Member News
We examine some key highlights affecting business and economic policy, including reaction from ePolitix.com members.
• The Treasury will rebuild the UK's foreign currency reserves.
• Simplification of the tax system including the abolition of 43 tax reliefs, but the community interest tax relief will be maintained.
• Today's 'Plan for Growth' will remove £350m worth of regulation on businesses.
• Default indexation assumption for direct taxes to move to CPI by April 2012.
• The government will consult on merging national insurance and income tax systems, but this will take "a number of years".
• Corporation tax will fall by 2 per cent from April 2011 and will fall to 23 per cent by 2014, but the bank levy will be adjusted upward to offset.
• The limit of money that can be invested in the enterprise investment scheme will be increased fourfold and entrepreneurs relief increased to £10m.
• Non-domiciled workers will be charged £50,000 per year if they have lived in the UK for over 12 years. However, non-doms investing in British businesses will not be charged for bringing capital into the UK.
• The Treasury will review revenues from the 50 per cent tax rate, which the chancellor confirmed was temporary, and on the taxation of high value property.
• Extend the business rate-relief holiday for small business until October 2012.
• From April 2011 the small companies research and development tax credit will rise to 200 per cent, and 225 per cent in 2012.
• Capital allowances for short-life assets to rise to eight years.
• The government will introduce 21 enterprise zones, with councils being allowed to keep all the business rates for 25 years.
• Personal income tax allowance to be increased by £630.
• Pay rise of £250 for armed forces, prison, NHS, teachers and civil servants earning under £21,000.
• Clampdown on tax avoidance to raise £1bn per year from levies including stamp duty, capital gains tax and relief on CDs imported from Channel Islands.
• No new changes to alcohol duty beyond those already announced.
• Tobacco duty rates to increase by two per cent above inflation, as previously announced. Tobacco duty regime reformed to narrow differential between lower-cost brands and the others.
• The no-win no-fee legal services that prey on employers will be restricted.
Member Response: David Salusbury, chairman, National Landlords Association
The National Landlords Association welcomes changes announced in the 2011 budget which will help reduce the barriers to investing in homes.
The stamp duty concessions on bulk purchases will encourage landlords to invest more in residential property, thus providing much needed housing in the private rented sector.
Member Response: Baroness Jo Valentine, chief executive, London First
The chancellor was right to acknowledge the lasting damage the 50p tax will do to the economy if it were to become permanent, but what about the damage it is already doing to our international competitiveness. The 50% rate is bad for growth and bad for the Exchequer. The HMRC review – which we welcome - must take account of the many high earners discouraged from coming to the UK by this penal tax.
Member Response: Paul Kenny, general secretary, GMB
The government themselves are adding to the numbers unemployed with their spending cuts before the economy recovers from the 'Bankers' recession. At GMB we have tracked over 220,000 job losses already in the pipeline in the public sector. We have said repeatedly that it is not possible to deflate your way to economic growth and a balanced budget.
The chancellor missed a fantastic opportunity to reverse the deflationary direction so as to keep people in work and stop creating unemployment.
There is no message of hope in this budget for the millions of Britons and their families facing massive cuts in their living standards.
Member Response: Len McCluskey, general secretary, Unite
George Osborne just re-arranged the furniture, when Britain needed a plan B.
Growth is shrinking, unemployment is on the rise, wages are falling or stagnant and this government is creating a lost generation of young people. No one should be fooled by this budget, it's a mirage from the architect of the most devastating cuts to jobs and services in generations.
What is on offer is tax cuts and deregulation for corporations, whilst attacking workers' rights in small companies. This budget has not actually created any jobs. The tax avoidance measures to claw back £1bn of taxes is a drop in the ocean compared with the £30bn of taxes lost through avoidance every year. If you are struggling to make ends meet, there is very little in this budget to help you.
Member Response: British Retail Consortium director general, Stephen Robertson
The Chancellor is right to stand firm on austerity measures to bring the deficit under control and to refocus on the need to boost economic growth, given falling forecasts for GDP. Consistency of direction is crucial for jobs and investment – this is no time for zig-zag Government.
This Budget offers some support for enterprise. Certainly, the small business measures set the right tone but they should be applied more widely.
We look forward to the promised reductions in regulatory burdens. They must be applied to legislation that has real impacts on business, not just to long-disused rules, so that significant cost reductions result.
Member Response: Peter Hollins, chief executive, British Heart Foundation
A two per cent rise on tobacco duty makes smoking a little less affordable and will help reduce the number of people who smoke – a habit that still kills more than 100,000 people in the UK.
This together with a further 10 per cent rise on hand-rolled tobacco, which has been increasingly used by smokers as a cheaper alternative to cigarettes, is a welcome steps forward.
Reducing the amount of time to approve clinical trials is great news for heart patients. In recent years increasingly burdensome regulation of clinical research has slowed down progress in the UK. This means patients are currently being denied improvements in treatment and young doctors can lose interest in undertaking life-saving research.
A faster process means new treatments will reach patients more quickly. But it's vital the recommendations from the recent Academy of Medical Sciences are implemented in full if we are to achieve this.
Member Response: Graham Arundell, managing director, Hire Association Europe
This Budget was always going to be challenging following on from the tough spending review last year. We hope that businesses and consumers alike will feel a bit more confident about the future, although growth prospects remain a worry, as do cost pressures. With the full impact of reductions in public spending yet to be felt, we hope the government will keep business concerns high on their agenda."
Member Response: Phil Orford, chief executive, Forum of Private Business
It was important a Budget heralded as being pro-enterprise focused on easing the dual burdens of tax and red tape – two of the biggest barriers to business growth and job creation facing small businesses. In that sense, we weren’t disappointed and this was certainly more than just a nod in the direction of UK SMEs.
However, while there have been some definite steps in the right direction the Government could have gone further in reducing taxes and making the tax and regulatory systems more proportional to all small businesses so that they incentivise to entrepreneurship rather than act as a barrier to it.
Member Response: Baroness Margaret Eaton, chairman, Local Government Association
The one per cent increase in employer National Insurance Contributions will add an estimated £81 million to the local government pay bill. That's enough to pay the salaries of more than 3,500 frontline staff on median wage. It comes as an unwelcome added expense at a time when councils are working extremely hard to save money in order to reduce job losses and protect frontline services in the wake of the biggest reduction to their budgets in living memory.
We would much prefer to have seen this increase put off until after councils had the chance to implement more of the measures needed to reduce the impact of the cuts on their residents and workforce.
Member Response: Chris Cummings, chief executive, TheCityUK
A fair, consistent and transparent long-term roadmap for the tax system will allow entrepreneurs, businesses and employees to have confidence in their future plans in the UK. The Government's announcement of regulation and tax simplification, notably to ensure corporation tax becomes the lowest in the G7 will have a positive impact on business confidence, support growth and make the UK more competitive.
Companies looking to develop their global operations look for future stability and predictability to run their business - measures announced today will ensure the UK maintains a leading position against other financial hubs around the world. This will provide the impetus to drive forward investment in innovation, which in turn leads to growth and jobs generation.
Member Response: Billy Hayes, general secretary, Communication Workers Union
The only thing that's growing under this Chancellor is unemployment and inflation.
Today's measures seem overwhelmingly stacked in favour of business and the wealthy with a cut in corporation tax and news that the 50p rate of tax should be a temporary measure. Working people will be concerned about the definition of 'flexible working' in today's Budget. The question as ever is 'flexible for who?' With the government looking to undermine agency workers rights in the UK this concern is well justified.
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