Chancellor Osborne insists UKMFG thrives in balanced economy
3rd December 2014
CHANCELLOR George Osborne used the Autumn Statement to reiterate his central message that a rebalanced UK economy will thrive through a commitment to business support, and investment in science and infrastructure.
Adopting a more upbeat tone than many had expected, he made pledges to support business but fell short on implementing changes to business rates instead saying a full review would be carried out.
Pulling a rabbit out of the hat at the end of his 50-minute speech he promised a full overhaul of stamp duty to make it easier for homebuyers - and trump Labour's plans for a Mansion Tax.
Abolishing the "single-slab" system, duty will be levied at a more gradual rate. This will mean nothing on the first £125,000, 2% on the share above that up to £250,000; then 5% on the next slice up to £925,000; then 10% on the next slice up to £1.5m; then 12% on everything above that.
Help for SMEs was also a theme, the Chancellor promising to extend both the British Business Bank and the Funding for Lending scheme.
R & D tax credit is extended to 230% for SMEs and 11% for larger companies, while small business rate relief will be extended for another year.
Mr Osborne said the £1,000 discount on rates intended to help small shops and business would increase by 50% next year to £1,500.
Supporting firms which promote youth employment and apprenticeship schemes, the jobs tax on young apprentices is being abolished. The Tax Free Personal Allowance is also increased to £10,600.
Mr Osborne also highlighted the growth in the UK economy, with predictions revised upwards to 3% this year, ahead of many other leading economies. However, he repeated an earlier warning from David Cameron that "the warning lights are flashing" with recession in Japan and stagnation in the Eurozone.
The Chancellor also pledged to create a "Northern Powerhouse" with a raft of commitment to boost the economy of the North West with a series of measures, including the announcement of a £250m Sir Henry Royce Institute for Advanced Materials Science in Manchester with branches in Leeds, Liverpool and Sheffield.
While there was no direct reference to Birmingham or the West Midlands, he referred to the recent devolution deal with Manchester and its elected mayor, and said that while there were no further deals in the pipeline, his door remained open to other cities.
Mr Osborne danced through the national debt and deficit figures, which were better than expected, partly due to a new accounting treatment.
He said the growth forecast for this year was now 3%, up from 2.7% in March and 2.4% last year. Growth is forecast to be 2.4% next year, 2.2% in 2016, 2.4% in 2017, and 2.3% in 2018 and 2019. Inflation is forecast to be 1.5% this year, 1.2% next year and 1.7% the year after.
Andrew Spence, tax partner at accountancy and advisory firm EY in Birmingham, said: "It looks like the measures on stamp duty will make the headlines and it looks like they could cost a lot given the percentage of people who will be better off.
"The deficit figures and ours being the fastest growing economy are also headline-makers.
"In terms of the Midlands, while there was quite a lot on the Northern powerhouse and measures for Scotland, Northern Ireland and Wales, for the rest of the country south of the Pennine corridor there were no specific measures."
Spence said there wasn't as much about business rates in the statement as was expected but he suggested more could be contained in the detail.
"But he announced further relief around research and development which is good for manufacturers," he said.
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