Thursday, March 22, 2012

News: The Budget 2012


The Chancellor, George Osborne introduced yesterday's Budget as one that "unashamedly backs business" but what does it mean for Rotherham businesses?

Local businesses should be able to keep more of their profits as the government announced that the main rate of corporation tax will be reduced from 26% to 24% in April 2012, to 23% in April 2013 and to 22% in April 2014. As a result, the UK will have the lowest main corporation tax rate in the G7 and the fourth lowest in the G20.

An additional boost for businesses looking to secure finance is likely to come from the Business Finance Partnership. Announced in the Autumn Statement, the managed funds will lend directly to mid-sized businesses and the fund has been increased to a total of £1.2 billion.

£100 million of the funding has also been allocated to invest through non-traditional lending channels that can reach smaller businesses, which could include peer-to-peer platforms and supply chain financing. Further details are expected later in the year.

The banks are also being incentivised to lend more to smaller businesses under the Enterprise Finance Guarantee (EFG) scheme and the video games and animation industry is set for tax relief.

The government vowed to continue to reduce red tape which includes a radical change in the administration of tax returns for SMEs (earning less than £77k pa) which will be based on cashflow.

Rotherham retailers are also being given the option of Sunday trading during the Olympics and Paralympics this summer.

Osborne announced that £60m will be used to establish a UK centre for aerodynamics which will open in 2012–13 and support innovation in aerospace technology, commercialise new ideas and spin-off technologies with wider applications in other sectors.

The new centre could prove to support the work carried out by the University of Sheffield Advanced Manufacturing Research Centre (AMRC) with Boeing, and Tata Steel Specialty, who recently completed a £6.5m investment in aerospace steel production.

But Karl-Ulrich Köhler, MD & CEO of Tata Steel's European operations called on more to be done to support energy-intensive industrial companies in the UK. He said: "The Chancellor is rightly aiming to reward work, but this Budget did little to ease the additional unilateral energy costs that UK industry must bear. The benefits to industry pale into insignificance against the costs imposed on them from existing energy and climate change regulations, which are rising alarmingly in the UK."

Some direct investment has also been announced for transport in the region with Network Rail set to invest a further £130m in the Northern Hub rail scheme to improve transport links between Manchester and Sheffield.

This includes increasing capacity (but not electrification) on the Hope Valley line between Manchester and Sheffield, which will enable the number of fast trains to double.

There has been no indication yet of Treasury approval for the £55m required for the DfT-approved tram-train project linking Rotherham and Sheffield.

Infrastructure projects in the Sheffield City Region are set for further funding with the government adding a further £270m to the Growing Places Fund. The region secured £12.3m from the fund in November to help unlock plans for economic growth, job creation and housing,

However, the Sheffield city region is not one of the "superconnected cities" to benefit from the £100m of funding for high speed broadband.

The Budget had little emphasis on skills, apprenticeships or youth unemployment but did outline an idea that will see a pilot project to determine the best way to introduce a programme of enterprise loans to help young people set up and grow their own businesses.

HM Treasury website



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