In today’s Budget (20 March) the Chancellor admitted that growth has been slower than expected and cut the forecast to 0.6 per cent, down from the 1.2 per cent outlined in his autumn statement.
He outlined measures to help small businesses and employers create jobs and boost growth saying the Government would “throw [its] full weight behind the entrepreneurial forces in our society.”
Creative industries like high-end television and animation and the visual effects sector will receive tax-breaks to stimulate growth.
Measures also include more generous incentives for investment in social enterprises and UK businesses. Corporation tax was reduced to 21 per cent and will be further reduced to 20 per cent in April 2015 making it the lowest in any major market.
Osborne said: “[This will] help make us one of the most internationally attractive places to innovate. I also want Britain to be the place where people raise money and invest … I want to send a message to anyone who wants to create jobs here that Britain is open for business.
Ian Twinn, director of public affairs for ISBA, says: “The announcement of tax relief for the creative industries will help advertising play its part in forging this vision of an ‘aspiration nation’. We already know from the recent Deloitte report that advertising yields strong returns on investment and the Chancellor’s endorsement of the creative sector, for which the UK has such a formidable reputation, is to be supported.”
A number of measures were also introduced to help “hard working people” and boost consumer confidence and ability to spend but the British Retail Consortium says the Chancellor “could have done more to help retail businesses”.
The Chancellor scrapped the automatic beer duty accelerator which increased duty 2 per cent above inflation. In addition he reduced duty on a pint of beer by 1p while keeping duties on all other alcoholic drinks the same. The move comes amid the ongoing debate around introducing a minimum price for alcohol, which the Government is widely expected to drop. Osborne did not reference minimum pricing in today’s Budget but of the reduction in beer duty said: “Responsible drinkers should not pay the price for the problems caused by others.”
The move has been welcomed by the British Beer and Pub Association but criticised by the drinks industry including Diageo for “punishing the UK spirits industry for its success in this harsh economic climate”.
The planned rise in fuel duty due in September was also scrapped, which Osborne claims will save households driving a car such as an Vauxhall Astra £7 every time they fill up and makes petrol 13p cheaper than it would have been two years ago if the Government had not introduced a freeze on duty.
The £10,000 income tax threshold was brought forward to 2014 meaning the average working household will pay £700 less in tax and 3 million of the lowest paid workers will pay no tax at all, according to the Chancellor.
Osborne said: “[These changes] will not transform the finances of any family but it helps a little to have some bills that are not going up. It helps a lot to be able to keep more of the money you earn before you have to pay tax on it.”
Ian Barber, director of communications at the Advertising Association, welcomed some of the measures in the Budget including tax cuts, lower duties and support for the creative industries but says the “upsides are in the margins”.
Barber adds: “Infrastructure still gets top billing, despite consumer spending being at the heart of the problem. And without the oxygen of publicity, these initiatives will go nowhere – Government must invest in marketing those policies it believes will get the economy moving.”
The Chancellor also claims to have introduced the biggest ever package of measures to reduce tax avoidance including agreements with Isle of Man, Guernsey and Jersey to bring in over £1bn of unpaid taxes.
Meanwhile, the Evening Standard has prompted an investigation after the full contents of the Budget was tweeted by the paper alongside a picture of its front page before the Chancellor even took to the stand in the House of Commons.
Key measures in 2013 Budget:
- Corporation tax cut to 21%
- Income tax threshold raised to £10,000 by next year.
- September fuel duty rise scrapped
- 1p reduction in beer duty per pint
- £2,000 national Insurance bill cut for employers
- £3bn investment in infrastructure
- Growth forecast cut to 0.6%
- Public sector debt to fall by 2017/18