don’t see how this will help us.

Being in a rather specialist business in food manufacturing, it didn’t help us much. The only direct help for SMEs seems to be for the hi-tech sector.

I think risk-based regulation would be great. It is a nice sentiment but we would like to see things actually change.

I am not too confident about the promise of greater support on skills. We have tried to use government-assisted skills schemes before and the bureaucracy involved was unbelievable. In the end we stopped using them.

The pre-Budget report wasn’t much use for us at all. I would give the Chancellor five out of 10.

What Martin Dewey’s had wanted to see in the pre-Budget report:

I’d like to see more of the government expenditure on supporting enterprise going to the enterprises themselves, rather than to the administration of grants. The government spends so much money making sure that grants don’t go to the wrong people that in effect very little money goes to anybody at all, in our experience.

I believe the chancellor should expand some of the existing schemes to support growing businesses but not back Lord Turner’s proposals for compulsory company pension contributions.

I would like Gordon Brown to extend the scope of the Small Firms Loan Guarantee Scheme, which has helped Square Pie acquire debt. I also think the tax break offered under the Enterprise Investment Scheme should be doubled to match the 40 per cent relief offered to Venture Capital Trusts to level the playing field between private angel investment and institutional investors.
Jonathan Moules

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The manufacturer
Martin Keighley, managing director (Europe) at Brunner Mond, Europe’s second-largest manufacturer of soda ash

It looks like there will be a local planning gain supplement but we are pleased that at least it is going to consultation so we can feed in our point of view. We have a commitment to invest planning gains back in our business - that helps create vibrant, wealth-generating communities.

Manufacturing is conspicuous by its absence - there is no mention of support in terms of taxation or business benefits, which is slightly disappointing at a time when we are under so much pressure.

The view that phase one of the European emissions trading scheme is done and dusted is disappointing. We still consider that there are major anomalies connected with the scheme.

And it is a shame that there is not more on energy, which is a fundamental part of running the economy.

This is a lot of missed opportunities - nothing that lights my fire. In terms of our business I would but it no higher than four out of 10.

What Martin Keighley had wanted to see in the pre-Budget report:

Energy costs and environmental taxes are my main concern. Customers in the glass industry are really hurting because of high energy costs and could start to switch production overseas or reduce output. A severe winter could mean a big drop-off in orders early next year.

We support cutting carbon dioxide emissions and have invested in technology to do so. But we want signs from the chancellor of a more commensense approach to implementing the European emissions trading system.

The problem is how principles are turned into practice. We are being penalised more than competitors whose governments have interpreted the legislation in a different way. Environmental taxation is another thing we are watching. We have already seen a number of “stealth taxes” – the aggregates tax, landfill tax, climate change levy.

We also have an interest in what Mr Brown decides on planning gains. For eight years we’ve wanted to sell a redundant brownfield site for housing, but the proposed development has still not been approved. We hope that proceeds from any sale are not going to disappear into the Treasury rather than being reinvested in our business.
James Wilson

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The small businessman
Don Reeves, founder of WSDE Ltd waste handling systems and industrial shredders

The measures to raise VAT thresholds will help people coming into business to a degree but they are too late for me: if they had come earlier I would not have had to invest in hardware, software and training.

The £10,000 allowance for corporation tax has gone, which is pathetic, and I don’t think the extension of first-year capital allowances will help much.

Economic growth is going to be much lower and the chancellor is not going to have the money he wants. That makes me think he is going to have to get tax from somewhere to cover the shortfall. It is a storm gathering for next year’s Budget.

This has done nothing for business. I was looking for a big positive boost to manufacturing and I give it no more than three out of 10.

What Don Reeves had wanted to see in the pre-Budget report

The company I founded three years ago now employs seven people in Stretford, Manchester, but our growth has brought problems I would like the chancellor to address.

We have just passed the turnover threshold where we can no longer use VAT cash accounting, so we have had to change our systems and invest in new software. We feel like unpaid tax collectors and it creates a lot of stress at a time when we’re trying to build up the business. If they gave us back a 1 per cent rebate of what we collect, that would be a start.

I would also like to see a much higher threshold before corporation tax has to be paid and central government needs to increase funding to local councils, which view companies as an “easy touch” for higher business rates when they are short of revenue.
James Wilson

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The oil executive
Mike Wagstaff, chief executive of Venture Production

I’m shocked but not surprised that he has put up taxes on the industry, and raising the supplementary North Sea charge from 10 to 20 per cent is what most people expected – it’s the simplest thing to do.

But I’m disappointed that he did not tie the increase to the level of the oil price, so that it might come down next year.

I’m also disappointed that he did not do more to encourage further development: extending the exploration expenditure supplement will have little impact, because it is a small amount, and in any case we are not involved in exploration.

