The general election campaign began to gather pace last week, after the Chancellor made his final Budget announcement before the country goes to the polls.
In one of the most politically charged Budgets in recent memory, Alistair Darling laid out a package of measures intended to safeguard the economic recovery – while also taking every possible opportunity to explain why the decisions made by the government were the right ones.
The Budget has drawn a broadly positive response, even from traditional Tory strongholds. The Telegraph, despite deriding the plans as a tax raid on the middle class (which they emphatically are not), praised many of the proposals in the business pages. At the same time many business groups have reacted favourably, particularly to the plans for a one-year cut in business rates.
The Chancellor was in a remarkably difficult position, in which he needed to be seen to take tough action to reduce the deficit while also making the Labour Party attractive to swing voters. It looks as though he may have pulled it off.
What the Budget means for you
For a Budget so comparatively thin on actual economic announcements, there was actually quite a lot for small business owners to cheer about.
For many firms the most interesting aspect will be the one-year cut in business rates. This will ease the financial burden on many businesses which have their own premises, and looks set to take almost 400,000 firms out of the rating schedule altogether.
Entrepreneurs looking to invest in new or growing businesses will be pleased with the doubling of the annual investment allowance, and those looking to sell equity will benefit from the doubling of entrepreneurs’ relief.
Small firms that have had difficulty securing loans may be heartened to hear of the establishment of a new credit adjudication service, which will provide businesses with a route of appeal if they are turned down. At the same time, new business lending targets for RBS and Lloyds could mean firms find it easier to get credit.
On the downside, buy-to-let investors may be hit by the stamp duty holiday announced for first-time buyers purchasing houses with a value up to £250,000. This may lead many first-time buyers out of the rental market and onto the property ladder.
Finally, firms employing low-paid workers should also note that the National Minimum Wage will be increased by 13 pence to £5.93 for workers over the age of 21. The rise, which comes into effect from October, would actually amount to a post-inflation pay cut if CPI remains around 3 per cent.
What has the impact been on the election race?
The impact of the Budget announcement on Labour’s election was tangible and instant. A YouGov poll released to following morning saw the Tories’ lead reduced to just 2 points, suggesting that the voting public had responded favourably.
The whims of business groups have a significant impact on the electability of any party, particularly in a time of economic uncertainty. As a result, this Budget was particularly business oriented. There is some concern that other members of the public may see little in it for them; indeed, the most immediately notable elements for the average person on the street are increased duties on fuel, tobacco and alcohol.
It is also interesting to note the Conservative response to the Budget. Rather than let his shadow chancellor respond in the Commons, as is usual, David Cameron chose to make the speech himself. It contained very little in the way of actual economic rebuttal; indeed, it was more political than the Budget announcement itself. The general feeling was that Mr Cameron performed well, but the public seem not to have responded favourably – as the opinion polls have shown.
In other news …
The Conservative Party has retained the services of advertising giant M&C Saatchi to help develop its election campaign. The Saatchi brothers were responsible for the infamous ‘demon eyes’ poster of Tony Blair that became a focus of the Tories’ 1997 campaign – a campaign that obviously did not turn out too successfully. Given the abrasive nature of previous Saatchi campaigns, and David Cameron’s increasingly combative tone in Parliament, we could be in for an interesting (and entertaining) few weeks.
The date of the election is still yet to be announced, although it must happen on or before 3 June. In the meantime, Simply Business will keep you updated with the latest campaign news, and let you know what it means for your firm.