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Second Budget, second thoughts?

Patrick Burns | 16:00 UK time, Tuesday, 22 March 2011

George Osborne outside Number 11 Downing Street

George Osborne outside Number 11 Downing Street


Will the Chancellor go for 'Plan B'?

Will he heed his critics' warnings that his austerity measures are taking too more money out of the economy and putting the fragile recovery at risk?

Our region's Labour MPs have been warning for months that record youth unemployment (more than one fifth of Midlands 16 to 24 year olds are out of work) and the highest regional increase in employment as a whole last month (up by 27,000 in our region to 265,000 or 9.9% of the working population) show that the Government's economic policies are 'off course, so change course'.

Are there any signs he really is bringing Britain 'back from the brink' and does he see the economy being back on the road to recovery in time to pave the way for better times ahead during the second half of this Parliament?

Without sustained growth the very foundations on which the Coalition was built could simply crumble away.

These were the fascinating subtexts going into Wednesday's Budget statement for us Westminster-watchers. But as I explained in my last blog post, our region faces some of the UK's most intractable economic problems: millions of Midlanders know their livelihoods, their homes and their families'  prospects are at stake in a way which calls into question Mr Osborne's oft-quoted assertion that "we're all in this together".

In the event, he showed he is in no mood for turning. He acknowledged that the economic indicators at the turn of the year (shrinking industrial output, rising unemployment and, now, higher inflation and public borrowing) have been a major setback. But he was determined to stick with Plan A.

One of his principal ambitions has been to 'rebalance the economy'. He singled out 'a region as important as the West Midlands as evidence of just how unbalanced the economy had become. He told a packed House of Commons that even before the economic downturn, private sector employment in our region had been falling. 

So the Midlands is to be awarded two of the first wave of 10 local Enterprise Zones, with business tax relief for small firms employing 10 people or fewer, encouragement for new business start-ups, and a marked easing of planning restrictions.

One of the zones will be in the Birmingham and Solihull area and the other in the Black Country. Mr Osborne promised a further 11 enterprise zones to be announced in the summer so there may yet be more. 

We knew all along he was going to proclaim his second budget as a 'Budget for Growth'. But one of the key tests will be whether the business-friendly measures he set out really will encourage small businesses to start-up, expand and create jobs in the way we need them to do if private sector employment is to fill the gaps left by the cuts in public spending.Fay Goodman

To find out what this means for countless small enterprises battling through the toughest market conditions we've seen in living memory, we caught up with Fay Goodman. A long-time Midlands spokeswoman for the Federation of Small Businesses, she's now branched out into promoting up-and-coming musicians and working as an ambassador for creative industries.

With an annual turnover of between £80,000 and £100,000 she says she's lucky if she breaks even. She says businesses like hers need 'tax incentives, not penalties".

So what's her verdict on the Chancellor's handiwork? Our reporter Ben Godfrey spent Budget day with Fay. 

She told Ben she welcomed the Chancellor's decision to merge National Insurance with Income Tax. And of course she was delighted with the cut in road fuel duty.

But its impact on her personally was far less positive.

She'll be telling her own challenging story on the Politics Show this Sunday. The other side of her life is as a carer for her 82 year-old mother Evelyn Preece.

She attends the Rainbow Mental Health Day Centre at Hall Green in Birmingham. There are four care workers employed there, and because of the Government's public spending cuts it's due to close at the end of next week. She had been hoping Mr Osborne would target particular help for small community-based organisations like the Rainbow Centre as a demonstration of his backing for the Big Society. She and her mother remain bitterly disappointed. 

We'll also be reporting from the area of the Midlands whose industries are the least resilient to the effects of the economic downturn, according to a survey commissioned by the BBC and conducted by Experian Research. For more details see my blog of 8 September 2010.

Stoke's football ground

In it I explain how the industry that gave the Potteries their name has declined over the past 30 years. But Stoke City's Premier League football team is still proud to call itself the Potters, and it is to the club's Britannia Stadium that local industry bosses will head first thing on Thursday morning for the inevitable post-Budget 'Power Breakfast', their first opportunity to come together and digest the significance of the Budget for them.

Joining me live in the studio on Sunday's Politics Show will be James Morris MP, the Conservative MP for Halesowen and Rowley Regis. Before entering Parliament last year he was the Chief Executive of the Localis 'think tank' which makes him one of the architects of the Government's Localism agenda.

Shabana Mahmood is the Labour MP for Birmingham Ladywood, one of the most deprived constituencies in the UK. Also elected to Parliament last year she's now on the Opposition Front Bench as a Shadow Home Office Minister. And Martin Horwood, the Liberal Democrat MP for Cheltenham. He's also the chairman of his party's Policy Committee on Transport.

Let us know what you make of the Budget: email us at

And of course I hope you'll join us for the Politics Show live on BBC One from 12 midday on Sunday 27 March 2011.              


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