The Chancellor, George Osborne has presented his autumn statement to parliament with little room for manoeuvre due to the weak state of the UK economy.
At the centre of his autumn statement is a credit easing plan designed to help small and medium-sized businesses invest. Mr Osborne announced a variety of new infrastructure projects including 35 new road and rail schemes.
Mr Osborne also announced a cap on public sector salaries of one per cent pay rises for the next two years. There was welcome news for motorists as he cancelled the 3p rise in fuel duty that was to take effect from January 1st 2012.
Mr Osborne said: "Much of Europe now appears to be heading into a recession caused by a chronic lack of confidence in the ability of countries to deal with their debts.
"We will do whatever it takes to protect Britain from this debt storm while doing all we can to build the foundations of future growth."
Ed Balls, the Shadow Chancellor said: “The OBR says growth is flat lining. 18 months in and the verdict is clear – It’s just not working. If you try and cut spending too fast you risk choking off the recovery.”
This is what the experts had to say on many of the proposals announced today.
John Cridland, CBI Director-General, said: "This autumn statement works with the realities of today and provides an imaginative framework for UK businesses as it strives to secure growth and jobs. This is "Plan A plus" in all but name.”
Simon Rubinsohn, RICS Chief Economist said: "The recognition that infrastructure development and the construction industry are the key drivers of this much needed growth is a good start but will only deliver in the medium term. More immediate measures are needed to kick start the economy now.”
BBA chief executive Angela Knight said: "This initiative gives business what they seek by making more finance available and providing a wider choice of options. They use the Government's positive credit rating to make the finance cheaper. The banks will play their part in making this happen.”
British Retail Consortium Director General Stephen Robertson said: "The Government is absolutely right to understand that it must target spending to infrastructure that genuinely increases business efficiency and delivers benefits in proportion to the costs.”
Gavin Oldham, chief executive at The Share Centre said: “The Chancellor today confirmed a far reaching programme with a combination of public and private funding.
Infrastructure spending is by far the most effective economic stimulus, much more effective than reductions in VAT or increasing general Government spending.”
Murray Rowden, managing director of infrastructure at Turner & Townsend, said: “Investing in infrastructure is an investment in Britain's future growth, and the right project will generate both wealth and jobs in its own right.
“PFI, once the darling of the Labour government, is now the funding model which dare not speak its name. So in its stead the government is proposing to use private pension funds as a source of long-term funding.
"It's a logical and tested way of keeping much of the cost off the government's balance sheet – and getting a significant chunk of the money up front.”
Karen Barrett from Unbiased.co.uk said: “The freeze on January's planned fuel duty rise, announced in the Chancellor's autumn statement today, will be a small relief to consumers and those motorists who rely heavily on their car to earn their living.”
BRC Director General Stephen Robertson said: "Imposing no rise in January is welcome help for hard-pressed customers and businesses already suffering big increases in many of their costs.”
The option to postpone 60 per cent of April's increase will be a modest help but the bills will still have to be paid in the end. Offering a delay stops well short of implementing a significantly lower increase.
BBA chief executive Angela Knight said: "The banks are committed to playing their part in restoring the public finances through the many different taxes they pay. But a stable tax regime is important: banks of all nationalities do business around the world from here and they pay tax here. Certainty is an important requirement."
John Cridland, CBI Director-General, said: "The Youth Contract is excellent news for young people across the country. This will encourage firms to take a chance on inexperienced young people and help tackle the scourge of youth unemployment."
Andrew Tully, Pensions Technical Director at MGM Advantage said: “In times of rising longevity, it seems right the Government has taken this action. Giving 15 years' notice should give people sufficient time to prepare. It's likely the increase to age 68 will also come sooner than the planned 2046.”
Dr Ros Altmann from Saga said: “Amid the economic gloom, with lower growth and rising unemployment, at least the worst predictions for pensioners have not materialised. They will receive the full September inflation uprating, which is only right given that pensioner inflation – on the official ONS measures – has been much higher than average national inflation.”
John Lawson, Head of Pension Policy at Standard Life said, "State pension age looks like it has developed its own seven-year itch. At this rate, someone in their early-20s today will not receive their state pension until age 71 and someone aged 40 today will have to wait until they are 68 before they receive their reward for a lifetime of work or caring."
CML director general Paul Smee said: "It is disappointing to see the government withdrawing the stamp duty concession that currently benefits first-time buyers. While the concession may not have stimulated additional demand, it was a significant help to home-owners entering the market and its removal runs counter to the themes of the new housing strategy.”
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John Walker, National Chairman, Federation of Small Businesses, said: "Taken as a package, the announcements in the Autumn Statement address many of the concerns raised by small businesses and are therefore to be welcomed. The key now is for the Government to be consistent, and set to the task of translating these policy intentions into tangible actions on the ground.”
Christopher Shaw, managing director at Platform Black, commented: “The extension of the Enterprise Finance Guarantee scheme is a welcome gesture, and an affirmation of the importance of extending finance to thousands of small businesses.
“It’s also a tacit acknowledgement that Project Merlin targets or not, banks are not lending enough to small businesses.”
BRC Director General Stephen Robertson said: “The option to postpone 60 per cent of April's increase will be a modest help but the bills will still have to be paid in the end. Offering a delay stops well short of implementing a significantly lower increase.”
Families and working tax credit
Labour Stephen Twigg MP, Labour's Shadow Education Secretary commented: "If the reports earlier this week are true and this Tory-led Government is going to cut tax credits for working families, but refuse to repeat the tax on bank bonuses Labour has called for, then that would be deeply unfair and show just how out of touch this Government is with the needs of hard-pressed families across our country.”
Family Action Chief Executive Helen Dent CBE said: "We're glad the Chancellor has given the poorest parents and children a reprieve from a complete benefits freeze but this is a small mercy compared to the rest of the financial pain he is piling on the families at the bottom."
"The Chancellor has backtracked from the already announced £110 per year boost to the child tax credit at the same time as cutting low income working households' annual budgets by £100 by freezing the parent element of Working Tax Credit.”
Financial Transactions Tax
Liz Peace, chief executive of the British Property Federation, said: “The FTT would have left the property industry in line for a seriously damaging tax liability that would wipe out a large part of the taxation benefits of REIT status and shrink the returns available to investors in real estate funds – many of whom will be pensioners.”
Ernest Doku, technology expert at uSwitch.com said: "Britain's infrastructure is in need of rejuvenation. To see that the delivery of a super-fast network to the majority of the UK population is a key element in the Chancellor's plans is heartening.
"Although there is £100million earmarked for improving London's broadband network, bringing an appreciable average speed to those in rural areas who have been forever languishing in the slow lane must be of equal importance.”
David Salusbury, Chairman, National Landlords Association (NLA) said: “The Government has pledged to support small businesses and encourage new investment with its Autumn Statement, but has missed a key opportunity to promote investment in affordable housing to rent by failing to extend the policy of income-tax relief to include landlords ready to invest in new residential property.”
David Scott, partner at law firm Harbottle & Lewis, said: "For private clients and their advisers, the most significant taxation change is the introduction of the new "Seed Enterprise Investment Scheme". This is intended to promote investment in start-up companies by offering income tax relief at 50% on annual investments up to £100,000 irrespective of the rate of income tax actually paid by the investor.”
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