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All praise the budget to forget

Author : Tim Fryer

28 March 2012

As budgets go, the one last week (21st March 2012) wasn’t the most interesting, but on the whole ‘uninteresting’ is a result that most people are happy with.

In fact, even the pre-prepared Labour response of it being a 'millionaire’s budget', aimed at the cut to the 50p tax rate, seemed to lose steam rapidly in the face of increases to personal tax allowances.

I actually think that in a budget that only took small steps in any given direction, it is this increase in tax allowances that will probably have most benefit to the facilities management sector.

Most of us will remain untroubled by what happens to tax rates at the £150,000 end of the spectrum and I personally don’t think anybody sets up a fledging business chooses the country based on how much you might be taxed in years to come if you are super-successful. The same is true of corporation tax, although the successive cuts in this down to 22% in two years time can only allow a little slackening of the corporate belts when it comes to investing in property, plant and people.

The new income tax threshold, which will take many low-paid workers out of paying tax altogether, will of course be of most help to workers in cleaning, security, catering, hospitality and many other sectors traditionally associated with low pay - although most people will be happy to get the extra £220 a year that this measure will result in. After several years of inflation running ahead of pay settlements this is a well-deserved boost to lower-paid workers and with consumer confidence providing the foundation for whatever recovery or growth we may experience in coming years, every little helps!

While it may appear difficult at first glance to pick out either highlights or low-lights from the rest of the budget, Gareth Tancred, BIFM’s CEO, found a number of points of interest: "Osborne’s additional £150m to support the roll-out of super-fast broadband in Belfast, Brighton, Bristol, Cardiff, Edinburgh, Leeds, Manchester, Newcastle and Birmingham is excellent news and will help businesses to move away from major cities, and set up in other areas easing congestion, reducing commuting times and improving work-life balance." Tancred continued: "The review of the much-criticised Carbon Reduction Commitment, meanwhile, is a step in the right direction. Many will agree with Osborne’s description of it as "cumbersome, bureaucratic and imposing unnecessary cost on business". But hinting that he may scrap it and introduce an alternative environment tax in the autumn creates uncertainty for business and many will have hoped that the complex CRC would have been completely scrapped at this Budget. Meanwhile this year’s CRC payments will still go ahead."

Jeremy Waud, Managing Director of Incentive FM, was more concerned about the lack of motivation for the banks to get behind SMEs: "Under the National Loan Guarantee Scheme (NLGS), the government is providing £20 Billion in guarantees to the banks to assist companies with a maximum turnover of £50mn. This is potentially a brilliant initiative, however the offer as we understand it is that it will not manifest itself in giving more security as the banks will only lend if you have a strong enough balance sheet or other personal assets as security. This means you could be running a great business but if the balance sheet looks weak, the banks will not lend no matter what. Instead, we should be using this guarantee to provide security for the first two years or the early part of the loan to enable people to invest in their business (be it research and development or acquisitions or service expansion). The banks need to be encouraged to lend!"

John Cridland, CBI Director-General, commented: "Businesses, especially smaller ones, will be disappointed that the Chancellor did not do more to cut red tape. There needs to be much greater urgency to the Government’s deregulatory agenda. We must bring down the barriers to companies hiring staff and creating new jobs." He also added: "The Government is wasting time by announcing yet another consultation on the Carbon Reduction Commitment, rather than getting on with scrapping this complex and bureaucratic scheme."

All in all, it was largely a budget to forget, which is usually a good thing. The memorable ones live in the memory for the wrong reasons!


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