Letter to George Osborne MP regarding my wishes for next Tuesday’s Emergency Budget Speech:
Dear Mr Osborne MP,
Emergency Budget 2010
I appreciate that you have an extremely difficult job next Tuesday 22 June 2010 in delivering a Budget Report that seeks not only to balance the books over the longer term but to also avoid derailing any possible chance of an economic recovery in the UK in the short to medium term. No mean feat!
I ask that you place support for Enterprise and Business at the centre of your plans. In my view, this represents the only fighting chance we have of preserving jobs – so that people can keep on saving and spending – whilst generating profits and economic growth to keep the till ringing at the Exchequer with tax receipts for years to come (and so pay down our monstrous public deficit).
Central to this approach must be a “sleeves rolled-up” desire to discard with red-tape, bureaucracy and other hurdles to businesses getting on “with doing business” aligned with a clear vision and road-map of the UK as a great place to do business. This must be a long term plan backed with long term measures. No short term chopping and changing – we’ve had enough of this of late – as businesses want “certainty” so that they can plan for the future with the confidence that the rug will not be pulled out from under their feet anytime soon. (As an advisor, I agree that this would be nice too).
You have already set out in your coalition agreement that you will increase the rate of capital gains tax for individuals, however, I ask that you stick to your pledge to retain more attractive rates for investment in business assets and avoid implementing any cumbersome taper relief measures that cause wide-spread head-scratching. Keep it simple. In a similar vein, I ask that you withdraw the hideously complex restrictions on tax relief on pension contributions made by higher earners so that people can save for their retirement without having to navigate this minefield.
You have also expressed a wish to simplify corporation tax to make the UK one of the most competitive tax systems in the world. I wholeheartedly agree with this lofty goal but ask that you refrain from withdrawing tax incentives that have helped influence longer term business planning in a positive way such as R&D tax credits, enhanced capital allowances and the forthcoming patent income and gaming relief tax breaks. The UK’s highly successful entrepreneur and inventor, James Dyson, has called for the R&D tax credit to be retained and enhanced – although I question whether the relief should be aimed solely toward particular high tech sectors as Dyson suggests. Further, a recent report by NESTA points to recent findings that the fastest growing 6% of businesses generated 1/2 of the jobs created in the UK between 2002 – 2008 – what these companies had in common was a disproportionate tendency to be innovative. We have the expertise to build innovative intellectual property rich businesses that become key exporters bringing cash into our country and you should seize this opportunity by demonstrating commitment via targeted tax incentives such as those noted above.
Capital allowances should continue to be used as a lever to encourage ‘greener’ investment and I would also like to see the Government implement tax-advantaged status for specific business parks or zones to encourage inward and internal investment in businesses spread across the UK. The increasing prominence and differential of London as a business centre compared to the rest of the UK regions needs recalibrating and such measures could help. This could also lead to much needed job opportunities in areas of high unemployment – particularly where painful planned public sector jobs cuts are implemented.
Given the substantial revenue raising potential of an increase in VAT rates, I can understand why this is likely to be a target for change. Most B2B businesses would suffer minimally from such an increase as they would pass on the cost in most cases, however, please be mindful of the pain likely to be suffered by UK retailers and customers alike. I would also ask that any planned phased increases take account of the administrative and labour costs of changing prices for each uplift and its timing (e.g. not over the Christmas busy season like your predecessors implemented please), if such an approach is ultimately planned.
Other matters I would like to see addressed include: no drastic cuts to the HMRC Time to Pay Arrangement which so many businesses have been relying on to spread their tax bills whilst the banks have been less willing to lend; a withdrawal of the planned 1% increase in Employer’s National Insurance contributions and some practical, workable solutions for married / civil couples to split their personal income tax allowances.
The above is just a handful of the sorts of changes I would like to see but my overall plea is that a long-term business friendly strategy is adopted that opens the door for new business start-ups, increased overseas inward investment and a supportive tax and business regime that gives every promising UK business a chance to flourish.
Please let me know if you have any questions.
Best wishes and good luck for next Tuesday.
Have I missed anything?