Tag Archives: Budget

 

Back in November the Chancellor, George Osborne was feeling quite flush after the OBR (Office for Budget Responsibility) forecast he’d have a windfall £27 billion to spend over the next 5 years.

George used it to avoid cuts in tax credits and stave off a threatened rebellion amongst Conservative backbenchers. But four months later the OBR had downgraded it’s forecast because the world economy isn’t growing as fast as expected. So having spent it already George had no alternative but to announce .5% p.a. cuts off the government spend (currently £750 billion p.a.) That way he does at least have a chance to meet his commitment of eliminating the fiscal deficit (difference between tax income and expenditure) by 2020. However, government spending is projected to rise to £850 billion p.a. by 2020 so that represents some £4.25 billion of cuts in that year alone which is a lot of noodles. And everyone is carefully ignoring the elephant in the room – the eye-watering level of government debt run-up to stave off a banking collapse.

Delivering local council services through the ‘Big Society’ agenda will be more likely than ever

Achieving the savings will be no easy task for Government departments squeezed for the previous 10 years. Delivering local council services through the ‘Big Society’ agenda will be more likely than ever. County education authorities were given a warning that HMG intends to ‘set schools free’ from council bureaucracy by requiring them to convert to academy status. Presumably someone has done the maths and can see the cost savings.

Lock-up kiosk businesses in market Halls celebrated after Small Business Rates Relief was made a permanent concession

As well as cutting expenditure the Chancellor announced cuts in taxes to stimulate the economy. This included an immediate increase in personal allowances to £11,500 but no increase in VAT thresholds which was a shame. Lock-up kiosk businesses in market halls celebrated after Small Business Rates Relief was made a permanent concession with the RV threshold doubled to £12,000 with taper relief up to £15,000. Hopefully the Valuation Office and local councils will now co-ordinate their paperwork to avoid the need for individual applications.

Sweetened drinks represent only a fraction of the sugar consumption by kids whose processed meals mean they eat their own weight in sugar each year.

Of course any Budget Chancellor needs a high profile, headline-grabbing announcement to stop MP’s from dozing-off during the boring fiscally bits. George opted for a ‘sugar tax’ on sweet drinks with the £520m raised going to help the NHS combat childhood obesity and fund school sports. With suspicious alacrity the School Food Campaigner Jamie Oliver was pictured jumping for joy outside Parliament. The share price of Tate & Lyle also plunged until investors remembered their company had sold it’s sugar business back in 2010. George made the crackingly self-righteous statement that: ‘I am not prepared to look back at my time here in this Parliament, doing this job and say to my children’s generation: ‘I’m sorry – we knew there was a problem with sugary drinks. We knew it caused disease. But we ducked the difficult decisions and we did nothing’. Great stuff, George, but sweetened drinks represent only a fraction of the sugar consumption by kids whose processed meals mean they eat their own weight in sugar each year.

George couldn’t resist having a swipe at the ‘Brexit’ campaigners

With the 23rd June EU membership referendum rapidly approaching, George couldn’t resist having a swipe at the ‘Brexit’ campaigners. Eurosceptics reacted furiously and accused him of misrepresenting the opinion of the OBR when he said it had warned of ‘negative implications’ for the UK’s economy after a Brexit. George has reason to be worried – the latest public opinion polls show voters are pretty evenly split with the FSB saying it’s members are ‘insufficiently briefed’ and the CBI sitting on the fence. The OBR joined them on the fence with a statement that ‘It is not for us to judge at this stage what the impact of a Brexit might be on the economy and public finances’. And no-one has mentioned immigration yet.

Restrictions on Sunday trading

The spring budget came a couple of weeks after the government failed in another attempt to remove restrictions on Sunday trading to stimulate the economy. It tried to dodge an inevitable fight with the clergy, shopworkers unions and ‘Keep it Special’ backbenchers by proposing local councils should set the hours. This fooled no-one. It then offered to amend the proposals in the House of Lords if MP’s voted in favour. That simply annoyed the fence-sitters and resulted in an unlikely alliance of backbench Conservative, Labour and SNP MP’s voting 317 against vs. 286 in favour.

