What has Osborne got up his sleeve?

The Argus: Chancellor George Osborne – Dominic Lipinski/PA Wire Chancellor George Osborne – Dominic Lipinski/PA Wire

Chancellor George Osborne will deliver his 2012 Autumn Statement today (December 5).

The statement, which is later than usual this year, provides an update on the Government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility.

Business leaders and politicians across the county are clear that Mr Osborne must set out measures to spur the economy in Sussex.

Tony Mernagh, the executive director at Brighton and Hove Economic Partnership, said the Chancellor must focus on three things – “growth in the economy, growth in the economy and growth in the economy”.

He said: “Everyone accepts that the Government has a big problem - £550bn pa income and £713bn pa outgoings leading to a 2012 deficit of about £160bn and total national debt over £1 trillion which is forecast to rise to £1.5 trillion in 2016 hence the need for austerity measures.

“The UK has to get the debt down but it won’t do it by austerity alone and it is becoming increasingly clear that we could take 20 years to reduce our debt and, as long as we have a realistic plan, it wouldn’t make any difference to our credit rating; we could still borrow money cheaply.

Borrow more

“I would like to see the Chancellor borrow more. Borrow more and spend it on large scale infrastructure projects that will generate employment and provide for our future needs when this is all over, which it will be one day despite the gloom.

"At the moment he is borrowing more in any event largely to service a growing benefit bill. Hence outgoings increase and income declines or, at best, remains stagnant. Only growth will solve that.”

Wendy Bell, at Sussex Enterprise, the county’s chamber of commerce, said George Osborne must include tough decisions to prioritise growth, without adverse effects on the Government’s deficit reduction programme.

She said: “We believe that resources need to be re-prioritised to support business growth, international commerce and the building of houses and infrastructure here at home.

“Our message to the Chancellor is clear. Business will lead our economic recovery, but needs targeted support and a confidence boost from government. Ministers must be bold and take some unpopular decisions but the interests of the nation must be put first so we can ensure a bright future for our children and grandchildren for years to come.”

Microfinance

Julia Chanteray, the president of Brighton and Hove chamber of commerce, said the city has a very high rate of business start-ups. She said they need sources of finance to survive.

She said: “We would encourage the Chancellor to make some changes which would make a real difference to businesses in the city. We’d like to see him bring in sources of microfinance for the businesses which need to raise £50,000 – £100,000.

“At the moment, it’s very difficult to access this level of finance, especially if you can’t offer a personal guarantee on your loan. We’d also like to see a cap on the level of interest being charged by the banks when they lend to businesses. Currently, banks in Brighton are charging 12% or 13 %, when base rate is at 0.5%.”

Nigel Lambe, the boss at WJ King Brewery in Foundry Lane, Horsham, said Mr Osborne must stop allowing major multinationals to avoid corporation tax in the UK.

He said: “Starbucks, Amazon and Google have taken advantage of international loopholes that are not available to local companies.

“Secondly, despite what they claim, high street banks are not lending to small businesses.

"Many businesses I speak to are missing opportunities to grow because of a lack of capital. If the Chancellor was to extend payment terms on tax receipts such as payroll tax and VAT, this would give a direct cash injection to the companies that contribute most to the overall economy.

Review duty

“The Chancellor needs to have a review of the beer duty escalator. As a small brewery, almost 46% of the money we collect from our customers goes straight back to the Treasury in taxes. This is preventing us from reinvesting in growing the business and recruiting more staff.”

The big issue is a lack of clarity on how to get support for business according to Paul Yates Smith, the manager at Brighton Business Club.

He said: “Anyone looking to get help or support will struggle unless they already have knowledge of individual organisations or contacts. There’s no clear definition of how small businesses can get help.

“More needs to be done to support small businesses now that the majority of businesses are SMEs. Large businesses already have the infrastructure and money to take on challenges.

“Unless you know where the South East Business Portal is, you won’t know where to get help. The system is not clear. We’ve had the tax breaks and apprenticeships schemes but now we need easy to understand guidelines on where to get support.”

