Businesses, charities and organisations across the area have met chancellor George Osborne’s Autumn Statement with mixed reviews. Clare Semke and Kimberley Barber find out how it will affect us.
The Autumn Statement has received a mixed reaction with praise for action being taken to help businesses and stamp duty but concern that more is not being done to help our communities in other areas.
The chancellor George Osborne yesterday confirmed the high street would be offered a lifeline in its battle against online retailers thanks to a review of business rates.
Other measures to help businesses include abolishing National Insurance on young apprentices and £500m of bank lending for small businesses plus £400m government-backed venture capital funds which invest in small and medium sized firms.
The small business rates relief will also give high-street shops, pubs and cafes a £1,500 discount on business rates for another year.
Those plans have been welcomed locally, along with the stamp duty reform, VAT refunds for hospices and air ambulances and the £2,000 employers allowance being extended to carers.
However news that there will be no increase in funding for the armed forces and that no additional cash will be going into the Portsmouth and south-east area have been criticised.
Dr Michael Asteris, economic analyst at the University of Portsmouth, said: ‘The good news is that Britain’s economy is growing rapidly, unemployment is falling and inflation is low.
‘On the downside, the gap between what the government spends and what it takes in taxation remains far too high for comfort.
‘The chancellor has therefore not been in a position to shower us with ‘giveaways’.
‘Even so, Autumn Statements are about political showmanship as well as dreary book-keeping.
‘Mr Osborne has therefore pulled a few rabbits out of the proverbial hat. The sweeteners include family- friendly measures such as the dramatic reform of stamp duty on the purchase of a home and the scrapping of air passenger duty on flights by children.’
Stewart Dunn, chief executive of Hampshire Chamber of Commerce, welcomed the statement, and said the organisation would continue to campaign for more help for businesses in the area.
He said: ‘Overall it is a welcome statement.
‘Whilst we are disappointed that we haven’t got everything we have been campaigning for, clearly the chancellor has listened
‘The £1,500 increase in rates relief for shops, businesses and cafes will help the high street which of course affects every town and city in Hampshire.’
He added: ‘We do welcome very much the reduction in National Insurance contributions for young employees.’
Neil Eames, development manager for the Federation of Small Businesses (FSB) in our area, said: ‘The chancellor has listened to the needs of business, despite tight public finances.
‘The FSB is delighted to see the double small business rate relief remain for another year and a full review of the outdated business rates system, which is something we have long campaigned for. ‘
Tim Walker, Managing Director of Fareham-based Taylor Made Computer Solutions, said: ‘This autumn statement was a bit thin when it came to good news for businesses – the biggest news is the review of business rates which firms will be pleased to see but may not feel the benefit of for some time.
‘The chancellor made a good case for the economy being in good shape and this tends to be the feeling in the region – we are certainly not out of the woods yet but businesses are quietly confident about the future.
‘Encouraging firms to invest in research and development is the right thing to do and will have significant benefits for many companies in the south. We’re finding that companies are coming to us looking for IT systems that can grow as they do, and that’s a good sign of an emerging confidence.
Andy Smith, chief executive of the UK National Defence Association which is based in Portsmouth, said: ‘We are dismayed and disappointed that the chancellor has not taken this opportunity to increase funding for Britain’s armed forces, especially as he made particular mention of ‘geo-political threats’ in the introductory remarks to his Autumn Statement and has previously recognised that higher priority must be given to national security.’
Stamp duty reform hailed
THE reform of stamp duty has been hailed by local businesses.
The move, announced by chancellor George Osborne in the Autumn Statement, means that under the new regime there will be no tax paid on the first £125,000 of a property, followed by two per cent on the portion over that amount, up to £25,000.
This in turn will be followed by five per cent on the portion up to £925,000, £10 per cent up to £1.5m and 12 per cent on everything after that.
Lorna Munro is a partner in the residential property team at Blake Morgan, which has offices in Portsmouth.
She said: ‘Stamp duty was the real ‘rabbit in the hat’ for the chancellor in this year’s Autumn Statement and that was quite a clever move given the debate that has been raging in the press over the so-called mansion tax.
‘Whatever his political motives, this change will result in a saving for the majority of people buying a house.
‘A graduated rate in place of the current system of going up in thresholds feels much fairer and will benefit homebuyers without costing the treasury a great deal.