Ministers conceded the proposals would not be resurrected

Ministers conceded the proposals would not be resurrected. The ‘High Streets’ planning minister Brandon Lewis announced through gritted teeth that ‘We respect the view of the House of Parliament. The Commons has spoken and given a very clear view – we have to absolutely respect that’. Brandon’s pronouncement was reminiscent of a famous radio interview comment by Dick Tuck, a would-be U.S. Democratic Senator. He sombrely conceded defeat in his California election campaign by announcing: ‘The people have spoken – the bastards’.

 

The Chancellor’s July budget from the all-new, all-Conservative government was disappointing for small businesses. George Osborne described it as ‘a budget for working people’ but not many were impressed. There were no new incentives for entrepreneurs or start-ups and the only rabbit he produced out of his hat was the ‘National living wage’ set at £7.20/hour from April 2016. But this was for over-25’s only with under-25’s still stuck with the lower ‘National minimum wage’. This was retained for under-25’s to ensure they can ‘secure work and gain experience’ i.e. not be priced out of the labour market. Despite this the independent Office for Budget Responsibility predicted job losses, particularly in the agricultural sector so in response George cut Corporation tax from 20% to 19% (from 2017) and increased the National Insurance ‘employment allowance’ which waives contributions from small businesses to the tune of £3,000 per annum.

Small businesses are deeply unimpressed

Research confirms small businesses are deeply unimpressed. Those in the retail sector consider this no substitute for the more, errrr…informal wage arrangements often seen in the Markets industry. They would far have preferred an increase to the Vat threshold – a very real disincentive to making the leap into Vat-registration.

The budget also contained proposals to review the old Chestnut of Sunday trading legislation

The budget also contained proposals to review the old Chestnut of Sunday trading legislation. Osborne suggested decision-making might be devolved to local Councils to support ‘bricks and mortar’ retailing versus it’s online competition. The arguments for and against are well-rehearsed – increased costs over 7-days without increased takings etc – but unfortunately his glamorous blonde colleague and Minister for Small Business, Anna Soubry MP (Con. Broxtowe, Notts.) forgot her job title before going public with the proposals. She should have consulted with a few more small business representatives before suggesting critics such as ‘Keep Sunday Special’ are “…harking back to a world that probably didn’t exist. Sunday was the most miserable day of the week”. She should, for instance have talked to the Federation of Retail Newsagents or Association of Convenience Stores. They rejected Osborne’s proposals, suggesting less than one in ten customers wanted changes. Other critics included ‘The Sun’ newspaper which – after ditching Page three’s ‘News in Briefs’ – let columnist Rod Liddle loose to sum it up nicely as ‘a wonderful excuse for me to buy yet more crap’.

Nor were the proposals well-received by two of the ‘Big four’ supermarkets. Tesco and Sainsbury own lots of Convenience store outlets which can stay open already, so don’t fancy opening expensive Supermarkets as well. Asda and Morrison though don’t have the same High Street presence so were enthusiastic. This proposal is now out for consultation so if you’d like to share your views about trading 7-days per week I’m sure Anna would like to hear from you. She can be emailed at: anna.soubry.mp@parliament.uk

What the report really highlights is a total lack of regulation in this important area

At about the same time the CMA (Competition and Markets Authority) confirmed it had found evidence supermarkets are misleading customers with price promotions – but the pricing guidelines mean the problem is more of a cockup than a conspiracy. This came after a 3-month enquiry triggered by a ‘Super complaint’ lodged by the Consumer Association magazine ’Which?’ The CMA confirmed although there was evidence of misleading pricing on the 40% of grocery sales on promotion at any one time, the problem is not widespread. Supermarkets generally take compliance with pricing seriously and the problems identified by ‘Which?’ are caused more by lack of clarity in the pricing guidelines. The CMA made some weak recommendations about price comparison data and ‘Was/Now’ promotions, where by law the period on offer of an ‘Is now’ price cannot exceed the period of the higher ‘Was then’ price. The industry-funded and entirely voluntary Retail Ombudsman suggested pricing guidelines need updating because “The problem is the current rules are merely guidelines, which present retailers with a lot of wriggle room. What the report really highlights is a total lack of regulation in this important area”. This sounds rather like the problems of food labelling and the impossibility of legislating for every possibility.

