The business reaction to the new government

Charlie Mullins, Managing Director of Pimlico Plumbers
“I’m feeling like a dark cloud of gloom has been lifted from UK PLC. At long last we have the Prime Minister we voted for – we had an election, admittedly things didn’t exactly go 100% to plan, but I am happy that we now have the right result for business.

“This is already evident by the fact that the increase in the employers’ contribution to National Insurance has been abolished as part of the coalition deal – something I, and many other business people backed the Conservative on very strongly.

“And in making this welcome announcement immediately our new government are showing that not only are they prepared to take hard, strategic, long term decisions for the greater good, but they understand on day one the importance of being decisive, taking a stand, and signalling to industry that they mean business.

“It will be up to history to judge whether ultimately this coalition is a good idea, but from where I sit we do now have a stable platform to base our recovery on.

“Already, my first thoughts were about my company and our expansion plans for Pimlico Plumbers, not, as it’s been lately, thoughts of what on earth will happen if Gordon Brown somehow managed to manoeuvre himself back into Number 10.

“I believe, as I always have, that David Cameron is the man to take the UK out of recession, deal with the deficit, and get things back into the black. And I think his actions over recent days since the election have shown he is the cool head we need at this time.

“Now that we have the details of the government in front of us it is clear that, while Mandelson, Campbell, Balls and Brown were trying to defy mathematics and cynically steal power for their own selfish reasons, which is something that put the wind up a lot of people, David Cameron was calmly working out the fine details of an agreement that can give us the stable future we need.

“It’s taken longer than expected, but at last we are all drinking out of the same tea pot – this is a government we can work with!”

David Whiscombe, a partner at BKL Tax in London and a member of the Group’s tax panel

Any uncertainty over tax needed to be ended as soon as possible, while he also called for the new Conservative-Lib Dem alliance to protect the interests of entrepreneurs in any changes that take place.

He said: “It is now clear that the Lib Dems’ ‘mansion tax’ plan will be dropped, which is obviously a good thing and I assume the hare-brained idea to levy VAT on new homes will also go. The dropping of the one per cent National Insurance rise is also good news for SMEs, while it seems the commitment to a £1million Inheritance Tax nil rate band will not come in during this parliament.

“It seems to be more or less established that the rate of CGT will increase substantially, perhaps to be at the same rate as income tax, which will require a fundamental re-think of much tax planning that has been undertaken in recent years.

“One hopes that the special position of wealth-creating entrepreneurs will continue to be recognized as it has in the past been recognized through, successively, retirement relief, taper relief and Entrepreneurs’ Relief. It would be very much welcomed by the owner-managed business community if there could be early confirmation that there is no intention to make any substantial changes to entrepreneurs’ relief and in particular that the increase in the lifetime limit to £2m introduced in the Finance Act 2010 will not be reversed in the lifetime of this parliament.”

He added: “What will also be interesting will be to see the extent to which the Tories’ commitment to support for the family is watered down as a result of the compromises inherent in coalition. Given the ludicrous extent to which the current tax system penalizes one-earner couples, one had hoped that a Tory government would have gone at least some way to remedying this but now I am not so sure. Any failure to do so would be a grave disappointment.”

Charles Purdy, Director, Smart Currency Exchange
” So we have a new government in the UK. An interesting set up and certainly a bold move by David Cameron to move things forward. It certainly must be a dream come true for many of the liberals who probably thought they would never have any ministerial positions ever.

There has been lots of talk about the deals being done on electoral reform and nuclear deterrent but the key is still what is to be done about the huge budget deficit and the need to match government income to expenditure. Initial talk is about an emergency reduction in government expenditure of £6bn but this will only be the start and not nearly enough.

What will the effect be on sterling? Initial reaction has been neutral to slightly positive.

But given on-going problems in the euro zone where the rescue package announced last weekend seemed by many to be an effort to paper over the cracks and some fundamental problems still needing to be resolved, sterling could start to gain especially if this coalition government does have the willpower to sort out the deficit.

And against currencies such as the US$ and the commodity backed currencies such as the Australian and Canadian dollars sterling could continue to weaken as they are ahead of us in their economic recovery. ”

Elfed Thomas, CEO of i3 Group
“The Conservatives are the only party that have delivered a more structured and believable strategy for super fast broadband. They have a lot of time to make up due to the great Digital Britain debate that has been underway for far too long.”

“The area that is the toughest to address is the rural broadband issue, and the Conservatives are not alone in their vague approach in how to resolve it. I am concerned by their ‘wait and see’ strategy which hopes that the networks in rural areas will be built without any public spending. It is unrealistic, as often the figures to build a commercially viable infrastructure just don’t stack up. I am in favour of their idea to use the BBC licence fee to fund connectivity in areas with limited access – and is certainly a much more sensible approach than Labour’s proposed broadband tax was.”

“I hope that the Conservatives will put a stop to using the public purse for initiatives that the market can supply and see it supporting those ‘not spot’ areas that have limited access.”

The Liberal Democrats have referred to ‘supporting the use of public investment, focusing on those areas less likely to be provided for by the market’ which certainly makes good sense, but the steps to achieving it are yet unclear.