Faster broadband

Phil Jones, the managing director at Wired Sussex, said that the success of the city’s digital sector relies on broadband provision.

He said: “We will be bitterly disappointed if the Government does not announce the success of Brighton and Hove’s ultrafast broadband bid. Over the past five years, the digital sector here has delivered stratospheric growth in a challenging business environment.

“It has driven high value employment, cemented the city’s reputation for creativity and innovation and it is now a really significant part of Brighton’s economy. It has done all that with virtually no Government support. We now need decent infrastructure to continue that success and it starts with broadband. We’ve delivered and I would hope and expect that the Government will do the same.”

Jason Kitcat, the leader of Brighton and Hove City Council, said: “I would like the Chancellor to invest more money in the Green industries across the county and in Brighton and Hove. Most of the jobs at the moment are in the environmental sector and it’s important the Government keep pushing on that front.

Super-rich tax

“Secondly it would be welcomed if tax loopholes were sorted and perhaps new ways of generating money could be implemented, such as targeting the 1% super-rich. I’d like to see local councils being allowed to adopt a stance of true localism by making our own decisions to support the businesses in our towns and cities.”

But Ian Lucas, boss at Red 7, a travel and events company in Kensington Street, Brighton, said: “Sussex businesses will not benefit from the forthcoming budget announcements. It is up to us as business leaders to ignore politics, forget about the world economic state and just get on with what we do best – which will have more positive influence than any chancellor.

“Mr Osborne has attempted to do the right things; increase revenues and cut expenditure. The problem has been with implementation and the fact he is not actually in control of economics or businesses.

“The other issue Mr Osborne, and any other chancellor, is faced with is he has to make political decisions as well as budgetary decisions. That presents additional nullifying factors yet he will still make them in the hope they will work. But they will not to any noticeable degree.

“Mr Osborne, like everybody else in worldwide politics, is a spectator of the economic scene. He has long since made his big decisions. The economy will either recover in 2013 and 2014 or it will not. His influence on that outcome is now essentially zero.

New customers

“He will make his decisions in the hope that his measures will be politically triumphant. It is after all his priority. But let’s remember, it's a confidence game. If business leaders are confident, they place orders; if consumers are confident, they will buy and spend.

“In my view, Sussex businesses should focus their energy on their existing customers plus attracting new customers and put aside world issues that only serve to distract.”

Phil Graves, a director at commercial property agents Graves Jenkins in Marlborough Place, Brighton, said the property sector in particular has been starved of debt and the reliable borrowers are being punished for the aggressive inappropriate lending that took place before the banking crash.

He said: “There is no doubt that continued appropriate austerity measures are a good thing as the UK looks to be in better shape than most other European countries. However, it is critical to future business growth that the lending criteria for small to medium size business has to change and for finance to be made available to support and grow such business.

“The idea of a ‘business bank’ could well work.”

Business rates

Businessman Mike Holland said the Chancellor can help Sussex firms in many ways.

He said: “First there are many Sussex businesses that are on the verge of folding simply because they cannot keep up with the overheads.

"The Chancellor should in my opinion be advising local authorities that in certain circumstances, providing they can meet certain criteria, any company bumping along the bottom should be eligible for rate reductions and in some cases exemptions.

"It is in nobody’s interests that businesses continue to close with redundant employees then joining the dole queue.

“These same struggling companies should be able to apply for renewable six month grants to avoid proven unavoidable redundancies. If those grants were, for instance, half the cost of keeping an unemployed person in benefits then everyone is a winner.

“We must also be prepared to take much of the bureaucratic nonsense involved in employing personnel out of the equation. It needs to be much simpler to hire and fire whether the nimbies like it or not.

"Currently it is not possible to get rid of someone simply on the basis that they are useless. Unless we stop this silliness there is little point in anyone employing more than the absolute minimum of staff.”

What do you think? Write to john.keenan@theargus.co.uk.

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