REGIONAL business chiefs gave a mixed reaction to Gordon Brown's pre-Budget report after the chancellor admitted the economy had failed to meet his expectations.
But Ed Balls, a close ally of the chancellor and now MP for Normanton, said the report contained good news for people in Wakefield.
Mr Brown admitted on Monday that the economy was having a "tough year", revealing a revised growth estimate of 1.75 p
er cent for 2005 – half the 3.5 per cent figure he predicted in the Budget in March.
But he claimed the economy was surviving well under difficult conditions including high oil prices and slower house price rises.
In his pre-Budget report speech, Mr Brown told MPs employment was up and inflation remained low. He predicted growth of between two and 2.5 per cent next year and 2.75 to 3.25 per cent in 2007.
Other highlights of the report included: a shared equity scheme for first time buyers; a fuel tax freeze; an extension of the current £200 winter fuel payment for pensioners; and councils to get £500,000 to fund young people's activities.
Penny Hemming, director of the CBI for Yorkshire and the Humber, criticised Mr Brown's failure to cut back spending. She said: "We were more than disappointed that there has been no attempt to scale down public sector spending.
"Businesses in our region are under increasing pressure because of issues like rising energy costs and competition and what we have in this report is borrowing continuing to increase on the back of positive assumptions about growth that at the moment is by no means certain."
Key proposals from the pre-Budget report that will affect businesses include the extension of research and development (R and D) tax credits and the widening of VAT payment flexibility for small businesses. First year capital allowances for small businesses have been increased to 50 per cent in the year from April 2006.
The Mid-Yorkshire Chamber of Commerce and Industry (MYCCI) welcomed the measure.
Ian Patterson, of Hanson's Tax Consultants on behalf of MYCCI, said: "Small business owners may wish to delay purchasing plant and machinery until after March 2006 in order to get the extra tax relief."
He added: "While the pre-Budget report included some welcome changes the overall tax and regulatory burden for businesses still continues to increase."
Gill Lang, secretary of the Wakefield district branch of the Federation of Small Businesses, welcomed steps to simplify things for small businesses and the increase in capital allowances.
She added: "We are pleased that all small businesses, irrespective of legal status, will now qualify for a more generous capital allowance regime. It was interesting to note that the chancellor admitted this has been a tough year and acknowledged that new jobs were coming primarily from small businesses. Given this, we would have wanted a more significant lifting of the burden in the administration of the staff payroll."
She said the more flexible VAT payment schemes were a step in the right direction, but more needed to be done to ease the administrative burden. "We believe more should have been said to emphasise the government's programme on cutting back red tape," she added.
Ed Balls said despite the challenges of the year, the economy remained in a stable position.
He added: "Most people see that their mortgage rates are staying low, employment remains high and the economy is better managed.
"They don't want a return to the ups and downs of the past."
Mr Balls said measures to help pensioners, young people and first-time buyers would benefit thousands of Wakefield residents.