‘For first and second home buyers, for whom money can be tight, this could mean the difference between making a purchase or not and so can only be of benefit to the housing market. Meanwhile those buying the most expensive homes will still pay a significant amount.’
Ian Cope, senior branch manager for the Portsmouth area at Leaders estate agents, said: ‘I think it [the stamp duty reform] is going to make a significant difference to the Portsmouth market as most of the properties for sale are worth under £500,000.
‘It will maintain the already buoyant market.’
Jonathan Isaby, chief executive of the TaxPayers’ Alliance which ran a Stamp Out Stamp Duty campaign, said: ‘Stamp duty reform will be an early Christmas present for young people looking to get on the housing ladder and families who want to move home.
‘The chancellor is right to significantly reduce the burden that this tax on ambition has placed on hard-pressed taxpayers. ‘
The reform will see the abolition of the ‘slab’ structure, with buyers paying just the percentage amount over the bracket amount.
Help for hospices, air ambulance and carers
PLANS to refund VAT for hospices, air ambulances and search and rescue organisations have been welcomed.
The announcement will benefit Hampshire and Isle of Wight Ambulance, The Rowans Hospice in Purbrook and Naomi House and Jacksplace hospices for children and young people in Sutton Scotney among other organisations locally.
Ruth White is chief executive of the Rowans Hospice, which relies on donations to stay afloat.
She said: ‘We are delighted the chancellor has acted to close the VAT gap faced by charitable hospices, allowing us to reclaim VAT on many non-business supplies.
‘This rebate scheme recognises the unique contribution of charitable hospices, like The Rowans Hospice, to the local health economy and also the invaluable support from local people who give their time to support us through fundraising and volunteering.
‘Ultimately this will enable us to invest more of our donated charitable funds to the delivery of front line care to people at home and to those who are accessing in-patient hospice care, their families and carers.
‘This announcement is very timely for The Rowans Hospice as we embark on ambitious plans, to develop a ‘Living Well Centre’, on adjacent land to The Rowans Hospice. The Centre will provide more supportive care to the growing numbers of older people who have complex health and social care difficulties as we respond to the needs of an aging population.’
A Naomi House and Jacksplace spokesman said: ‘This looks like a positive step and we certainly welcome this news. It has long been thought that reconsidering the VAT burden placed on hospices would be a good idea and we look forward to receiving more detail from HMRC and our colleagues at Hospice UK.’
THE UK is now the ‘fastest growing of any major advanced economy’ according to chancellor George Osborne.
Delivering the Autumn Statement yesterday, Mr Osborne said the nation boasts higher growth, low unemployment, falling inflation and a deficit that is half what the government inherited.
The economy has grown eight per cent over parliament and business investment has risen by 27 per cent.
Mr Osborne said 500,000 new jobs were created in the last year with unemployment benefit claims falling by 23 per cent and young people on long term jobless benefit almost halving.
Regular earnings growth is faster than inflation, at four per cent for those in full-time work for more than a year.
A £23bn surplus is predicted for 2019/20, the government will meet its debt mandate a year late and fiscal mandate two years early.
Mr Osborne confirmed an extra £2bn every year for the frontline of the NHS and a £1.2bn investment in GP services paid for from foreign exchange fines.
The employment allowance of £2,000 will be extended to carers.
The chancellor has committed to raise £5bn by cracking down on tax avoidance and evasion.
Meanwhile the end of military operations in Afghanistan will save an additional £200m.
The inheritance tax exemption will be extended to cover aid workers who die dealing with humanitarian emergencies, and the national debt incurred during First World War will be repaid.
Meanwhile hospices and search and rescue and air ambulances will be granted VAT refunds.
Bank profits which can be offset by losses for tax purposes will be limited to 50 per cent, meaning banks will pay almost £4bn more in the next five years.
There will be a clampdown on aggressive tax avoidance to raise £2.8bn.
There will also be a reform of residential property stamp duty so rates fall only to that part of the property price that falls within each band.
This will mean nothing will be paid on the first £125,000 then two per cent on the portion up to £250,000 and five per cent on the portion up to £925,000
Fuel duty is frozen and air passenger duty for children under 12 will be abolished in May and for under 16s in 2016.
Business rates will be reviewed and research and development tax increased for small and medium firms.
Meanwhile the personal tax allowance will rise to £10.600 from April, giving a wage boost of £825 a year.
And the higher rate income tax threshold will rise to £42,385 next year.