Working parents and businesses will benefit most from George Osborne’s autumn statement, as the chancellor tries to boost the ailing UK economy. Channel 4 News looks at what to watch out for.
Despite gloomy economic forecasts warning the UK is heading back into recession, the chancellor will insist the government’s spending controls have had “real benefits” for Britain, including bringing down debt interest repayments, saving the Treasury £20bn over four years.
George Osborne is also expected to announce additional cash for free childcare for two-year-olds as part of his autumn statement.
Funding for the childcare scheme will be increased to £380m a year by 2014/15, doubling the number of places to 260,000.
The money, which will be distributed to local authorities and totals £650m over the next three years, will be mainly targeted at disadvantaged families, according to reports.
At present, all children aged three and four are entitled to 15 hours of nursery education for 38 weeks a year. The new scheme will provide this free “early education” to 40 per cent of two-year-olds.
More on the autumn statement from the Channel 4 News team
– Economics Editor Faisal Islam warns us to get ready for a fiscal horror show
– Business Correspondent Sarah Smith on the small businesses with big ideas
– Political Editor Gary Gibbon says there will be a ‘marked deterioration’ since March
Mr Osborne is also set to unveil a host of reforms focusing on creating growth by targeting small businesses.
Under a seed enterprise investment scheme, investors supporting companies with fewer than 25 employees will be eligible for up to 50 per cent income tax relief on the money they have ploughed in, capped at a maximum of £100,000 a year and a one-year capital gains tax holiday.
A £50 million fund for small business risk capital will be aimed at companies setting up in the areas worst affected by the public sector spending cuts.
An existing business rate relief holiday will also be extended by six months, taking it to April 2013.
The statements comes as the Organisation for Economic Co-operation and Development (OECD) warned that the UK has already entered a period of recession which will last until the spring and will be followed by months of stunted growth.
Tax specialist, Mike Warburton, director at Grant Thornton, told Channel 4 News that Mr Osborne’s proposals to help businesses could earn him a great deal of support.
He said: “In terms of economics, a lot of the budget will focus on growth – you can only solve unemployment through growth of business. The growth agenda will be done by the infrastructure project, which was all over the papers, and by encouraging bank lending.
“I expect there will be a lot of support of lending for business, and that may be paid for by freezing tax credits for individuals.
“There will also be something to encourage wealthy foreigners to invest – if you bring this money to this country you won’t pay tax if you invest in a business.”
What to watch out for in the autumn statement
Grant Thornton director and tax expert Mike Warburton looks ahead for Channel 4 News at the measures to watch out for in George Osborne’s autumn statement.
“I think they’ll announce they won’t go ahead with the 3 pence increase in fuel duty in March – that will help motorists.”
Statutory residence test
“I expect there will be something to do with the treatment of people who become non-residents and what tax they have to pay. There is a legal grey area on that – there’s still a lot of uncertainty about the tax people who leave the country pay – and what they’re trying to do is clarify it. The government have had a document out on a ‘statutory test of residence’, so we’re expecting confirmation of that.”
“We expect the chancellor to confirm an increase in personal allowances by £630. The amount you can earn before you pay tax is currently set at £7475, but I expect that will go up by £630 from next April.”
He also expects some kind of measures introduced on tax avoidance.