Member Article

Budget reaction from Michael Whitfield, CEO, Thomsons

The Government’s 2013 Budget, provided the same old same old, with little substance, no room for manoeuvre and a distinct lack of innovation behind it. Whilst there are a few morsels of hope for new home-buyers and those who wish to have children, this is nowhere near enough for Mr Osborne to call us an ‘aspiration nation’. On the upside, I’ll be off to the pub on Sunday to enjoy the 1p off my £3 pint.

Pensions: The flat rate pension will undoubtedly simplify state pension provision, along with the abolition of contracting out, and the resultant levelling of NI for all pension schemes and members. All this will make life far easier for administrators. However, if the increase to £10,000 in personal allowance is linked to the auto enrolment trigger point, as has been the case to date,, the result will be that a large chunk of people will be taken over the auto enrolment threshold, but it is exactly these people who need to be automatically driven to plan their retirements. This is a real catch 22 situation.

Tax: As predicted, tax was very much at the heart of this Budget. For business, it’s good news to see a 20 per cent single rate corporation tax being introduced from 2015 – incidentally, the lowest of all the major world economies. The reduction of £2,000 in National Insurance for every employer, the removal of the job tax and personal allowance increase to £10,000 being brought forward to 2016, will result in more people paying less tax. However, there was no uplift from the £100,000 level where personal allowance ceases. This will ultimately mean more people being caught by inflation – in affect it’s a 60 per cent stealth tax. Whist it’s brilliant to see an increase in the R&D tax credit to 10 per cent, this is not enough to deliver the vision Mr Osborne has painted. Of course, the mortgage initiatives will be welcomed by the construction sector and home buyers, but we won’t compete successfully on a global stage without significantly more investment in technology companies and start-ups.

Business: Mr Osborne is trying to convince the world that Britain is open for business and that this nation is a financial powerhouse waiting to explode again. Who is he trying to kid? It’s a sad realisation that Britain looks firmly set for three to five years of deeply impenetrable gloom. With an ever increasing possibility of a Labour Government in 2015, bringing no doubt more change and an inevitable reversal of spending cuts they don’t agree with, Mr Cameron and Mr Osborne are in a very deep hole with steep slippery sides. The 2013 Budget is too little too late, a budget with much perspiration, little inspiration and even less to aspire to.

This was posted in Bdaily's Members' News section by Thomsons Online Benefits .