Chamber welcomes Chancellor’s plans

Andrew Lindsay, Chairman of West Yorkshire Chamber of Commerce, said:

“The announcement to review business rates is long overdue – welcome, but still overdue; and if our calls for this had been answered a few years ago we wouldn’t have had to wait until 2016 for potential changes; but the review needs to be far-reaching and not simply tinker at the edges.  We also welcome the ‘roads revolution’ investment to hopefully tackle some of the congestion hotspots that are clogging up the major highways of West and North Yorkshire.

[This follows the Chancellor’s commitment to investment in the northern regions as highlighted in the One North report. A response from the northern Chambers can be found here]

“Access to finance is still cited as a key issue for many firms and so the plans to pump more money into lending are a good thing – we just need to ensure that it gets through to those that need it as quickly as possible and not get stuck in the system.

“Failure to reduce the deficit was tackled with smoke and mirrors by the Chancellor, though, and what happened to the planned statements about devolution?  The sovereign wealth fund for the north could be years off if it’s based on fracking revenues.

All in all, however, it was a decent stab at backing business and growth, given the fiscal constraints – the Government now needs to turn the words into action.”

Summary of Osborne statement

  • Osborne quick to take credit for falling inflation, but much of this down to factors beyond his control such as falling food and fuel prices
  • Growth forecast is 3% – 3 x faster than eurozone
  • OBR revised down forecasts for global growth, particularly in main export markets, like eurozone
  • Half a million new jobs created in past year
  • Numbers claiming unemployment benefit fallen 23%;  number of young people claiming halved in past year,
  • 1,000 new jobs created every day since government came to power (85% F/T)
  • For those in full time work, earnings grew 4% in past year. It will grow above inflation for next 5 years
  • OBR inflation forecasts: 1.5 per cent this year, 1.2 per cent next year and 1.7 per cent the year after

Deficit forecasts:

  • 2014-15: £91.3bn
    2015-16: £75.9bn
    2016-17: £40.9bn
    2017-18: £14.5bn
    2018-19: -£4bn (i.e. a surplus)
  • debt is forecast to peak at 81.1% of GDP next year
  • further £10bn of spending cuts next year
  • “Lower inflation” credited with reducing pension and benefit bill by £4bn – but don’t forget that the government switched the benchmark for calculating increases from RPI to the (usually lower) CPI in 2011
  • IPPR says UK’s export-led recovery is just a mirage
  • 25% tax on companies that make money in the UK and then shift it overseas. This is the Google Tax.  He calls it the diverted profits tax
  • Banks using losses from financial crisis to offset taxes on profits “totally unacceptable”; plan to introduce limits meaning banks contribute £4bn MORE in tax over next 5 years
  • Business rate reforms – help increased to £1,500 for small high street businesses next year, up from £1,000 – but no confirmation of wider reform; Business rates relief doubled for further year, and inflation-linked increase in business rates capped at 2%.  Review next year of structure of business rates, and increase in rates discount to help shops, pubs and cafes by 50% to £1,500
  • fuel duty frozen despite falling oil prices
  • Air passenger duty on flights for u-12s abolished from May. From 2016 extended to u-16s.
  • Risen from 14th to second in global innovation index. Support for post-grads to be “revolutionised”. Government-backed student loans of up to £10,000 to be available to all post-grads
  • sovereign wealth fund for north so shale gas extracted will be used there (part of ‘northern powerhouse’ idea)
  • government to support benefits who take on young people. 2m people have taken up apprenticeships. Businesses employing apprenticeships under 25 will no longer pay jobs tax on their earnings.
  • Tax free personal allowance will rise to £10,600 not £10,500. 3.5m of the lowest paid will be taken out of paying income tax.
  • ‘slab system’ of stamp duty ditched:  The property tax known as stamp duty will be completely reformed says the chancellor. And from midnight tonight (3rd Dec). Each tax rate (and there are new ones) will apply only to the particular slice of the selling price to which they apply, not the whole value of the property (as at the moment).

New stamp duty rates:

0 on homes worth up to £125K
2%on homes worth up to £250K
5% on homes worth up to £925K
10% on homes worth up to £1.5m
12% on all homes worth more than that.

98% of homes will see lower stamp duties.