So, George Osborne says this is a budget that rewards work. We have listened to today’s Budget statement to see what points will be good for job creation and for business growth.
Let’s start by looking at the OBR forecasts which have been announced today. The Office for Budget Responsibility has forecast unemployment will peak this year at 8.7%, and then fall to 6.3% by 2016/17. Assuming this forecast is reliable, then one hopes the worst days for the jobs market will soon be behind us.
The OBR believes one million more jobs will be created over the next five years.
But what does this mean for individuals? Well, if you are in work then you can expect to see an increase in your take home pay. From, April 2013 the personal income tax allowance will rise to £9,205. According to Mr Osborne, this will result in some 24 million people becoming £220 a year better off.
If you are lucky enough to be a higher rate tax payer at the controversial 50% tax rate, then this too will be reduced – to 45% from April 2013. Controversial we think, but according to the OBR it simply did not collect the revenues forecast by the previous government. According to Mr Osborne, today’s new budget measure of taxes on the rich will raise more than 5 times the rate collected by the 50p rate.
However, it’s worth noting that today’s budget did highlight that Iain Duncan-Smith will have to find a further £10bn of savings from the welfare budget by 2016.
Before we move away from individuals, it is worth noting how Mr Osborne dealt with the Child Benefit issue. The cliff edge has gone. Child Benefit will be phased out gradually when someone in a household earns more than £50,000 at a rate of 1% per every £100 earned of £50,000. Only those households with someone earning over £60,000 will lose child benefit entirely.
For a refreshing change, the OBR has revised UK growth forecasts up. The forecast for growth in 2012 has now been revised up to 0.8%. The forecast for 2013 is 2%, rising to 2.7% in 2014 and 3% in the subsequent two years. Still very low, but certainly offering a glimmer of hope ahead.
If we want to see growth, many business leaders want to see a competitive tax regime here in the UK. It looks as if we might have one. Corporation tax will be cut to 24% from next month and fall over the next two years to just 22%.
For small businesses, with turnover of less than £77,000 the Chancellor has announced a simplified tax system which we understand will operate on cash accounting.
It is worth noting the Chancellor increased the bank levy “to ensure that corporation tax cuts do not benefit the banks”. This increase is forecast to raise an additional £2.5bn per year.
We also watch with interest the review on public sector pay to be regionalised – making it simpler for small businesses to be competitive on pay in some parts of the country. Whilst looking at the public sector, we were also pleased to learn that Lord Heseltine has been asked to conduct a review as to how government departments can encourage private sector growth.
Further announcements on which we await further detail including the announcement of major savings in administration costs for business, the reduction of taxes on Patents which will boost companies R&D investment, and that the UK will become “Europe’s technology centre”.
All in all, some positive measures for businesses. And we hope jobs too.
For more information, we here are a few useful links to online budget information. And don’t forget to follow updates on twitter using the #budget hashtag.
BBC Budget at a glance: http://www.bbc.co.uk/news/uk-politics-17449501
CBI Budget Resources: http://www.cbi.org.uk/business-issues/economy/in-focus/the-budget/
Deloitte’s Budget Site: http://www.ukbudget.com/ukbudget2012/