The Chancellor of the Exchequer will deliver his Autumn Statement tomorrow. It’s his opportunity to give an update on the government’s economic plans, based on the latest forecasts from the Office for Budget Responsibility (OBR). These are published twice a year and look forward at the expected future performance of the UK economy, in this case for the period to 2018-19. It also allows George Osborne to look at existing policies and report on how they’re working.
Few people expect anything new in the Statement
However, knowing that the Statement is coming gives other organisations the chance to offer their opinions (constructive or otherwise) in advance. For example, the Association of Chartered Certified Accountants (ACCA) predicts that tax avoidance and tax evasion will be high on the agenda – but it also questions if there will actually be anything new announced.
Some of the issues it would expect to hear include a freeze on business rates, the scrapping of stamp duty on homes worth under £500k but the introduction of Capital Gains Tax on properties owned by non-UK residents. It believes that the so-called ‘Green Deal’ is likely to be replaced with green levies for energy companies, in light of the hike in energy prices. And it’s also convinced that the Chancellor plans to increase the Personal Allowance to £12,500 by 2016.
Chas Roy-Chowdhury
‘Covering old ground’
In the view of Chas Roy-Chowdhury, “The Autumn Statement is not really going to bring anything new to the table. It is really going to be a case of what was already announced back in March for the Budget, with a few added extras. “What ACCA really wants to see from the Autumn Statement is a coherent long-term strategy on tax which encourages long-term investment by businesses and savings by individuals as well as moves forward through the work of the Office of Tax Simplification (OTS) on a streamlined and simpler tax regime.”
The CEO of Zurich’s UK Life, Gary Shaughnessy, hopes that the Chancellor will resist the temptation to tinker with ISAs and pensions tax reliefs. Doing so, he argues, would undermine our nation’s saving culture at a time when it is crucial to keep these important incentives in place.
“There are some areas where both this Government and previous administrations have a strong track record. For example, for over a decade the ISA tax regime has been very stable, and this has sent out a strong positive message about saving. If this Government is really serious about encouraging a saving culture in this country, it is important that it applies this good practice to all forms of saving.
“Our pensions tax system has experienced big changes in recent years. This has brought significant costs for companies and pension schemes, and has damaged public confidence in pensions as a way to save. With auto-enrolment unfolding, pensions need stability if these reforms are to continue to be a success.”
Julia Unwin
Growth must not leave the poorest behind
Julia Unwin, Chief Executive of the Joseph Rowntree Foundation, welcomed the news that the UK was returning to growth. However, she stressed that the “recent positive changes in the economy do not outweigh the damage that has been done to the incomes of the poorest during the recession. We need to ensure that growth does not leave the poorest people and places behind. Prioritising an improvement in the living standards of people in poverty is essential and although the cuts were felt across the income spectrum, we know that those in the poorest areas were hardest hit. This gap should not be allowed to continue to grow.”
The Social Market Foundation has published a briefing on the economy, which expresses a little concern at the Chancellor’s determination to eliminate the structural deficit. It expects Mr Osborne to describe his plans for going further in the next Parliament to run a surplus. But as Emran Mian, Director of the SMF, explained, “the problem he faces is low productivity growth in the economy. If this stays stuck anywhere near as low as it is at present, then the UK could be facing a deficit rising to over 100% of GDP in the medium term. While running a structural surplus in the next Parliament sounds like responsible fiscal planning, spending to raise productivity is the better choice for a future with an ageing population”
By contrast, the used car website, Trusted Dealers, in partnership with the NFDA (National Franchised Dealers Association), has urged the Chancellor to reduce fuel duty. It’s conducted a survey from 1,000 UK car owners which show that an overwhelming majority (79.9%) would prefer a cut in fuel duty if relief could only be applied to one thing – dwarfing alcohol (8%), cigarettes (6.8%) and all others combined (5.3%). The organisation believes this proves that fuel is an essential purchase, not a luxury, for most families.