BUDGET 2011: OSBORNE’S FUEL IN THE TANK FOR THE BRITISH ECONOMY?
AN MLS CHASE LLP BUSINESS BRIEFING
UK Chancellor George Osborne unveiled his first annual budget today. Since the formation of the coalition Government a little over a year ago, much has been made of their intention to cut spending as far as possible.
The debate in Parliament and the media appears to be crystallising into the question of whether the cuts (or “savings”, depending on your political sympathies) encourage economic growth through the freeing up of the private sector, or jeopardise growth through mass unemployment on a scale the private sector cannot absorb.
Today’s budget is therefore the Chancellor’s attempt to provide some detail on how he intends to navigate the tricky route ahead. As is now the norm, we were given a taste of what to expect in the form of a series of headlines leaked and briefed by the Treasury in the past few days. These included combining National Insurance and Income Tax, which was not in the budget.
This was actually Mr Osborne’s second budget following the initial ”emergency” budget unveiled in June shortly after the coalition took power.
What follows is a summary of the Chancellor’s budget statement. Traditionally, understanding the true detail of the budget and the accompanying red book takes some days, a PhD in Advanced Whitehall Studies and a series of off the record briefings with Treasury advisors. In the meantime, the following is a summary of headline measures. To see the budget document, click here.
There are some areas not addressed in the Chancellor’s statement which I am expecting to be addressed in the small print of the budget document, or in the course of the next week or so. Please let me know if you would like an update on these issues as and when the position becomes clearer. In the mean time, you can follow the developing reaction to the budget here:
BBC
Guardian
Daily Telegraph
Twitter (#budget)
Google News Aggregator
For more information, please contact me at peter.daly@mlschase.com.
HELP FOR BUSINESS
Corporation tax to be cut by 2% in April, not 1% as previously planned
Bank levy to be adjusted so banks do not pay less tax as a result
43 tax reliefs to be scrapped as part of simplification of tax code
£350m of business regulation to be scrapped
No new regulation on firms with fewer than 10 staff for three years
Business rate relief holiday for small firms extended for another year
New rules to require planners to prioritise growth and jobs
£100m funding for science facilities
21 “enterprise zones” to be launched, backed by tax incentives
UK ECONOMY
2011 growth forecast downgraded from 2.1% to 1.7%
2012 forecast also down from 2.6% to 2.5%
Inflation set to remain between 4% and 5% in 2011
BORROWING
Forecast borrowing of £146bn this year, £2.5bn lower than anticipated
Borrowing to fall to £122bn next year, dropping to £29bn by 2015-16
National debt forecast to be 60% of national income this year, up to 71% in 2012
JOBS AND SKILLS
Funding for 12 further university technical colleges
40,000 new apprenticeships for young people out of work
Funding for 100,000 work experience placements
PENSIONS
Accepts Hutton review of reform of public sector pension contributions
Long-term aim for £140 a week flat-rate state pension – not to apply to current pensioners
TRANSPORT
£100m for repairing potholes in England
£200m support for regional railways in England
GREEN MEASURES
£2bn extra funding for Green Investment Bank – to launch in 2012
INCOME TAX
No personal tax increases
Personal tax allowance to rise a further £630 to £8,015 in April 2012
Consultation on long-term plan to merge income tax and National Insurance
50% top rate of tax to remain but review of how much it raises
OTHER TAXES AND ALLOWANCES
Council tax to be frozen or reduced this year in every English council
10% discount on inheritance tax for people leaving 10% of estate to charity
Rise in air passenger duty to be frozen this year
Private jet users to pay passenger duty for first time
Levy on so-called “non-doms” up to £50,000 for those resident in the UK for 12 years
Tax avoidance clampdown to raise £1bn this year
Support for families in the south-west of England with water bills
HOUSING
Government-backed shared equity scheme to help 10,000 first-time buyers
FUEL, CIGARETTE AND ALCOHOL DUTIES
Fuel duty to be cut by 1p per litre from 1800 GMT
Planned 4p per litre rise due in April to be delayed to 2012
Annual fuel duty escalator to be scrapped until 2015
VAT on fuel will not be reduced
No additional changes to alcohol duty rates
Tobacco duty rates up by 2% above inflation, duty regime to be reformed
