Dated: 24 March 2010
The big story in today’s Budget was not so much the content, but what was missing.
- The Budget contained many positive initiatives to help small and medium-sized businesses, which we welcome, but it did not reverse the increases in the top rate of income tax and national insurance contributions. Nor did it reverse the Government’s proposal to halve infrastructure spending over the next four years.
- We are also very concerned that the proposed reductions in the budget deficit do not go far enough. We believe the Chancellor’s GDP growth forecasts are on the optimistic side, but even if they are not, the case for swift and deep public spending reductions (excluding infrastructure expenditure) remains.
Commenting, Miles Templeman, IoD Director-General, said:
“The Chancellor’s GDP forecasts are too optimistic and there is still no sign of a credible deficit reduction plan, so while we certainly welcome the specific measures to support small and medium-sized businesses, we need to hear a lot more from the Government on debt reduction.
“We remain convinced that swift action to tackle the budget deficit is needed. This means making significant spending cuts in 2010 rather than delaying commencement until 2011. The argument that early cuts would jeopardise the recovery is mistaken. We believe that lower spending would have triggered a whole series of positive developments to assist growth.”
Commenting on specific tax measures:
- The doubling in the amount of plant and machinery that can be written off in the year of purchase will help some companies, but most will not benefit because their investment is smaller than the old £50,000 limit.
- The increase in the CGT entrepreneurs’ relief limit, and the one-year reduction in rates for properties with rateable values of up to £12,000, will be welcomed by many businesses.
Commenting on specific pensions and savings measures:
- We welcome news on ISA limits increasing annually in line with inflation, providing certainty to the savings market.
- The cap on public sector high earners’ pensions is also a welcome first step in addressing the wider issue of public sector pensions, although much remains to be done on this.
- Sadly, there is as yet no sign of a change in the implementation approach for the restriction of tax relief on pension contributions for higher earners. As currently presented, this is hugely complex and damaging to pension saving.