Lancashire's 2014 budget response

The chancellor unveiled his latest budget today, promising good news for the "makers and doers" of the country. We canvassed the opinion of those making and doing in the red rose county to find out whether they had confidence in his convictions.

GaryLovattFSBRegionalChairman

Gary Lovatt, FSB regional chairman for Lancashire:

“There are a number of measures announced which we believe will help the economy in Lancashire. Extending the support to small businesses around employing apprentices will encourage more firms down this route, and the extension of tax credits for research and development will help to convince those businesses keen to invest in these areas that now is the time to fast-track these plans.

"Scrapping the fuel duty increase scheduled for September keeps businesses moving, and measures aimed at tackling energy bills have to be welcomed.

"Beer duty will be subject to a 1p in the pound cut, which whilst a small gesture, gives hope to independent pubs. A reduction in corporation tax is always welcomed and the childcare support proposals around making childcare tax-free will encourage parents back into the workforce more quickly.

"Attempts to put more money in the hands of consumers through income tax cuts for lower earners are always welcome, but as with many of these announcements there is a need to see the detail and digest the true implications.”

Mark SchofieldMark Schofield, Haworths Chartered Accountants and president of the North West Society of Chartered Accountants:

"The government has been keen to show it is the party with solutions to the economic situation to continue to bring the country out of recession as the next election grows closer.

"Budget announcements have seen plenty of effort to promote growth to boost and build a resilient economy. The emphasis is on supporting savers, and investing in manufacturing and exports. All of which is good news for the region.

"We have already seen a cut announced to the main corporation tax rate, bringing it down to 21% with effect from April 2014. It has today been announced that the main rate of corporation tax will now fall by a further 1% on 1 April 2015 to 20%, bringing it in line with the small companies’ tax. This will mean that the small profits and main rate will be unified in April 2015.

"In previous budgets, the government announced an increase of the Annual Investment Allowance to £250,000 from 1 January 2013 for two years to promote capital investment by businesses. This has not only been extended to 2015 but doubled to £500,000. This is particularly important to Lancashire and East Lancashire because East Lancashire is currently experiencing a boom in engineering linked to aerospace. This means significant numbers of East Lancashire businesses in the area are not only looking to grow, but also to buy expensive engineering machines and the new increase will be a big help."

"The budget will support manufacturing and growth. What is good news is the extension of the grant to small businesses to support Apprenticeship schemes, which will certainly help address the skills shortage in this country. Even with this investment, we have an economy in great need of re-balance and re-structure to set manufacturing at the heart of the Lancashire and the UK."

gavin taylorGavin Taylor, Mayes Accountants:

"With an improving economy, this year’s budget was always going to prove a difficult balance for the chancellor. Resilience was the main theme and whilst there was good news from a personal tax liability view, businesses really were the big winner with a number of announcements that will help exporters, manufacturers and all British businesses grow.

"Stand out wins for business include the employment allowance which will take £2,000 off employers workforce costs and a doubling in the value of the Annual Investment Allowance to £500,000 to the end of 2015. These, in partnership with Regional Growth Fund grants such as Lancashire’s Fuse Fund, will no doubt help kick start additional capital investment across the region.

Jane Parry PMMJane Parry, head of tax, PM+M:

"There was some welcome news for manufacturing business from the chancellor with the expansion of the annual investment allowance being particularly helpful for larger businesses in the region. He also announced a £7bn support package for manufacturing business which sounds promising although the devil may well be in the detail.

"The fundamental changes to the pension regime came out of the blue - representing yet another change in the somewhat complex route towards pensions simplification. The basic premise of giving people complete control over their pension savings is great news but there could be huge traps for the unwary and getting strong advice will be critical. The government funded Right To Advice scheme sounds interesting although it may not be suited to the needs of high net worth individuals.

"Overall a budget to support growth and savings with some good news for local businesses and investors."

62-Mark_Stokes_-_Head_and_ShoudersMark Stokes, Red Plane:

“Mr Osborne framed the green shoots of economic recovery, including increased wages and strong growth in property values, with a solid and unwavering austerity message. This cautious approach will set the tone for how business responds to his budget.

