ISSUEBUDGET OUTCOME
  
MACROECONOMY
Departmental spending·         2010/11: total public spending to increase 2.2% in real terms (as previously announced)·         2011 onward: cuts and efficiencies of £20bn-plus identified prior to Spending Review.·         Including civil service relocation away from London, including 15k within next five years. Long-term strategy to reduce civil service in London by one-third over the next decade, with at least 50% moving outside the Greater South East. ·         Asset sales to reduce debt – Dartford Crossing, Tote, Student Loan book, etc.
Investment/Infrastructure spending ·         Strategy for National Infrastructure launched – positive, as will give businesses greater confidence and certainty·         New infrastructure investment bank with £2bn (split public/private) – for transport and energy. A positive move, but must be launched quickly widened into a full Infrastructure Bank. ·         Roads: £100m to pay for repairs to local roads; £250m for improvements to motorway network including hard-shoulder running. New funding for motorway capacity a clear win for the BCC’s infrastructure campaign. ·         £60m to help development of on-shore wind turbine supply chains – A point David Frost has made repeatedly to ministers.·         Broadband: plans as previously announced
Fiscal forecast·         Size of contraction during recession: 6% peak-to-trough.·         2010/11 forecast growth 1.0%-1.5% This is broadly in line with the BCC’s own forecast. ·         2011/12: forecast revised downwards to 3.0-3.5% BCC view: still too high. Must be made more credible (our forecast is closer to 2%). Forecast for following years unchanged ·         Inflation forecast: Government predicts that inflation spike (currently at 3pc) will be temporary·         Borrowing expectations 2009/10: £167bn (down £11bn from PBR); £163bn for 2010/11; £131bn 2011/12; £110bn 2012/13; £89 for 2013/14; and £74bn 2014/15. ·         Deficit reduction plan: 11.8pc of GDP to 5.2pc over four years·         Forecast net debt as a percentage of GDP will peak at 75% in 2013/14
Banking·         One-off bank bonus tax raised £2bn – more than double estimates.·         New guarantee of a basic bank account for all  ·         Rise in bank lending targets to support viable SMEs – from March 2010, RBS and Lloyds have legally binding lending commitments (LBG: £44bn gross lending to business; RBS: £50bn gross lending to business). This is positive. We will continue to be vigilant on bank lending, though we now believe that supply of credit is significantly better than it was six months ago. ·         Fast-track Credit Adjudication Service to address credit complaints from SMEs
Employment·         Older workers: extend tax credit support by reducing minimum number of hours needed to be eligible·         Consulting on reform of or scrapping of the Default Retirement Age – BCC will fight against this. ·         Extend guarantee of a job, work placement or training to under 24s out of work for six months to March 2012
Public Sector Pay·         No new announcements. Confirmation of PBR announcement of 1% cap on all public sector pay settlements (2011/12 and 2012/13); cuts to senior civil service salaries; public sector pension contributions will be capped by 2012/13; greater contributions from high-earning public-sector workers.
Regulation·         Financial sector: on-going G20 reforms to capital, liquidity, etc to ensure financial sector risk is curbed. Continued support for an international bank levy. ·         Better regulation: commitment to an annual forward regulatory programme; consideration of more rigorous benefit-cost analysis prior to regulating
BUSINESS SUPPORT MEASURES 
Enterprise Finance Guarantee·         No new announcements – EFG to continue through to April 2011.
HMRC ‘Time to Pay’·         Extended through whole of the next Parliament
SME equity financing·         UK Finance for Growth – name for new National Investment Corporation. Oversee £4bn range of finance support for businesses. Include new Growth Capital Fund to provide fast-growing companies with capital; will grow to £500m. Picks up BCC push for action on the ‘equity gap’ faced by many growing SMEs.
Manufacturing·         Targeted support for specific industries, including computer games
R&D·         £35m University Enterprise Capital Fund for spin-out companies·         Extra one-off fund of £270m for universities for 2010/11 to create places in key STEM subjects·         10% corporation tax rate to income from UK registered patents from April 2013
Accelerated Development Zones·         £120m grant for establishment of regeneration zones to enable key infrastructure investment
Trade support·         No significant announcements. UKTI and ECGD to be co-located in a single building
  
TAX CHANGES
Income Tax·         No new announcements. Previously-announced 50% rate over £150k comes into effect April 2010; tax reliefs for pensions for those over £130k progressively removed. We will continue to warn of the long-term consequences of this tax rise. ·         New tax avoidance measures to promote compliance and increase revenue.
ISAs / Savings·         ISA limit up to £10,200 as previously announced. ISA limits will increase annually in line with inflation.
Capital Gains Tax·         No increases in main rate of Capital Gains Tax·         New doubling of Entrepreneur’s Relief for CGT – lifetime threshold to increase to £2m.
VAT·         No further changes
National Insurance Contributions·         1p employer NICs rise (to 13.8pc) stands – a major missed opportunity to help businesses. BCC fought for a switch to a 1p increase in VAT, which would have offset the revenue lost by cancelling the NICs rise.
Corporation Tax ·         No changes on corporation tax. Small company’s rate will remain 21% this year, but will increase to 22% as planned in April 2011.
Corporation Tax Allowances·         New doubling of Annual Investment Allowance to £100,000. Excellent news – BCC has campaigned strongly to increase the AIA to promote SME investment. ·         Enhanced capital allowances will end in April 2010, as originally planned.
Business Rates·         Empty Property Rate Relief threshold will remain at £18,000 for an additional year·         Temporary Increase in level of small business rate relief – no business with rateable value up to £6000 will pay business rates for one year from October 2010 to October 2011. Also reductions for businesses between £6000-12000 rateable value. ·         Cut business rates for SMEs for one year from October – NEED MORE
Stamp Duty·         Double stamp duty threshold for first-time buyers to £250,000 (for this year and next year?)·         Funded through an increase in stamp duty on £1m-plus homes to 5%
Inheritance Tax·         Freeze thresholds for a further four years
Fuel Duty·         Pre-announced rise to be staged rather than all-at-once. To rise by 1p in April, 1p in October, 1p in January 2011
Vehicle Excise Duty·         HGV duty has been frozen.
Alcohol and tobacco Duties·         Pre-announced rises on alcohol to go ahead. New extra taxation on cider (10pc above inflation).·         Tobacco duties to rise 1pc above inflation.
Pensions·         No new announcements post-PBR. 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.
Public procurement·         Increase by 15% number of Government contracts going to SMEs throughout the supply chain. A very positive move – but will need to be backed up with simpler qualification and bidding processes. ·         80% of invoices to be paid within 5 days
Copper wire tax·         50p landline tax for universal broadband service to go ahead in 2010 Finance Bill