Meanwhile in the dysfunctional world of Euroland ..

Meanwhile in the dysfunctional world of Euroland the Germans played a game of blink – and lost. The unblinking Greek Prime Minister Aleksis Tsipras called the EMU’s bluff and after three (or was it four?) sets of ‘final negotiations’ agreed to some watered-down austerity measures in return for a bail-out of the Greek Euro. The Bundesbank smiled at the breakthrough through gritted teeth as the UK blocked it’s £1 billion contribution to the Euro Stabilisation Fund and City of London bankers stuck two fingers up at their rivals in Frankfurt. The Euro dropped to 72p from 97p in 2008 and although sterling is not yet back to it’s pre-financial crisis exchange rate, it is going the right way. Which is nice.

The German Chancellor reportedly arrived in Athens for the last round of emergency talks to be greeted by an officious Greek immigration officer armed with a clipboard and a list of questions: “Name?” he asked:“Angela Merkel” she replied. “Nationality?” he asked. “German” she replied. “Occupation?” he asked. “Nein – not yet” she snapped. ”First ve haf to talk……”

 

 

The bookmakers odds for the May 7th general election are all over the place. The outcome looks the least predictable for decades now that coalition government and fixed-term parliaments have become the norm.

Turnout should be good though as more people tend to vote in a general election if the result is uncertain.

Depending on where you live you could have the choice of up to 12 mainstream parties to choose from: Conservative, Labour, Lib-Dem, SNP etc., plus up to 21 fringe parties such as the Yorkshire Devolution Party and CISTA – which sounds like an unpleasant personal infection. But if you live in the constituency of the Speaker of the House of Commons like wot I do then it’s much more boring. The mainstream guys have a gentlemans agreement not to field a competing candidate so we’ve only got the Greens and UKIP. And Nigel Farage isn’t the candidate here again as last time he had a nasty accident in an aeroplane.  Turnout should be good though as more people tend to vote in a general election if the result is uncertain. In 2001 a mere 59% of registered electors bothered to vote after Labour’s previous 1997 landslide win. In 2010 after the financial crisis the figure rose to 65% but not in central Manchester, Leeds or Birmingham where more than half still couldn’t be arsed to vote. Mind you that’s better than in Lithuania where only 37% turned-out for their last general election and a lot worse than in Australia where 94% did so. But in Oz it’s a legal obligation to do your civic duty and vote or you get fined £12 and thrown to the crocodiles.

 

If you’re feeling as interested as a Lithuanian but want to understand everyone’s policies and impress your mates down at the pub then go to the BBC’s excellent ‘policies at a glance’ website at http://www.bbc.co.uk/news/election/2015/manifesto-guide

‘Which county has created more jobs than the whole of France?..’

MP’s were waiting eagerly in March for the Chancellors pre-election budget. They expected a last-minute knock-down ‘Chancellors special’ but in the event came away disappointed. George Osborne sat back and rested on the Government laurels of the fastest growing post-recession economy in Europe. The Yorkshire Devolution Party (No MP’s, yet) was ecstatic when he announced ‘Which county has created more jobs than the whole of France? The great county of Yorkshire!’. George glossed-over the need to pay-down the governments £1.4 trillion of debt after the deficit has been sorted but did throw in a few morsels such as tax breaks for North Sea oil companies and reduced duty on beer and wine. The only real cheers were for fuel duty (no increase) and abolition of annual tax returns and national insurance contributions for the self-employed. Sadly, George didn’t lift the threshold for Vat registration and boost the ‘engine room of the economy’ as he calls small businesses.