"However, my view is that a whole swathe of businesses would benefit from enacting an investment strategy now. There are concerns that weak productivity growth is not setting the foundations for a resilient economy. At a micro level, businesses need to draw more from their existing workforces, rather than recruiting. Technology is the key here, as operational productivity can be boosted dramatically by implementing systems and infrastructure that drive efficiencies.”

Damian Walmsley sqDamian Walmsley, Moore and Smalley:

“We expected the £250,000 annual investment allowance to be extended beyond the end of 2014, but it was a genuine surprise to hear the chancellor announce plans to increase this to £500,000 until the end of 2015. This offers real clarity and certainty for those Lancashire businesses planning investments in plant and machinery.

“The pledge to boost export finance by £300bn and cut interest rates on export finance will be welcomed by all Lancashire companies looking to break into export markets.

“Plans to address another major issue for manufacturing businesses, the high cost of energy, with a £7bn package of measures will also offer comfort to UK manufacturers who face the highest energy costs in Europe.

“While a fiscally neutral budget overall, the business sector, particularly manufacturing, has to be pleased with what the chancellor has announced, particularly the annual investment allowance increase which will cost government £2bn.”

Malcolm IrelandMalcolm Ireland, head of leisure and licensing at Napthens solicitors:

“It’s no secret that the licensed trade has suffered in recent years, so we welcome the news that the alcohol duty escalator has been scrapped and various duties frozen or cut in the case of beer. This is an unprecedented move, to cut beer duty for two years in a row and is a clear sign of commitment to the licensed trade.

“The chancellor made reference in his speech to the fight by the industry and declared it would help save pubs and create jobs. Many people are simply happy that the sector has not received any bad news from the chancellor.”

Richard Evans KPMGRichard Evans, KPMG’s Preston office:

“Embedding sustainable growth in the UK economy is threatened by an over-reliance on UK consumption. We must do what we can to enable British business to tap into overseas markets through international corridors to high growth countries such as India and China. The announced changes to air passenger duty and support for our regional airports will help but improving access to export finance will be fundamentally important.

"Many other countries, which the UK competes with for global trade, have far better export finance schemes, which put their local businesses at an advantage. The review of the Export Finance Scheme could lead to a sea change in the competitive position of the UK’s export finance; allowing UK businesses to win a larger market share as a direct result.

“Today’s announcement has the potential to close the international competitive gap by overhauling the existing system, which is, in its current state, an option of last resort. This review could fundamentally change the status quo, making it more attractive to lenders and, most importantly, making it readily available for UK exporters of all sizes who would like to offer overseas buyers more competitive payment terms.”

peterPeter Catlow, Businesswise Solutions:

"The support for manufacturing, in the shape of tax breaks, lower energy costs, apprenticeships and capital allowances, marks a significant shift in strategy and recognizes the importance of that sector to the UK economy. Onshoring, the repatriation of manufactured goods from low cost countries, is already underway, as some of the none price factors in the sourcing decision are being recognised in the light of experience.

"Such issues as minimum order quantities, the cost of delivery and the length of the supply chain, are driving this trend, and these financial incentives, will only serve to accelerate that process. Here in Lancashire, with our world leading manufacturing businesses, particularly in Aerospace and Automotive, we are uniquely well placed to take advantage of this renaissance in the importance of the sector."

Simon Rubinsohn RICS Chief EconomistSimon Rubinsohn, RICS chief economist:

“A tight budget with little room for manoeuvre. Yet again, the Chancellor has failed to overhaul the stamp duty system, with wages well below inflation and rents rising rapidly for years, many have been struggling to save for a deposit, let alone meet a huge tax bill. Helping more buyers to enter at the lower end of the market would have resulted in more movement and transactions, freeing up stagnant property chains and bringing badly-needed housing onto the market.

“While plans for regeneration and new homes in Barking, Brent Cross and the new garden ‘city’ at Ebbsfleet - which is really just a garden village - will contribute a little housing in the South East. These numbers are a drop in the ocean and do nothing to help others in the UK. More importantly, they don’t deliver the mix of homes we need across society, from the private rented sector to affordable and social housing.