Unless your happen to be involved in biofuels, there was not a lot to get enthusiastic about.

But he does not have a lot of room for manoueuvre at this stage in the cycle. For a man with his back to the wall, I’d give the PBR seven out of 10 for business. But I fear things are going to get worse before they get better.

What Mike Wagstaff had wanted to see in the pre-Budget report:

I share the concerns of the entire North Sea oil and gas industry that the chancellor will find it difficult to resist increasing taxation, given the current heady price of oil.

The UK Offshore Operators’ Association recently warned investment has only just got back to the levels it had reached before the Treasury’s last tax increase in 2002 - which led to a two-year slump in investment - and said any further increases could damage that recovery.

A tax increase could scupper much of the good work done in recent years by the Department of Trade and Industry to prolong the life of the North Sea fields, but if oil stays at anything like $55 a barrel, we’ll see tax rates going up around the globe. Russia, Venezuela and the Congo have already lifted their rates.

Uncertainty is in itself a cost. My company’s share price lost 5 per cent in recent days, just on speculation of a tax hike. If the chancellor did decide to raise taxation, he should make it clear that was the last increase for the foreseeable future. I also hope any tax increase would make a distinction between companies that were still investing in the North Sea and those that were just harvesting.
Andrew Bolger

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The stockbroker
John Hall, chief executive of Brewin Dolphin, the investment manager and stockbroker
It doesn’t give an awful lot and it looks like there are more stealth taxes around the edges, and growth forecasts are cut.

I can’t see anything that is going to encourage new savers, or pensioners or capital gains tax payers, which is clearly one of the things we were interested in.

It looks like we are going to see tax increases rather than tax reductions, and no measures to encourage savings, which is disappointing when we are facing a pensions crisis. In light of the Turner report pensions look quite crucial, but maybe they’re going to look at it further after a debate on Turner.

We were looking out for reform of capital gains tax, and there’s clearly some sensible measures you could take here that have been taken in other countries, for example Ireland, to increase revenue and reduce the tax and administration burden on private individuals. But there’s nothing here, which is disappointing. I would give it five out of 10.

What John Hall wanted to see in the pre-Budget report:

My recommendation to Gordon Brown, and top of my wishlist, would be to introduce a flat and reduced rate of capital gains tax. It is such a complex tax and with a top rate of 40 per cent people waste half their time working out how to mitigate it.

In Ireland, they have cut CGT to a flat rate of 20 per cent. The responsibility is put on individuals to self assess and people are paying it. They are now collecting vastly more tax.

It is straight-forward, benefits everyone and does not affect proper investment decisions.

Gordon Brown will be remembered for giving the Bank of England responsibility for setting interest rates. But he also taxed pensions at the time.

If he reversed that decision and reinstated the tax credit on dividend income in pensions he would go down in history as a chancellor who recognised that what he introduced had an adverse, unintended effect.

The government should not be seen to be penalising pensions.
Kate Mackenzie and Helen Thomas

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The technology executive
Mark McCusker, chief executive of Texthelp Systems, an e-learning software manufacturer

I hope the chancellor will do something for technology start ups. Our company makes a product that helps people with literacy difficulties use the web. It has sales of about £4m and, unlike many small software companies, Texthelp makes a profit.

My view is that tax breaks are not always the best mechanism to encourage start ups. Even if a company is making money, the tax break only kicks in at the end of the tax year. On the other hand, for loss makers the relief has no immediate impact. Such companies experience cash burn when they are in start up mode.

Anything to do with tax breaks is good news. But many companies would like the help up front, not 12 months down the line, which is what happens with a tax relief. I recognise that European Union rules make it difficult for the chancellor to give grants to fledgling technology companies, but Mr Brown could instead look at national insurance holidays.
John Murray-Brown

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The venture capitalist
Colin Walsh, chief executive of Crescent Capital

I suppose no news is good news.

We had been hoping to see the venture capital trusts extended. I could see no mention in the Chancellor's speech.

If that means they are here to stay then that is a good thing. But I would like more clarity.

What Colin Walsh wanted from the pre-Budget report:

I would like the chancellor to retain venture capital trusts, which give investors in venture capital companies capital gains tax deferrals and income tax relief.

The VCT was introduced seven years ago, with the rules changed again in 2002. Investors in new shares in a VCT can defer any tax that might otherwise be incurred on gains made up to a maximum of 40 per cent.

In addition, the investment attracts income tax relief at 20 per cent. Any capital gain can be distributed by the trust as tax free dividends. There is currently a minimum holding period of 3 years. There is also a limited secondary market in VCTs.

This has been an important prop for the small technology companies and venture capital companies like ours. For many investors its a tax efficient way to invest. We’d like to see it extended.
John Murray-Brown

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