STIMULATING economic growth must be the focus of the Chancellor’s Budget to be announced later this month, say businesses in our region.

Companies are expecting austerity measures to continue, but are hoping for incentives to be announced to ease the burden on businesses and get the economy moving.

The Federation of Small Businesses (FSB), which will debate the budget with cross-party speakers, including Vince Cable, Mark Prisk and Ed Balls at its conference in Scarborough later this month, said it welcomed the Government’s National Loan Guarantee scheme of up to £20 billion, which it said should help to decrease the cost of finance for small businesses.

It also welcomed the deferral of a 3p rise in fuel duty from January to August but called for a long-term solution to take hold of the volatile fuel prices.

Barry Dodd, chairman of the York, North Yorkshire and East Riding Enterprise Partnership, and owner of manufacturing company GSM Group, said the Government needed to prepare a budget to stimulate growth.

He said he hoped for a selective reduction in VAT, on rebuilding and construction projects and a fuel duty rebate for people in rural areas.

He said: “They do it in Scotland on how many miles you are from the nearest petrol station. It would really help rural communities.

He said: “As a manufacturer, I think if they were to look at some targeted capital allowances for plant that would help to encourage manufacturers to invest in new plant.

“At the moment, everybody is sitting on their hands. It would dramatically change the growth prospects in the UK.”

Adrian Widdowson, associate tax director at Garbutt & Elliott, said the Budget was expected to include important announcements for the science and innovation sector.

He said: “One of these is the Patent Box, which will allow companies that profit from patented products to have a lower tax rate. The standard company tax rate will be 24 per cent from April 1, 2013, but for the part of a company’s profits that is generated from patents a lower ten per cent rate will apply.

“In addition, the tax relief for research and development (R&D) is being improved.

“From April 1, for every £1 that a small or medium-sized company spends on R&D, it will be able to reduce its taxable profits by £2.25.

“It can cash in a loss that results from R&D without the refund being capped by the PAYE and NI that it has paid in the year, and the requirement to spend at least £10,000 a year on R&D is removed.”

Meanwhile, Enterprise Rockers, the campaign for micro-businesses employing up to nine people, has requested specific support not for SMEs, which includes quite substantial corporate businesses, but for start-ups up to 18 months old.

Tina Boden, co-founder of the Scarborough-based campaign group, said while micro-businesses were not excluded from applying for funding through government schemes, their lack of resources excluded them.

She said: “The majority of any Government funding for business support actually does end up going to the larger companies, which have got the capability of developing something that fits around Government strategy.

“A lot of people who have been made redundant and who have worked for a big organisation for a lot of years are now seeing self-employment as the only option.

“They don’t necessarily have the skills and the knowledge to look at how to develop a business plan, but have the passion and drive to make the business work.”

Paul Widdicombe, divisional director of Brewin Dolphin in York, said there were rumours that higher rate tax relief on pension contributions could face the chop.

He said reducing relief from 40 per cent to 20 per cent would make higher rate taxpayers £20 worse off for every £100 invested into a pension, and would kill pension savings.

He said: “Why would a higher-rate tax payer invest for only 20 per cent relief and then face paying higher-rate tax on the pension scheme.”