“RICS has long called for investor prospectuses for garden cities, which we welcome today. But we need a more ambitious approach than 15,000 homes at a time. To provide investors communities and developers with greater confidence, what we need is a proper political vision for garden cities and the wider economy.

“Meanwhile, the much trailed extension of Help to Buy to 2020 is not a game changer. While it provides certainty and clarity to the market, creating another 120,000 new build properties is still a modest target. We need over 230,000 just to meet current demand. Much more needs to be done.”

John Cridland CBI sqJohn Cridland, CBI Director-General:

“The budget will put wind in the sails of business investment, especially for manufacturers. This was a make or break budget coming at a critical time in the recovery and the Chancellor has focussed his firepower on areas that have the potential to lock in growth.

“The CBI has pushed hard for this significant and much-needed energy package that will help keep manufacturing jobs in the UK, while underpinning vital investment in new energy. The doubling and extension of the Annual Investment Allowance, together with making the seed enterprise investment scheme permanent, will be a shot in the arm for many medium-sized businesses.

“On pensions, what’s important is that people on low incomes can make more informed decisions on defined contribution schemes. For many, that will still mean taking advice and buying an annuity, but the increased flexibility will be welcomed. We are pleased that the government has chosen to consult on the implications of making a similar change to defined benefit pensions as stability for these schemes is essential."

Tony-AttardTony Attard, chair of the Institute of Directors North West and chief executive of Panaz:

“As both an entrepreneur investor, chairman of a construction company and CEO of a North West manufacturer, I thought that the Budget promoted growth encouraged exports and helped the re-shoring of manufacturing. I am sure that it will be welcomed across the North West business community.

“The increase in capital investment allowance from £250,000 to £500,000 will be a great incentive for business to invest in new equipment and technology, and the reduction in carbon tax to reduce energy costs further helps manufacturing.

“Incentives to invest in new companies with an extension to the SEED investment scheme is welcome, as well as research and development tax credit increases. Incentives to take on more apprentices and tax breaks for the under 21s will also help employers wishing to take on more young people.”

Elizabeth Graham cropped high resElizabeth Graham, pensions partner, Brabners:

“After Danny Alexander’s promise to avoid tampering with pensions in the 2014 budget at the NAPF Investment Conference this year, we are very happy to see the majority of pensions changes proposed, which in our view offer greater flexibility around taking smaller pension pots on retirement and reduce the need to secure benefits through the purchase of an annuity.

"Annuities are often costly and may reflect poor value, so more pensioners may now wish to explore using flexible drawdown to take benefits in tranches, to suit their retirement or flexible working arrangements, or take their benefits as one lump sum, if they have a very small pot.

"Pensioners have historically struggled to get competitive, or indeed any, annuity options to secure lower value benefits on retirement, so these Budget changes will no doubt be widely welcomed by the industry. Most pensions practitioners have been calling for a review of the use of annuities for some years now, so it is very positive that the government has listened and responded to try to address this issue.”

Jonathan DigginesJonathan Diggines, chief executive, Enterprise Ventures:

"There are some interesting strands in the budget that may not get noticed. The review into SME lending should cast light on the problem that is holding back the growth of the small business sector. Extended tax reliefs on seed investments and investment into social enterprises are also welcome.

"One measure of particular interest is the proposal for the British Business Bank to implement a wholesale guarantee programme. It doesn’t currently appear to be able to do this. This could signal a change of approach by the UK government – the US government has supported small firms very effectively for decades in this way."

Lynn CollinsLynn Collins, NWTUC regional secretary:

“Today’s figures tell us that more action is needed to tackle unemployment. There is a stubborn gap between ourselves and other parts of the country that needs bridging with investment is jobs, skills and wages. Today was an opportunity for the government to tell us how they intend to do that and instead we are left disappointed.

"George Osborne told us this was a budget if you are a maker, a doer or a saver. In reality, it offered little to those wanting to be a maker, doer or saver. People out of work across our region, often through no fault of their own, are not offered much by the chancellor today. Instead of announcements about investment in jobs, they were told that the government intends to place a further cap on social security that many have paid into through national insurance over the years. Instead of the help and support at times of need, they are hit further."

