In this issue: Weekly Focus: Chancellor unveils Summer Budget 2015 | Enterprise support on the agenda with Minister for Small Business, Industry and Enterprise | Latest information for companies trading with Greece | In the Media | Blogs this week
Weekly Focus: Chancellor unveils Summer Budget 2015
Today the Chancellor set out the new Government’s spending plans in the Summer Budget.
The Office of Budget Responsibility (OBR) forecasts show that the UK economy will grow at the fastest rate of any advanced economy for the second year in a row in 2015. The annual growth forecast is unchanged for 2015 and 2016 but revised slightly upwards for 2017. Deficit reduction is to continue at the same pace as in previous years to achieve a budget surplus of 0.4% of GDP by 2019/20. A new Fiscal Charter will be put to a vote in the autumn to ensure that debt as % of GDP falls every year and that the surplus achieved at the end of the Parliament in maintained in normal times (>1% growth per year).
Deficit reduction that was set out in the Budget will be achieved through cuts in the welfare budget and aggressive measures against tax avoidance. Departmental spending cuts will be outlined at the Spending Review in the autumn.
Key measures affecting manufacturers are:
Annual investment allowance: The Annual Investment Allowance will be set at £200,000 from January 2016, and be made permanent at this level.
Corporation tax: The Chancellor announced that corporation tax will be cut further, to 19% in 2017 and 18% in 2020. The government will publish a business tax roadmap by April 2016, setting out plans for business taxes over the rest of the Parliament.
Roads funding: Vehicle Excise Duty (VED) for new vehicles will be reformed and from 2020 the revenue from VED will be hypothecated into a Roads Fund to ensure sustained investment in the road network.
Training levy: The government will introduce a levy on large UK employers to fund apprenticeships. Details including rates and implementation will be set out in the Spending Review.
National living wage: The Chancellor announced the replacement of the National Minimum Wage with what he has called a National Living Wage for over 25s (this is not the same as ‘The Living Wage’). This will come into effect at £7.20 in April 2016, and should reach 60% of median earnings by 2020. The Chancellor expects this to be in excess of £9 per hour. To offset costs for employers the government will raise the NICs Employment Allowance from £2,000 to £3,000 a year from April 2016.
Business energy tax consultation: Government has announced a review of the business energy efficiency taxation regime which will look to rationalise the Climate Change Levy, the CRC Energy Efficiency Scheme and the Climate Change Agreements. A Treasury consultation on the subject is expected during September and EEF is already in discussions with officials regarding the likely shape of proposals.
For more information contact Lee Hopley, Chief Economist
Enterprise support on the agenda with Minister for Small Business, Industry and Enterprise
EEF met the Minister for Small Business, Industry and Enterprise, Anna Soubry MP, to discuss manufacturers’ priorities ahead of the Budget. We emphasised how the government could prioritise departmental spending to best support industrial productivity and enterprise, and also discussed the need for government to commit to the full implementation of the Energy Intensive Industries (EIIs) package. EEF will continue to engage with BIS to ensure government policies support manufacturers and help to boost productivity in the UK.
For more information contact Paul Raynes, Policy Director
Latest information for companies trading with Greece
The UK Government has published guidance on its website on the latest developments in Greece and its ongoing negotiations with the European Union. The website is being updated on a rolling basis, which companies who trade with Greece or rely on suppliers there may find particularly useful.
In the media
EEF’s Budget submission received widespread coverage in The Times (£), The Daily Telegraph and The Guardian.
Ahead of expected spending cuts in the BIS department, EEF’s comments on the importance of UKTI in supporting UK businesses looking to export featured in The Financial Times (subscription required).
Our response to the Airport Commission’s recommendation to build a new runway at Heathrow Airport last week continued to receive coverage in The Guardian and The Independent, and Senior Business Environment Policy Adviser Christopher Richards was interviewed on BBC Radio 4.
The EEF/Lombard manufacturing photography competition, which is now open for entries, featured in The Times (£).
EEF’s response to the latest IOP data featured in The Financial Times (link unavailable).
For more information contact Sophie Carroll, External Affairs Executive
Blogs from this week
08 Jul 2015 - Ten charts about manufacturing the Chancellor needs to see before the #SummerBudget by Felicity Burch
06 Jul 2015 - Week ahead 6th July by George Nikolaidis