Chancellor George Osborne today delivered his annual Budget. Image courtesy of: Conservative Party/Flickr.com
Chancellor George Osborne today delivered his Budget, unveiling a package of measures that he said “rewarded work.”
Many of the measures focused on ways to decrease the tax burden on lower-income families and help Britain “earn its way out of [trouble].”
Reaction to the Budget has been mixed, with some commentators criticising the tax-related measures as short-sighted.
Here are the key points of the Budget:
- Increase in the individual tax-free earnings allowance to £9205 from next April
- Reduction in the top income tax rate from 50 percent to 45 percent from next April
- A single tier pension at a maximum of £140
- Unemployment to peak at 8.7 percent this year before falling each year to 6.3 percent by 2016-17
- Inflation expected to fall from 2.8 percent this year to 1.9 percent next year
Fears of a double-dip recession were lessened as the Office for Budget Responsibility
(OBR) said the country would avoid technical recession with positive growth in the first quarter of 2012.
The OBR added that the economy has "carried a little more momentum into the new year than previously anticipated,” and revised up the growth forecast for this year from 0.7 percent to 0.8 percent.
Osborne outlined a number of pro-business proposals that aim to boost business confidence and growth, as well as improving access to finance.
- Simplified payroll tax system for three million SMEs with turnovers of up to £77,000 – a consultation has been opened
- A Welsh enterprise zone will be created in Deeside
- Enhanced capital allowances will become available for businesses starting up in new Scottish enterprise zones in Dundee, Nigg and Irvine
- Funding for superfast broadband and Wi-Fi in the UK’s ten largest cities will also be awarded, something that small business groups have said is essential to success for some time
- The Government will consider awarding enterprise loans to young people to facilitate entrepreneurship, which will hopefully help tackle youth unemployment
- Councils promoting development will benefit from an extra £150m of tax increment funding; a further £270m will be allocated to the Growing Places Fund
- Relaxation of Sunday trading laws on eight days during the Olympic and Paralympic games, starting on July 22
- Above the line R&D tax credits will also come into play from next year
- Corporation tax cut to 24 percent from next month, falling to 22 percent by 2014
Much of the general criticism aimed at the Budget has focused on the reduction in the high income tax bracket – Ed Miliband says that the Budget will mean millions of people will be paying more, while millionaires pay less.
Bob Crow, leader of the RMT rail union
, said the tax changes will give more money to the wealthy, with a banker on £500,000 receiving a further £17,500 “robbed from public services and the neediest in society.”
Simon Walker, director general of the Institute of Directors
, said: “While any tax reduction is welcome, the chancellor has not done enough to free business from the burdens and barriers that are holding economic growth back.
“Businesses dearly want the opportunity to invest, create and build, but George Osborne must go much further if he wants to fire up the engines of the economy. There was a bold move on corporation tax, but in the bigger picture this is still not far enough or fast enough.”
One area that is perceived to have been neglected is the environment, with the Budget introducing a number of measures aimed to extract the maximum value from oil, including £3m in funding to open up fields west of the Shetland Islands.
Andy Atkins, executive director of Friends of the Earth
, said: “This Budget sticks two fingers up at David Cameron's promise to build a clean future and gives a massive thumbs down to new jobs and cutting our reliance on expensive gas and oil."
Lee Perkins, Managing Director, Sage’s
Small Business Division: “The Chancellor introduced his Budget as one which “unashamedly backed business” and through cuts to Corporation Tax, simplifying the tax system for small businesses and providing increased support for start-ups and enterprise, the Government’s rhetoric was justified.
“Commitments to developing world-beating broadband and making Britain Europe’s technology centre makes the UK an incredibly attractive place to set-up and do business and will support sustained long-term growth that gives small businesses the confidence to expand.
“We wanted a pro-business budget. We needed a pro-business budget. What we’ve got is a series of measures that should see the small business “engine room” of our economy shift up a gear, providing the Government delivers on its announcements.”
Neil Kushel of DHL Express said: "This could be seen as the "Entrepreneurs' Budget”. It includes a number of initiatives to support British entrepreneurs and small businesses, including encouraging funding and underwriting loans through the National Loan Guarantee Scheme, as well as reducing corporation tax to 24 percent from April 2012.
"The Chancellor also stated in the Budget that the Government intends to double the UK’s exports to one trillion pounds this decade. This is a fantastic opportunity for UK businesses to pursue overseas opportunities and off-set faltering levels of UK consumer spending.
"At DHL Express we are carrying more UK products around the world than at any time in our company’s history; showing the increased appetite for great British goods globally. The suggested fiscal initiatives in the Budget could present an opportunity for UK entrepreneurs and small businesses to kick-start their exporting schemes and tap into the potential of emerging markets.
"The Prime Minister once said that if we could boost the number of SMEs that sell overseas from around one in five to around one in four, we could potentially add thirty billion pounds to the UK economy. We must do all we can to encourage and support our business people and entrepreneurs to think global and sell their wares to the world."
John Cridland, CBI
Director-General, said: “Family budgets have been under great pressure, and by putting more money in the pockets of ordinary people, the Chancellor has provided a much-needed confidence boost.
“The Chancellor has also painted a clearer vision of how the UK will earn its living in the future and, by seizing the opportunity to make sure our corporate tax system is more internationally competitive, he has sent a powerful signal to companies to invest, do business and create jobs in the UK.
“An extra one per cent off corporation tax this year could make a big difference to investment intentions. Plans to reduce the top rate of tax to 45p by April 2013 will show our top and aspiring talent that this Government wants them to create wealth here.
“With many calls on the Chancellor to spend money he didn’t have, the best news for businesses is that he stuck to his guns and delivered a fiscally neutral programme.
“If businesses were looking for more, it was in the area of deregulation. For smaller businesses, things may not feel very different on the ground. It would have also have been a huge relief if the Chancellor had taken the opportunity to get rid of the currently unworkable Carbon Reduction Commitment