Darrell MatthewsDarrell Matthews, North West region director at EEF:

“Manufacturers in the North West should be delighted - the chancellor said this would be a budget for manufacturing and he has more than delivered on his word. The government has sent a strong message that it clearly recognises the need to make the competitiveness of the UK a priority and this will benefit hard-working companies across our region as well as up and down the country.

“We made a strong case for the need to reduce the rising cost of energy faced by so many companies and the chancellor has acted on that. Taken together with measures to boost investment, exports and skills, the chancellor deserves a pat on the back. We have always said that to achieve a resilient recovery the government must back manufacturing and we’ve seen that from this Budget.

“We now have some of the building blocks in place which will help rebalance the economy. But, as the chancellor suggests, there’s still more work to be done. We now need to take steps which will lead to longer-term solutions beyond current spending and electoral cycles. This will finally give business the predictability and certainty to encourage the successive rounds of investment our economy needs.”

James ThompsonJames Thompson, Taylor Patterson:

“For me, the rabbit out of the hat, especially for the financial community, is the radical overhaul of pension benefits available to members of defined contribution pension schemes.

“This budget has seen the biggest set of changes we have seen in the financial sector over the last decade, if not longer. The chancellor has made material adjustments that will not only affect financial planning strategies, but will completely reform them. For example, the way an income can be drawn from retirement assets could potentially be reversed as a result of changes announced.

“The budget illustrates that the chancellor wants to make it easier for people to draw an income from their pension. Previously there have been caps in place, however it is expected these will be relaxed and potentially removed all together.

“Furthermore, the announcements made around annuities will see more people seeking financial advice. The chancellor reinforced what is already the case; that no one has to buy an annuity package. What will change, however, is that those who are considering an annuity package will be entitled to free financial advice to ensure that people realise there are other pension options available.

“Outside of pensions, ISA savings allowances also saw positive reform, with flexibility and simplicity introduced and a substantial increase in the annual savings allowance from £11,520 to £15,000. This is a huge step compared to previous years where the allowance rose by a significantly smaller 3 per cent.

“From a regional perspective, incentives announced around the shale gas industry will be a key motivator for Lancashire which could result in new jobs and resurgence in the energy sector. However it may fuel concerns over the physical impact on the environment over what is already a controversial energy source.

“All in all it is good news for the region and has already been labelled as the ‘working people’s budget’. Although the UK still has a deficit which needs addressing, steps are being made to create more flexible pensions as well as better saving opportunities backed by a government dedicated to supporting the country’s low to middle earners.”

MG_8750_LBV1Lee Petts, Remsol:

"I'm delighted that the chancellor, George Osborne has given us some clarity on Landfill Tax, which currently stands at £72 per tonne.

"2.170 on page 78 of the budget report tells us that the standard and lower rates of Landfill Tax will rise in line with the Retail Price Index (RPI), rounded to the nearest 5p, from 1 April 2015. However, we'll be keeping a close eye on it, as there will be a consultation later in 2014 after which the government aims to provide long term certainty about the future levels of Landfill Tax.

"I am also pleased with the news that there will be a clamp down on waste crime. This was on my wish list, and now 2.171 Landfill communities fund says: Changes to the Landfill communities fund will be used to provide monies for fighting waste crime, which DEFRA confirms will amount to an additional £5.1 million in 2014-15. Whilst not quite a ring fencing of Environment Agency budgets, this at least frees up some much needed financial resource."

David HawkeDavid Hawke, Vincents Solicitors:

"Overall we feel the economy is in a good position and is moving steadily out of recession into recovery, noting that there are still weaknesses in some areas, and there is no doubt that in 2015 when interest rates start to rise there will be a slowdown.

"We particularly welcome the increase in investment allowance that was announced, doubling it to £500,000 and extending it to 2015, for both Vincents and our clients as a stimulus to growth. It will allow our commercial clients to invest more freely, in deals to acquire other firms, new property, equipment and in staff, and from Vincents’ point of view will benefit our existing expansion policy which is already well under way and is soon to see the announcement of significant investment in a new acquisition ourselves.

"And looking at the changes to pensions and ISAs, which will affect our private clients, we’re pleased to see that for the saver and pensioner this Budget is good. What we now need is an improving economy and some wage inflation with low economic inflation so the costs of living starts to be less of an issue."