Axis Corporate Solutions

George Osborne’s first budget hardly threw up any surprises but it certainly did seek to clarify the vision of the new reality that we are becoming accustomed to. ‘Tough but fair’ has been the chancellor’s strap line over the past 24 hours, but today’s detail was hardly Harry Callaghan.

 

The coalition’s fiscal team has been at pains to communicate just how shocked they have been by the previous regime’s profligacy, to prepare the way for George to unveil his ‘progressive’ emergency budget. And yes, it does look painful in areas, but we can’t pretend to be surprised.

 

Experts have been predicting a rise in the VAT rate to 20 per cent for over six months. On the one hand, it is a tax that penalises all consumers equally, regardless of wealth – but on the other hand it’s probably the least painful way of raising £13bn a year. When the rate was reduced to 15 per cent in an attempt to stimulate sales last year did anyone actually notice? It cost us £12bn. And now we more are in line with France at 19.6 per cent and Germany at 19 per cent. This was an easy move to make because the market already had the expectation.

 

The support for small business comes in the form of a one per cent cut in Corporation Tax for four years until it reaches 24 per cent and the removal of the threatened rise in National Insurance contributions for employers.  

 

But the announcement of a two year pay freeze is the tip of an iceberg that doesn’t only threaten to trim the flab in the public sector, but is the precursor to the mother of all attacks on public sector finance. I’m all for abandoning the endless and pointless stream of quangos, consultancies and expensive studies into the socio economic impact of the demise of the futon, as well as        

redressing the balance between managers and medical staff in hospitals.

 

But a reduction in public sector budgets across the board will have a knock on effect to small businesses. Some of us have had it good while government bodies have been desperate to spend their seven figure budgets before the year end, but those days are over.

 

Other than that, I can’t argue with the increase to 28 per cent in Capital Gains Tax for high rate taxpayers and I’d be a brave man indeed to argue against the Bank Levy.

 

And with the Liberals in a position of recently unrivalled influence there was never any danger of alienating all but a handful of their supporters by revisiting that silly increase in tax on Cider.

 

 

 

Call me a cynic but I have a sneaking suspicion that sales of Kleenex will enjoy an upsurge over the next three and a half weeks. And there are two good reasons for that.

 

Firstly, those of us who suffer hay fever every time it gets a bit muggy will be in the minority praying for some low pressure. And even if we get our wish it is inevitable that the summer cold, spread wilfully and with no social conscience on the part of the under elevens, is on the way.

 

But more critically, it’s the World Cup, and anyone who thinks we’ve witnessed our last tear jerking howler following the hapless Rob Green’s fumble against the limited USA team at the weekend is blissfully deluded. I suspect (and I really hope I’m wrong) that come the latter stages of the tournament grown men the length and breadth of the country will again be blubbing inconsolably as we lose a penalty shoot out to Germany, Argentina or preferably Brazil.

 

Back to my earlier point. Not everyone has a Wright-Phillips-like bounce in their step in the summer, but what’s the betting that even those who aren’t snorting anti histamines throw the odd sickie during the World Cup?

 

So how should employers deal with the irreversible tide of hysteria?

 

A recent survey has suggested that there are more Scrooges in the Public Sector where only 30 per cent of organisations will allow staff to work flexibly to let them watch England play against Slovenia at 3pm next Wednesday. The Private Sector appears to be applying more common sense at 51 per cent.

 

Against the backdrop of pay freezes, redundancies and the disappearance of staff perks that has blighted the market in the last couple of years I do wonder what the 49 per cent are thinking of. The loss of three hours productivity to allow your people to cheer on our team is surely a small price to pay. Employers who stick to their guns when staff presence isn’t essential betray an approach to morale that leaves a lot to be desired.

 

And when the job market recovers don’t be surprised to see the downtrodden workers up sticks. There’s an awful lot of goodwill to be gained by showing your people that you care and it will be repaid tenfold. Those employers who allow their staff to watch the game will almost certainly suffer fewer sickness absences, and not just this year.

 

In any case, every office has someone who doesn’t see why everyone’s getting worked up about a bunch of blokes chasing a ball around – so now’s their chance to shine.