The PM has announced plans for a ‘Northern powerhouse’

The government is definitely twitchy about accusations that a ‘Metropolitan elite’ is running the country and doing ‘nowt for the north’. To do something for marginal northern constituencies the PM has announced plans for a ‘Northern powerhouse’ fuelled by allowing Greater Manchester to keep 100% of the growth in local business rates and benefit from another high speed rail link – HS3. This would extend HS2 from Manchester and Leeds up to Newcastle, but quite how it can be financially-justified is another matter.

‘little more than a costly vanity project’ 

That has already been pointed out by the Commons Public Accounts Committee and the free-market think-tank the Institute of Economic Affairs. It’s spokesperson described it as ‘little more than a costly vanity project’ which is how Lord Mandelson has described it’s conception in the dying days of the last Labour administration.

The Small Business Rates Relief scheme is extended until 31st March 2016

Anyway, putting aside HS2’s unwelcome lack of a business case the government has moved to safer ground by confirming the Small Business Rates Relief scheme is extended until 31st March 2016. Most market businesses qualify for this waiver on rates payable so if you’re not already receiving it I strongly recommend you check with the rating office at your local council. If the rateable value of your premises is below £6,000 you’ll pay nothing at all and to encourage you to grow into bigger premises you’ll now receive the relief for 12 months after you occupy an additional property. This news was delivered at the same time as Danny Alexander, Chief Secretary to the Treasury announced a ‘radical review’ of the business rates system with its outcome to be announced in 2016. ‘The time has come for a radical review of this important tax. We want to ensure the system is fair, efficient and effective’ he said, which was nice to hear. But those of us with long memories will remember previous government attempts to reform the rating system have been torpedoed by the civil servants of the Valuation Office which employs lots of keen young surveyors to administer the system.

Just as exciting and unpredictable as the result of the general election was the result of this year’s Cheltenham Gold Cup.

Just as exciting and unpredictable as the result of the general election was the result of this year’s Cheltenham Gold Cup. Unfortunately my foolproof system to ‘Back the jockey – not the horse’ came unzipped, yet again. Tony McCoy and Carlingford Lough trundled in at ninth place whilst Nico de Boinville on Coneygree romped home to a well-deserved length and a half victory.

McCoy has announced he won’t be riding at Cheltenham again.  I can see a pattern emerging here.

 

 

News Office for budget responsibility

Q: So why is the Chancellor’s ‘Autumn statement’ made in December?

A: Because they keep messing around with dates and names. Kenneth Clarke had his ‘Summer statement’ in October, Gordon Brown his ‘Pre-budget report’ in November and now George Osborne makes his ‘Autumn statement’ in December.

Q: So WHY does he make it?

A: Since 1975 the Chancellor has been obliged by law to deliver two economic forecasts to Parliament each year – his Budget statement in the Spring and his Autumn statement whenever.  

Q: So how is the Budget statement different to the Autumn statement?

A: The Spring Budget deals mainly with taxes whilst the Autumn statement deals with how the money is spent, which is logical. And he makes his Budget speech in March just before the start of the new fiscal year so no-one has time to implement cunning plans and avoid new taxes. The Autumn statement is more of a ‘Budget-lite’ – an update on how the taxes are being spent, with only a few policy announcements. Apart that is from the run-up to the general election when the Chancellor hopes to win support for his Government.

Q: Are there any other differences?

A: Well, the Chancellor is the only person allowed to drink alcohol in the House of Commons chamber, and then only during his Budget speech. If he or any other MP’s are caught boozing in the Chamber at any other time then they’re sent to the Tower of London. They have their own brand of whisky you know, but it’s not very nice.

Q: So all the MP’s are sober enough to understand the Chancellors figures?

A: Sometimes, unless they’ve been in one of the House of Commons’ eight bars beforehand. But don’t worry about the figures – they’ve been checked for accuracy by the independent ‘Office for Budget Responsibility’ established in 2010.

Q: So there’s no possibility the Chancellor could pull a fast one then?

A: Oh come on – this is the OBR, not Tesco’s auditors.

Q: And…?

A: The Autumn figures are seasonally-adjusted.