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.
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 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."
"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."
"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.”
“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.”
“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.”
“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.”
“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.”
“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."
“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.”
"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.”
"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."
“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.”
“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.”
"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."
"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."