For whatever the Chancellor commends to the House on March 21 will doubtless set the pace for the UK’s economic recovery.
Get it right and the country could power ahead with the likes of Germany and the US. Get it wrong though and the UK will likely hobble along in the slow lane and continue to flat-line.
To ensure that isn’t the case, Mr Osborne will need to put tax incentives and job creation policies at the top of the list if he is to deliver an economic blue print able to turn ‘green shoots’ in to full on growth, and effectively light the economic touch paper to achieve the necessary and sustainable fiscal growth required in the UK.
Our annual Budget submission focuses on five central pillars to achieve this: improving cash flow, making tax simple and proportionate, creating employment and improving skills, reducing business costs, and creating opportunities for growth.
Crucially, Government has to improve cash flow for SMEs, a huge barrier for small firms in recent years with bank initiatives not having gone nearly far enough to support lending. Think Merlin.
Making tax simple and proportionate – another area where Government must take action. Fuel duty, business rates, and National Insurance too are all aspects of the tax system requiring attention in the short term, root and branch in the long.
We are also proposing the 50p tax rate be abolished, but countered by rises in PAYE tax thresholds from the £7,470 lower rate. This could also be done in conjunction with a reduction in VAT on home improvements to further stimulate growth.
It almost goes without saying too that we want the Chancellor to either postpones or do away altogether with August’s planned 3p hike in fuel duty. We are also supporting calls for a cap on business rates of 2% for the duration of the current Parliament. April’s scheduled 5.6% rise will hammer small firms.
The perennial problem of late payment also continues unchecked, which is why we are calling on the Government to clamp down on large companies at the top of the supply chain via the introduction of the EU late payment directive, under which 30-day payment terms are mandatory. It would also ensure against any new legislation preventing suppliers being coerced into new payment terms against their will.
There is much the Government could do here, without cost, to promote better practice.
Until Wednesday though, it all a case of wait and see. We can only hope the Chancellor does not disappoint.
