Against a backdrop of tight fiscal purse strings the chancellor’s 2015 Budget lacked landmark changes.
A number of measures may have marginal immediate impact, but there is potential for some to be the seeds of radical reform.
The growing army of self-employed will benefit from George Osborne’s straightforward decision to abolish Class 2 National Insurance contributions (NICs), as the benefits of paying have long been outweighed by the administrative cost involved. The self-employed may also benefit from a simplified online tax system that is expected to replace traditional returns. The change may be extended to complex taxpayers and large business, but the question then arises, will IT systems cope?
The London Land Commission was also announced, with £1m provided to help ensure that the capital’s surplus public sector land and property, including brownfield sites, are developed. However George, please, a national framework is needed.
Osborne’s commitment to allow Manchester and Cambridge to keep their own business rates growth from April 2015 was an impressive step and the chancellor went further by inviting other places to ask for the same. It is hoped this will enable cities to plan regional infrastructure over extended periods, delivering plans for decades rather than the shorter timeframes arising from central funding.
Osborne also underlined his support for employers with cuts in NICs for those taking on apprentices under 25 and anyone under 21. A promising commitment not to cut the annual investment allowance (AIA) back to £25k was trumpeted, however, the positive effect will likely be neutered as the level of AIA was not confirmed.
It is disappointing that there was no radical help for businesses looking to upskill their workforces. Apprenticeship shortages in the development industry are consistently identified as an issue and politicians have not been shy in highlighting this. Complex modern construction projects involving new technologies and evolving construction methods need a workforce with a different set of skills to those taught under traditional apprenticeships.
The 2015 Budget could have made a statement of intent by providing substantial tax relief (e.g. on 150% of spend) on the costs incurred by businesses upskilling their entire workforce, not just focusing on under 21s or apprentices. Finally, as costs are incurred immediately, and not at a business’s year end, this accelerated tax relief could be provided on an upfront basis. This would give greater stability to an industry working close to the margins.
Mark Webb is chairman of the property and construction group at Smith & Williamson
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