No flags and no whistles.
Written by: Previous staff on 29 June, 2010There were no flags, no whistles and certainly no vuvuzelas at what turned out to be the second most important national event of the week – the Budget. Even if they were allowed in the public gallery of the House of Commons – I don’t think anyone really felt like celebrating. George Osborne termed it the “unavoidable budget” and we should be in no doubt that everyone will suffer. Over the last few weeks, Cameron and Osborne have skilfully talked up the size of the debt. Nick Clegg has also been out and about talking about the need for tough decision on public sector pay and pensions. There does seem to be a level of consensus about the need for radical action to deal with the public finances.
Perhaps he has just parted his hair differently but at Dispatch Box for his first Budget the Shadow Chancellor who was criticised for being too young and inexperienced seems to have grown a little in stature and gravitas over the last few weeks. Government seems to be good for George Osborne.
Overall, Intellect has welcomed the Chancellor’s commitment to the ideas in the Dyson Report. That was the report that the Tories commissioned James Dyson to write before the election, which put forward some strong ideas on how to foster innovation in the UK including focussing R&D tax credits on high tech businesses. There will be a further consultation on this later in the year so it is an issue that we will still need to keep pushing.
On capital allowances and, though the Chancellor announced a small reduction in the rates for capital allowances. Whilst this was better than many had expected, monitoring the situation to make sure that this does not penalise companies, like telecoms businesses, that are heavy investors in infrastructure and small and medium sized businesses that buy technology as capital expenditure.
The announcements on capital gains tax which extend the 10 per cent capital gains tax rate for entrepreneurs to the first £5m of lifetime gains may be good news for technology entrepreneurs but the higher rate could also deter investment in technology companies.
However, it is in the Public Sector that trepidation abounds. The announcement of a further £17 billion of savings, on top of what has already been announced, from departmental spending will undoubtedly be tough to meet. Once again, we have a top line figure and a little detail about exactly where the axe will fall. It simply isn’t true that the government’s belt tightening has started to bite, that will come with the Spending Review in October. Deputy Leader of the Liberal Democrats, Simon Hughes had already hinted that he is prepared to amend the budget. It is not at all clear whether he has the support of other Lib Dem backbenchers. Depending on whether Hughes is serious or just posturing, there could be serious trouble ahead for the Coalition Government in the autumn.
