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Pre-Budget Report - Key issues
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Publishing his pre-Budget report, chancellor Gordon Brown has set out tax and spending plans for the coming years.
SAVINGS AND INVESTMENTS
Stakeholder Response: Building Societies Association
Adrian Coles, director-general of the BSA, said: "Savings have not been mentioned in a Budget since 2001, so today's announcement to consult on ISA limits is very welcome. We urge the chancellor to listen to ordinary people and to save the £3,000 limit on cash ISAs.
"Moreover, cash ISAs have done more than any other government initiative to help those on lower incomes save. The BSA has consistently argued that, given the success of cash ISAs, the decision to cut the limit to £1,000 in 2006 was somewhat perverse.
"Over £96 billion has been invested in cash ISAs so far, demonstrating the overwhelming popularity of this government scheme with savers. Let's keep up the good work."
Stakeholder Response: Investment Management Association
Richard Saunders, chief executive of IMA, said: " IMA welcomes the government's recognition of the importance of ISAs as a key savings vehicle for investors. By announcing a consultation on maintaining current ISA limits until 2009 the government has sent out a clear message to encourage people to save.
"We would further urge the government to commit to retaining the ISA beyond 2009 and to ensuring that it contains significant incentives for savers."
Stakeholder Response: Which?
Mick McAteer, principal policy advisor, Which? said: We welcome the financial inclusion fund to tackle the growing problems of people who are financially excluded.
"Financial exclusion is not just about being denied access to bank accounts. It covers a range of issues, including access to decent pensions, unbiased financial advice and the growing use of risk based pricing in insurance.
"These issues in isolation hit hard the most vulnerable of our society. Collectively they disadvantage and exclude an ever-growing population.
"Government mustn't fall into the old trap of relying on industry to voluntarily meet the needs of society. Industry's record of stonewalling while talking big and delivering little is, sadly, well established.
"A new concordat between government and industry is needed to ensure that all consumers have access to the products and advice they need, Which?'s model for the National Financial Advice Network could provide people with the access they need."
Stakeholder Response: Association of British Insurers
Peter Vipond, director of financial regulation and taxation at the ABI said: "Improvements in the ISA limits, the Child Trust Fund, and further work on the Savings Gateway all suggest that the government is beginning to hear the message on savings. Our hope is that this marks the start of a sustained effort to boost savings across all ages and incomes."
Stakeholder Response: National Consumers Council
Claire Whyley, NCC deputy head of policy and expert on the financial needs of low income groups, said: "One in eight UK households still don’t have a bank account – a key passport to other financial services and cheaper household bills. Today’s measures are significant and promising. Government is putting money where its mouth is on extending financial inclusion – and importantly – establishing a taskforce to explore new initiatives that sits in the engine-room of government.
"The banks have a patchy record on promoting basic ‘no-frills’ bank accounts to people on low incomes. So giving the banks a target – reviewable after two years – is a step in the right direction. But NCC would also like to see the banks offering accounts that are more useful and attractive to low-income consumers.
"Measures to increase access to affordable credit are long overdue, so plans to reform the social fund in 2006 are welcome. NCC has been campaigning for more resources and wider eligibility for social fund loans as one of many ways to widen choices of affordable credit. We’ll be working with the taskforce to ensure that initiatives on affordable credit will meet consumers’ real needs rather than providers’ convenience."
OLDER PEOPLE
Stakeholder Response: Help the Aged
Mervyn Kohler, head of public affairs for Help the Aged, said: "The chancellor’s announcement can only be described as another patch of sticking plaster.
"The extra £50 on the winter fuel payment for people over 70 is welcome. And the downward pressure on council tax rates and the hint of further help for pensioners is also helpful. But, it still represents a failure both to address the basis for financing local services and provide a decent income to our pensioners.
"As the chancellor presented another upbeat assessment of the UK economy, pensioners are to feel that are to be left in the slipstream of the growing wealth of the nation.
"A fifth exist on incomes below the poverty line, and there are no targets to end pensioner poverty. Their needs for social and community care remain disgracefully under funded. They see rising fuel prices and water charges, and can look forward to a state pension increase of a meagre £2.50 next April. They may be considering these issues come a general election in May."
Stakeholder Response: Age Concern
Gordon Lishman, director-general of Age Concern England, said: "This is incredibly disappointing for older people. Older voters could decide the result of the next general election but have once again been largely ignored by the chancellor.
"The basic state pension is disgracefully low and small increases each year are not good enough. Almost two million pensioners are still living in poverty. Although it's good news that the level of Pension Credit will increase it's now well over a year since it was introduced and almost a third of pensioners still aren't claiming it.
