6 Dec 2012

Autumn statement: who’s drinking, who’s sinking?

George Osborne’s autumn statement contained more than a whiff of a long and chilly winter for millions of welfare claimants. But for millionaires’ row, it was an Indian summer. So who dodged a bullet?

George Osborne's autumn statement contained more than a whiff of a long and chilly winter for millions of welfare claimants. But for millionaires' row, it was an Indian summer. So who dodged a bullet?

Despite a forecast of years more austerity, one per cent increases on welfare equivalent to billions of pounds in cuts, and a tax raid on higher value pensions, the Autumn Statement contained cheery news for some.

The sighs of relief from the fuel duty lobby across the country were drowned out only by the cheers in the House of Commons when the Chancellor announced that the 3p rise would be scrapped.

“Cancelling the rise in fuel duty will help to keep Britain’s economy moving,” said Simon Best, chief executive of Institute of Advanced Motorists. “It’s not just good news for motorists – from supermarket food deliveries to life-saving emergency services, the nation depends on its roads. This is a saving for everyone.”

Over in the City, the champagne flutes were clinking. Take the following from Susan Spash, head of the personal tax department at Blick Rothenberg chartered accountants. After the Tories’ decision to abandon the Lib Dem coalition partners’ plans for a mansion tax, she said:

“Individuals owning high value residential property will welcome the confirmation of no new tax on property”.

And further reason to pop another cork after news that corporation tax would be cut by 1p, sending it down to an all-time low of 21 per cent in 2014. From Blick Rothenburg:

“The reduction in the corporation tax rate to attract businesses to Britain is welcome, and for overseas owners, no announced changes to the taxation of non doms was also good news.”

Inherited wealth

Nationwide there stood a better chance of holding on to the family silver, as the inheritance tax nil rate band will increase to £339,000 from April 2015. Frozen at £325,000 since April 2009, this certainly didn’t represent the raid on primogenital wealth some had feared.

Small businesses, although in the Treasury’s sights, were given a nod of support which was cautiously welcomed. The temporary doubling of the Small Business Rate relief will be extended by another year, to April 2014, a business bank will be created with £1bn of extra capital, and tax relief on plant and machinery will jump to £250,000 worth of investment from January – over the current level of £25,000.

These measures were welcomed by John Walker the National Chairmand of the Federation of Small Businesses who noted that the Chancellor has “listened to many of our members’ concerns”.

They were “disappointed” that they didn’t get an extension of the regional national insurance contributions holiday to all small firms, but John Walker, national chairman of the Federation of Small Businesses, said: “We are encouraged by the chancellor’s acknowledgement that small businesses need more help… it is an encouraging initiative that those businesses looking to invest in new equipment, machinery and vehicles for their business will get a tenfold increase in the amount they can invest tax free.

“We eagerly await more information on the business bank over the coming weeks. While the bank will help to house all government finance initiatives, meaning they are better signposted for small firms, it should also improve competition in the sector.”


There was also a stumbling cough followed by a muted cheer from busines over plans to invest £5bn in infrastructure, including four big road projects worth £1bn (upgrading sections of the A1 between London and Newcastle, a new link from the A5 to M1, widening the A30 in Cornwall, and upgrading the M25 around London).

The cash will also be used to assist the development of 120,000 new homes, new flood defence schemes, faster broadband in a dozen cities, and more spending on science and further education.

“We are pleased the government has listened to our call for improvements in the transport infrastructure, particularly the road network,” Mr Walker said.

Not enough, the British Chambers of Commerce said. John Longworth, the commerce’s director general, said: “The chancellor’s announcement that current spending will be cut by £5bn to invest in infrastructure will please businesses up and down the country.

“Yet this commitment is just the tip of the iceberg. It’s not radical enough to unlock the resources needed to maintain and improve Britain’s business infrastructure.”