Departmental spending

·         2010/11: total public spending will increase by 2.2% in real terms.

·         2011 onward: 0.8% annual spending growth – means real cuts to a number of budgets.

·         Protected: frontline services education, health and policing; international aid.

Investment spending 

·         Capital investment will fall from £49.5bn in 2009/10 to £22bn in 2013/14.

·         Previously-announced work on Crossrail, Thameslink, M1, Great Western Mainline to continue. Manchester-Liverpool-Preston rail lines to be electrified. Midland Mainline electrification to receive further consideration.

·         Government announcements on High Speed Rail expected during 2010.

Fiscal forecast

·         4.75% contraction in UK economy during 2009. Return to growth in Q4 2009. 2010 forecast growth 1.0%-1.5%. 2011: 3.5% growth forecast. BCC: 2011 number overly optimistic.

·         Inflation forecast to rise from 1.5% to 3% before falling back in 2011

·         Borrowing to be ‘more than halved’ by 2013/14 – Gov’t argues earlier cuts would put recovery at risk.

·         Asset sales to be used to fund investment.

·         Gov’t borrowing:  £178bn in 2009/10; £176bn in 2010/11; £140bn 2011/12; £117bn 2012/13; £96bn 2013/14

·         Forecast net debt as a percentage of GDP will peak at 78%

Banking system

·         One-off bank payroll tax on bonuses – 50% on any individual discretionary bonus above £25,000 with immediate effect.

·         £10bn loss for bank interventions forecast

Employment

·         Young people: move up job/training guarantee for 18-24s from 12 months to 6 months

·         Government guarantee that people will be better off in work than on benefits

·         Short-term business internship scheme – details to be announced.

Public Sector Pay

·         2011/12 and 2012/13: 1% cap on all public sector pay settlements.

·         Public sector pensions contributions will be capped by 2012/13; greater contributions from high-earning public-sector workers.

·         BCC view: needs to happen earlier

Enterprise Finance Guarantee·         Extended for another 12 months, with an additional £500m in bank loans guaranteed. BCC POLICY WIN.
Investment Allowances

·         Enhanced capital allowances will end in April 2010, as originally planned.

·         No increase to Annual Investment Allowance, which remains at £50,000

·         BCC SAYS: MISSED OPPORTUNITY TO PROMOTE INVESTMENT

HMRC ‘Time to Pay’·         Extended ‘for as long as it is needed’
SME Equity Finance·         Growth Capital Fund for equity investments in SMEs requiring £2m to £10m – details to be available soon. BCC POLICY WIN.
Trade Credit Insurance

·         Domestic trade credit insurance scheme closing to new customers from December 2009

·         No announcement on export credit insurance

Capital for Enterprise Fund·         Will close to new applicants as planned in March 2010
Manufacturing·         £30m to help industry on Teesside following Corus closure announcements
  
Income Tax·         No substantive changes for 2010.
VAT·         Returns to 17.5% from 1st January 2010. No other changes.
National Insurance Contributions·         Additional 0.5% increase in all NIC rates (employee, employer and self-employed) from April 2011 – meaning 1% overall increase for employers in April 2011. MAJOR ISSUE FOR BUSINESS.
Corporation Tax ·         1p rise in small business rate has been deferred. SME rate remains at 21%. BCC POLICY WIN.
Business Rates·         Exemption for small businesses with rateable values extended to April 2011. Threshold rises from £15,000 to £18,000 to take 2010 revaluation into account. BCC POLICY WIN.
Innovation

·         UK Innovation Investment Fund increased to £325m. Hermes Private Equity to manage.

·         From April 2013, a new 10p corporation tax on income stemming from patents obtained in the UK – so-called “Patent Box”

·         Strategic Investment Fund – to grow by £200m

·         Expansion of the R+D tax credit – removal of IP restrictions

Mortgage interest support scheme·         Extended for a further six months
Stamp Duty·         Holiday for properties under £1750,000 ends 31st December 2009.
Inheritance Tax·         Freeze individual allowance at £325,000 for 2010
Pensions

·         Personal accounts roll-out to be phased in – beginning in October 2012, but only 1% employer payment until 2015, going up to 2% in 2016 and 3% in 2017. Similar arrangements will apply for employees.

·         New businesses starting up between 2012 and 2015 will not have to pay until after 2015.

·         State pension – 2.5% increase in 2010

·         Tax reliefs reduced for people with incomes over £150,000

Company vehicles

·         Electric vehicles to be exempt from vehicle excise duty

·         100% first-year capital allowances for electric vans

Public procurement

·         Policy Through Procurement Actin Plan due later in December 2009

·         Commitment to publish Government spend with SMEs in Summer 2010

Taxes to support Broadband·         50p landline tax for universal broadband service to go ahead in 2010 Finance Bill
Regeneration / Tax Increment Financing

·         Further consideration – but no concrete measures.

·         Further consultation expected on implementation of Community Infrastructure Levy for local infrastructure