"The government must do more to get this extra cash to older people - too many are still missing out and living a poverty-stricken retirement. The government should move away from means-testing and increase the basic state pension to at least £105 per week."
"The one-off payment of £50 for the over 70s will help some older people with their bills but is a short-term gesture by the government. Inflation-busting council tax increases in recent years have caused misery for millions.
"What is really needed is a higher basic state pension so older people feel they have enough money in their pocket every week to heat their homes and pay essential living costs. We need a system of taxation instead which is based on people's ability to pay as well as the value of their property."
BUSINESS/ RETAIL RESPONSE
Stakeholder Response: Federation of Small Business
Simon Sweetman, vice-chairman of the FSB’s taxation committee, said: "We are pleased that the chancellor has not resorted to gimmicks and has resisted more tweaks to the tax regime that would have led to further confusion for Britain’s entrepreneurs. But the proposals on maternity leave have clearly been made with a general election in mind and with little thought to the impact on small employers."
"We are concerned that decisions are being taken with next year’s election in mind, and new rights for working mothers are coming at too fast and too furious a rate. All absence from work comes at a cost and small firms are hit the hardest from the increases in costs associated with providing temporary cover. The administration of maternity leave is already a headache for small firms and the proposed transferability of maternity leave will make this worse.
"We are disappointed that Gordon Brown did not lead on the new review of small companies and the self employed in the tax system during his speech as it questions the priority that he is giving to this important discussion document.
"But we understand that the review will start from the principle that choice of business status should be made on commercial not tax grounds. This reflects the long-held view of the FSB and provides the right starting point for rectifying the mistakes made in small business taxation over the last two years."
"With 350 different types of official inspectors enjoy rights of access to business premises, Philip Hampton’s review of inspection and enforcement is of vital importance to small firms. We are pleased that the review appears to be making significant progress.
"Gordon Brown today announced important commitments to information sharing between different inspectorates and to ensuring that all inspections occur for a reason and not on a whim. We want the government to consider establishing a general practitioner inspectorate so that businesses receive an initial visit from a generalist."
"The proposals for a single account and a single return are ideas that warrant further exploration but we question whether the proposals are achievable. Small businesses must be fully involved in all discussions on the single return and account to ensure that these are made to work."
"Post implementation regulatory impact assessments are something that we called for in a major report earlier this year. There cannot be a good regulatory regime unless legislation is reviewed for its effectiveness after it has been implemented.
"Common commencement dates are a good idea for small firms. They offer certainty and stability to people who run businesses. But they shouldn’t be seen as an open door for yet more regulations.
"Forty per cent of regulations affecting business come from the EU and it is important that they are open to external challenge so this commitment is useful."
Stakeholder Response: Forum of Private Business
Nick Goulding, Forum of Private Business chief executive, said: "The FPB has repeatedly stated that red tape is our members' number one business concern and the chancellor has addressed this in response to our submission to the Treasury. The FPB welcomes moves to have a single tax return for businesses and the extension of common commencement dates for health and safety, work and pensions and company law.
"The Hampton report will also be well received as it will make it easier for small businesses in their dealings with enforcement agencies and focus attention on advice and communication rather than inspection.
"This will help small businesses in their dealings with the Health and Safety Executive, Inland Revenue and trading standards. But the FPB very much wants to examine the finer detail of these announcements to see precisely how they will impact on the small business community.
"As matters stand, there is a huge hole in the economy if Mr Brown's predictions for growth are not fulfilled.
"The chancellor needs to do all he can to make it easier for small firms, the backbone of the UK Economy, to perform.
"Mr Brown must address small business concerns in the Budget, as set out in the FPB's wishlist, with particular focus on reducing the taxation burden on areas such as business rates, VAT, National Insurance Contributions and the minimum wage.
"To do so will deliver the flexibility and control business owners are demanding to ensure continued growth and prosperity, from which the Treasury will see increased revenue."
Stakeholder Response: Business Services Association
Norman Rose, director general of BSA, said: "BSA welcomes the commitment to continuing improvement in the modernisation of public services evidenced in today’s pre-Budget report. There is much to commend in the chancellor’s statement, but we must wait to see what action results from his words.
"In particular, as the skills champion for the business services sector, I am encouraged by the clear emphasis on the importance of improving skills levels within the workforce. Although previous attempts to address this crucial issue have not met with great success, I am hopeful that the new proposals will succeed in engaging the commitment of employers.
"The commitment of funding to support training up to NVQ2 is particularly helpful to employers such as BSA’s members, who employ large numbers of staff at this level and will welcome the additional support to enable them to improve the skills levels of these employees. Only time will tell whether it will be sufficient to engage smaller employers, who will still face major problems in making staff time available for training."
