Budget 2013: Chancellor delivers Budget for “aspiration nation”

CHANCELLOR George Osborne is planning to revitalise the economy by committing billions of pounds to infrastructure projects, housebuilding and introducing a series of tax breaks for businesses.

Coverage of the Budget is brought to readers of TheBusinessDesk.com in partnership with Ernst & Young.

Mr Osborne, who said it was a Budget for an “aspiration nation”, will direct £15bn over the next 10 years into capital projects, back successful sectors, offer tax breaks for industries such as shale gas, and increase the government’s procurement budget for small businesses.

He also plans to abolish stamp duty on shares traded on the Alternative Investment Market (AIM) and extend the Seed Enterprise Investment Scheme. The main rate of corporate tax will fall by 1% to 20% from April 2015. Small firms will also be exempt from paying the first £2,000 on their National Insurance contributions.

He said: “We are already supporting the largest programme of investment in the railways since Victorian times and spending more on new roads in a generation… By investing in the economic arteries of this country we will get growth flowing to every part of it.”

The Chancellor also took steps to stimulate the housing sector, promising buyers of new-builds a 20% loan interest free for first five years, repaid when the house is sold. There are also plans to build 15,000 more affordable homes.

He unveiled his plan as the Office for Budget Responsibility downgraded growth forecasts, predicting the economy will avoid a triple dip recession with a second quarter of negative growth and grow by 0.6% this year. The OBR predicts growth of 1.8% next year, 2.3% in 2015, 2.7% in 2016 and 2.8% in 2017.

The Chancellor said the UK’s Budget deficit would continue to shrink. It stands at 7.4% of GDP this year and will come down to 2.2% by 2017-18, according to forecasts. He sought to ease the pressure on low and middle-income earners by moving a tax-free allowance of £10,000 forward by a year to 2014. A planned rise in fuel duty, due for September, has been scrapped.

In a move that will delight Staffordshire’s brewers, Mr Osborne has done away with the beer duty escalator, and from Sunday has cut beer duty by 1p a pint.

The Chancellor added: “This Budget is for people who aspire to work hard and get on. It’s a budget for people who realise there are no easy answers to problems built up over many years, just the painstaking work of putting right what went so badly wrong. We’re slowly but surely fixing economic problems. We’ve cut the deficit by a third, helped business create 1.25 million new jobs and kept interest rates at record lows.

“But despite this progress we’ve made there’s much more to do. Today I’m going to level with people about the difficult economic circumstances we still face and hard decisions required to deal with them. By setting free the aspirations of this nation we will get there.”

Graeme Crawford, tax partner at Ernst & Young said: “He has met his goals of 20p corporation tax rate and the £10k tax free personal allowance.

“Aspiration was clearly the word of the day and I think his moves to support housebuilding through the Help to Buy Scheme will be welcomed by businesses in construction in particular as well as the commitment to increase infrastructure spending.

“However, I am sure though that most people would have preferred a penny off their income tax than a penny off their pint.”