Thursday, March 19, 2015

News: The Budget 2015

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The last Budget before the general election "makes new investments in manufacturing and science and the Northern Powerhouse for a truly national recovery." Anything in there for Rotherham? Our editor, Tom Austen takes a look.

The first statement to grab my attention was Chancellor George Osborne stating that the "great county of Yorkshire" has created more jobs than France in the last year. It was part of a targeted "talking up" of the Northern Powerhouse idea and deals were announced for West Yorkshire and Manchester.

Transport for the North will shortly publish an interim report on strategic options for future transport investment in the North of England. This will include options, costs and a delivery timetable for a HS3 east west rail connection.

In terms of taxes, the tax-free personal allowance - the amount people earn before they have to start paying tax – will rise to £10,800 in 2016-17, and £11,000 the year after. Class 2 National Insurance Contributions for the self-employed are to be scrapped and Class 4 NICs are set to be reformed. Also as part of a simplification of the tax system, the annual tax return will be abolished and instead introducing digital tax accounts to enable small businesses to manage their tax affairs online.

The Budget outlined how the National Minimum Wage should rise to £6.70 this Autumn and could be £8 by end of the decade. On apprenticeships, government cash would go straight to employers giving them "the purchasing power to have an even greater say in the quality, value for money and relevance of the training that their apprentices receive." The new mechanism, called "Apprenticeship Vouchers" will be developed and tested with employers and providers immediately and fully implemented from 2017.

Earlier in the week, the government announced the review in to the structure of the business rates system. Set to report back by Budget 2016, it will examine the structure of the current system which is paid annually on 1.8 million properties in England. The review will look at how businesses use property, what the UK can learn from other countries about local business taxes, and how we could modernise the system so it better reflects changes in the value of property.

Energy incentive factories such as Tata Steel's plant at Aldwarke in Rotherham will see compensation schemes brought forward. Tata has long called for changes to carbon taxes and compensation schemes to create a level playing field. A Tata Steel spokesperson said: "We welcome the Chancellor's plans to reduce energy costs for Foundation Industries by bringing forward part of the EII mitigation package. However he has proposed bringing forward relief from feed-in tariffs. The benefit from this measure will be very limited compared to the overall burden we face - we estimate four to five times less than if he had brought forward the relief we still urgently need against the spiralling costs of the Renewables Obligation."

There was little in the way of business support, save for extra resources for the UKTI to target the Chinese market. However, the Sheffield-based British Business Bank will pilot a Help to Grow programme to increase the supply of growth loans to firms that need between £500k and £2m.

There was little too for the majority of Local Enterprise Partnerships, with no new money for the Regional Growth Fund or other growth funds. The bid for the Don Valley to become a "housing zone" has not been approved. On the original shortlist, the area will not now be able to access government support and finance to build new homes on brownfield land.

The Sheffield City Region Enterprise Zone was also not one of the zones being extended or refined.

Over the border, the budget confirmed £14m of funding for plans including the proposed Advanced Wellbeing Research Centre (AWRC), which is being delivered by Legacy Park Ltd in partnership with Sheffield Hallam University on the site of the former Don Valley Stadium. A Sheffield "Maker Hub" was also announced – £3.5m government investment to renovate former Co-Op department store in the Castlegate area of the city.

The Chancellor announced that the debt black hole would be filled by selling off "toxic" bank assets taken on during economic crisis and also discussed how a clampdown on businesses avoiding and evading tax could raise £3.1 bn for the government.

The Office for Budget Responsibility said that the Budget plans will mean "a much sharper squeeze on real spending in 2016/17 and 2017/18 than anything seen over the past five years" and "a sharp acceleration in the pace of implied real cuts to day-to-day spending on public services."

Images: HM Treasury

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