Stakeholder Response: British Retail Consortium
Kevin Hawkins, director general of the BRC said: "There is very little in the pre-Budget report which will have an immediate impact on current level of consumer confidence or which will dramatically ease the pressure of cost inflation on the UK retail industry - a pressure which if left unchecked, will weaken the financial productivity of the industry and, therefore, its capacity to create jobs.
"The publication of the interim Hampton is welcomed by the retail sector. If the implementation of the final report delivers on the early promise shown today it would be a positive step forward in freeing business of the shackles on unnecessary regulation and letting them get on with what they do best - serving the customer and delivering economic growth.
EMPLOYMENT RELATIONS
Stakeholder Response: Chartered Institute of Personnel and Development
Mike Emmott, CIPD employee relations adviser, said: "Research suggests that giving employees more choice about their working patterns pays off in terms of commitment and performance. Increasing the length of time that mothers can spend at home before returning to work makes sense as part of a wider strategy to improve childcare.
"This is a step in the right direction. Nevertheless it is a missed opportunity. The government needs to look at the bigger picture and ensure there is help in place for other groups such as those responsible for elder care.
"We continue to urge the government to extend the right to all employees, which most employers already do in practice on a voluntary basis. In practice there is a lot of give and take in the employment relationship, it is a mutual relationship between employers and employees and there will be circumstances where an organisation cannot meet an individual's specific request for flexible working."
PROPERTY
Stakeholder Response: British Property Federation
Liz Peace, BPF chief executive, said: "The government has announced that it will not legislate on REITs in 2005, but will report back with a discussion paper by the 2005 Budget for further dialogue with industry representatives.
"The government will also be publishing at that time a summary of responses to the consultation it carried out over the summer. We are encouraged by the government’s commitment to continue its engagement with the industry to develop a well-designed vehicle.
"The government stated that it remains committed to tax reform that will improve the efficiency of the property market and has promised to continue its dialogue with the industry.
"We will, of course, through our ongoing lobbying, be continuing to emphasize to government the advantages for the UK economy of introducing REITs in a form and to a timetable that will allow the UK to capitalise on its expertise as a world leader in property investment and finance."
COUNCIL TAX
Stakeholder Response: Local Government Information Unit
Dennis Reed, chief executive of the Local Government Information Unit, said: "By helping local authorities to keep the lid on council tax increases in 2005/06, ministers may hope to have bought a second year of relative calm in which to develop reforms of local government finance that are essential for millions of council tax payers, local services and the future of local government.
"However, it seems that the problems that the remaining shortfall will cause could still leave some councils in a dispute about capping next spring. Funding for those vital local services that are not Whitehall's highest priority will remain tight and uncertainty still surrounds the financing of many of the new duties placed upon local government. There is also the distinct danger that too much reliance is being placed upon achieving Gershon efficiency savings as a means of redirecting funding to frontline services.
"In the longer term, with the revaluation of council tax bands taking effect in 2007, and the Lyons Review not making recommendations on the balance of funding until autumn 2005, the government is leaving it late to introduce reforms that are needed to make the council tax fairer and relieve some of the pressure upon domestic council tax payers. Without such reform, and if average income households face steep council tax increases from 2007, the crisis over the council tax will flare up again.
"As a result of delaying reform, ministers also still face their annual demands for extra one-off funding and a continuing dilemma over capping - a wasteful and bureaucratic process that undermines local democracy. Meanwhile, with recent independent studies demonstrating that the council tax increases of recent years were mainly caused by trends in central government policy, councillors around the country will resent having to make unpalatable decisions over tax and services that are not the result of anything they have done locally."
Stakeholder Response: Construction Products Association
Allan Wilén, economics director, said: "In a bid to avoid large-scale increases in council tax in 2005/06, the Chancellor has announced that £360 million of local authority expenditure will be removed from ring-fencing constraints. This is likely to result in the diversion of funding away from repair, maintenance and improvement spending on schools, social housing and local roads, as councils seek to address more immediate political priorities. We are also concerned that £512 million has been reallocated away from central government departments. It is not yet clear which departments will be affected but to ensure delivery of the government programme of capital investment in public services it is vital that capital allocations made in the Spending Review are not reduced."
DISABLED CHARITY RESPONSE
Stakeholder Response: Disability Rights Commission
Bert Massie, DRC chairman, said: "We have always said that more disabled people would be able to work if they were given the the support to do so. The success of the Pathways to Work pilot programme vindicates that opinion. I welcome the decision to extend the programme to other areas of the country and to continue them where they have already proven successful.
"The way forward is not to attack the social security benefits of those who need them but to support disabled people so they can acheive the economic and social independence to which they aspire."
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Published:
Thu, 2 Dec 2004 14:13:28 GMT+00
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