The predicted ‘boring budget’ has given some thrills for businesses, says ParcelHero
Chancellor Jeremy Hunt’s predicted ‘boring’ Budget was not quite the snooze-fest some political pundits had predicted, following the roller-coaster economic policies of last year. The delivery expert ParcelHero says there were a few eye-opening moments and some positive news for businesses large and small – even though the much-criticised increase in corporation tax, from 19% to 25%, is still set to go ahead.
ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., says: ‘From starting with the surprise news that the Office for Budget Responsibility (OBR) believes the UK economy won’t now go into recession (though it will contract by 0.2% this year), this wasn’t quite the big snooze that many pundits had been predicting.
‘Perhaps the most interesting news for manufacturers and other businesses was the (admittedly widely trailed) announcement of 12 new Enterprise Zones. These could create new Docklands-style developments across the UK, according to the Chancellor. They will be introduced in the West Midlands, Greater Manchester, the North East, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool, as well as Scotland, Wales and Northern Ireland. Each will be funded by £80m over the next five years. The Enterprise Zones are expected to gain tax relief and business rates help, and bring together regional governments and local universities to boost R&D projects, etc.
‘The really bad news for businesses was that the whopping climb in corporation tax, up from 19% to 25%, will go ahead as planned. However, its impact could be slightly offset by some other tax measures. This particularly applies to those companies investing in R&D, IT equipment, etc. Under Hunt’s “Full Expensing” plans, every pound a company spends on new IT equipment and new plants and machinery can immediately be deducted in full from taxable profits. Smaller businesses will also have an increased Annual Investment Allowance of up to £1m, meaning 99% of SME companies will be able to deduct the full value of all their investment from taxable profits.
‘Transport and distribution companies could benefit from a new £8.8bn pot for sustainable transport initiatives across the regions. Many working drivers will be delighted by the news that there will be an extra £200m spent on filling in the UK’s thousands of potholes. The announcement that fuel duty will remain frozen and the 5p reduction will be maintained for another year will also be welcomed by many owner-drivers.
‘Many transport and supply-chain companies wanted to see considerably stronger greener measures. While there were few initiatives to get Britain’s motorists switching to electric power, news of a new carbon capture scheme, backed up with £20bn in support, will be greatly welcomed. This could cut around 20-30m tonnes of CO2 per year by 2030.
‘As well as being the “boring budget”, this was also expected to be the “back to work” budget. Retailers and other businesses will be pleased to see several measures around increased childcare that will help parents afford to return to employment. The launch of so-called “Returnaships” (apprenticeships for more mature workers, focussing on flexibility and previous experience) will also help boost the amount of people available to work.
‘There was very little to wake up High Street retailers in this Budget, however, with no new moves to reduce business rates or boost other retail initiatives. However, High Street pubs and hospitality businesses will want to raise at least half a glass to the Chancellor for freezing the cost of a draught pint. From 1 August, the duty on draught drinks in pubs will be up to 11p lower than the duty in supermarkets.
‘All in all, this was certainly no KamiKwazi budget, full of shock tax cuts. Perhaps solid but slightly dull is just what most UK businesses were looking for. However, retailers across the UK will want to see further support for our endangered High Streets in Budgets to come.’