Business West managing director Phil Smith welcomed the fact that the Chancellor had not wavered from his Plan A as businesses relied on continuity – especially around low interest rates – to make decisions. The worst thing now was for the cost of borrowing to increase, he said.
But he added: “With economic recovery slower than expected, businesses are getting restless about the lack of real action and progress.
“The overall tone of this year’s Budget speech was a little different to the last one, not surprisingly as there was even less room for manoeuvre this time. With growth still faltering and few options for extra spend, delivering a fiscally neutral budget was a real challenge.”
“We welcome the proposed review of the Monetary Policy Committee’s (MPC) remit, scrapping the rise on fuel duty, further reduction in corporation tax, support for the British Business Bank and tax relief for the creative and animation industries, but we believe more could have been done to promote growth. Businesses across the country called for the scrapping of damaging increases in business rates, but our call was ignored by the chancellor once more with any action put off until the Autumn Statement. We will continue to ask the chancellor to take immediate action on business rates.
“The proposals for an employment allowance are particularly welcome and will help many small companies who will now pay no jobs tax. The move to re-direct money from government departments to infrastructure over the medium term is a step in the right direction. However, we would like to have seen a bigger shift in government direct spending on housing, roads, access to finance and export support.
“Whilst we welcome the demand side stimulation provided through the £3.5bn investment in shared equity loans to help get people onto the housing ladder and the mortgage guarantee, we would like to see more direct support for construction and housing. We’re still not building enough homes in the UK but the government has done little to unlock investment to enable this to happen. We need more action to free up publicly owned sites, stalled sites and to encourage the private sector to “get building”. Direct support for construction creates jobs and supply chain activity and boosts business confidence.”
He said perhaps the most important announcement in the Budget for the West actually came yesterday with the Government’s acceptance of the recommendations made by Lord Heseltine to create a ‘single pot’, devolving funding for housing, skills and transport through the Local Entperprise Partnerships (LEPs).
“Whilst the detail has not yet been announced this is a major boost for our cities and for business, with spending devolved to the local area where it can focus on real local priorities,” he said. Business West runs the Swindon Initiative as well as providing a range of business services.
Swindon-based Banks, Chartered Accountants described the Budget as one of the most interesting and intriguing for years and said it could be good for the town’s businesses.
Director Richard Mathews said some of the measures – such as the cut in National Insurance paid by employers and the reduced Capital Gains Tax – would be a welcome boost Swindon firms.
But he added that more detail was needed, and it was disappointing that some of the measures will not be introduced for nearly two years.
“For the first time for some years I think we can say we’ve had a really interesting and intriguing Budget, but we do need more detail,” said Richard. “The cut in National Insurance through the Employment Allowance, for example, is great news but I don’t think it’s necessarily automatic and we’ll need to see what employers have to do to qualify.
“The scrapping of the planned rise in fuel duty, reduction in Corporation Tax and raising of the personal allowance to £10,000 will all help to reduce individual’s and company’s tax liabilities, which is welcome news.
“We’re also pleased to see the Chancellor is introducing a general anti-avoidance rule to overcome tax avoidance measures, but we’d like to see how effective this will be in practice.”
He added that the newly announced Help-to-Buy scheme, to enable people with deposits for properties to obtain mortgages, was a welcome boost for the construction industry which would feed down into the support businesses that operate around construction.
On the personal taxation front Sharon Omer-Kaye, Tax Partner at RSM Tenon’s Swindon office said the budget did nothing to encourage savers or redress restrictions imposed on pension savings.
“The burden to support an ageing population remains a key long-term challenge,” she said.
“The setting up of new disclosure facilities to include the Isle of Man and the Channel Islands affords non-compliant taxpayers further potential to disclose on a voluntary basis. The yield is expected to be £1bn over the next 5 years which is indicative of the scale of funds potentially at risk.
“It is conversely underwhelming to see that the new levies imposed on high-value residential properties are only likely to yield £195m over the next five years. It will be interesting to know how much it will cost to administer the scheme.
“The modifications on benefits to employees, particularly around share schemes, while interesting and innovative, are unlikely to provide any real encouragement for the desired objectives.”
On the corporate side, she said the smallest of SMEs would welcome the £2,000 National Insurance refund “because it might just encourage the employment of an extra person”.
“However while the propensity for it to create jobs will always be debatable, the measure will effectively inject £6bn into the economy,” she said.
The 20% corporation tax rate from 2015 was a positive reaction to calls from the CBI to champion the UK as a platform entry point for investment into Europe.
“Perhaps the bravest measure announced is the proposal on helping home owners,” she said. “Coupled with the reform of the planning system, the question is will it inspire the construction industry and associated businesses? This is the sizzle in the Chancellors speech to stimulate economic activity and inspire investment by the construction sector – without the use of traditional tax stimulus.”
She said the proposed consultation on LLP structures could have wide-ranging implications for professional services firms and the consultation documentation would be awaited with interest.
