3:33pm Wednesday 5th December 2012
WESTMORLAND MP Tim Farron and Penrith MP Rory Stewart have welcomed today's decision by the Chancellor to scrap an increase in fuel duty planned for January.
In what proved a mixed picture for the nation's finances with borrowing being higher and growth slower, businesses and finance groups said there was still some cheer to be found in the autumn statement from George Osborne.
One of the key headline-grabbing announcements was the scrapping of the planned 3p per litre increase, following significant pressure from MPs including Mr Farron and Mr Stewart.
Mr Farron said: “This is incredibly important to people in rural areas like ours. For us a car is not a luxury, it is a necessity of life and fuel costs are a major issue particularly for hardworking local families who are struggling to make ends meet already."
Rory Stewart, MP for Penrith and the Border, also welcomed the temporary increase in the Annual Investment Allowance, from £25,000 to £250,000 for two years from 1 January 2013, and the temporary doubling of the Small Business Rate relief scheme.
Mr Stewart said: “This news will give a huge boost to Penrith and the Border, which has almost the highest concentration of small businesses of anywhere in the country: 92% of our businesses employ fewer than 10 people, and 27% operate from someone’s home. It will allow these small companies to invest in machinery, hire apprentices, and unlock surplus cash tied up elsewhere to stimulate activity to grow their business.”
Dorothy Fairburn, CLA North Regional Director, said the Chancellor’s decision to increase the annual investment allowance for plant and machinery 10-fold from £25,000 to £250,000 was "great news for the rural economy in the North."
She said: “This means farmers will be able to claim 100 per cent capital allowances against their earnings on up to a quarter of a million pounds of equipment a year, for the two years from January 2013. This could kick-start investment in farm machinery, renewable energy projects and other diversified rural businesses.”
Miss Fairburn said she was disappointed the Government "continues to fail to recognise that many small rural businesses are not incorporated."
“The Chancellor’s reduction in the Corporation Tax rate to 21 percent is of no use to a sole trader or partnership, the favoured business structures in the countryside.
“We welcome the introduction of the simpler system of cash-based accounting although the ceiling of £77,000 turnover means that it will be of little use. However, if the threshold were increased, it could be an excellent scheme and make a real difference to rural businesses.”
The Forum of Private Business described the statement as a "helpful springboard for UK economic growth in 2013 and beyond."
The business lobby group welcomed a number of the schemes outlined by the Chancellor, such as a 10-fold increase in the Annual Investment Allowance, a 25 per cent increase in the budget of UKTI to promote exporting.
Meanwhile, Sean McCann, personal finance specialist at NFU Mutual, said: “With growth well below forecast figures, and government borrowing increasing, rural businesses and families are going to come under more pressure as a result of the Chancellor’s new measures.
“While scrapping the planned 3p a litre fuel duty will help, reductions in the amount people can invest in pensions will restrict opportunities for farmers to save for their retirement. However, there is an opportunity before 2014 to make the most of tax efficient savings for retirement.
"A temporary two-year increase in the annual investment allowance will help agribusinesses invert for the future, and the 1% cut in Corporation Tax will benefit farm companies. The Inheritance Tax threshold will increase from 2015 – but only by 1% - so the opportunity to pass on assets to the next generation free of tax is still being eroded by inflation.
“There was good news, the point at which you begin to pay income tax and the threshold for paying the 40% rate have both increased.
Graeme Leach, Chief Economist at the Institute of Directors, said: “This was a tricky job, well done. Faced with a weaker outlook for GDP growth, the Chancellor needed to raise business confidence whilst at the same time keeping the deficit on a downward path.
"And he largely succeeded, particularly with the surprise reduction in Corporation Tax. Ideally, we would have wished for further and faster deficit reduction but political reality always made this unlikely. Business confidence will be boosted by the corporation tax cut.”
Melanie Christie, ICAEW North West Regional Director, said: “The Chancellor has gone for growth and wants to show that the UK is open for business. The reduction in corporation tax will be welcome news for larger companies and will encourage inward investment."
"There are still a number of juggernaut policies devised in Treasury by people who do not understand the realities of running businesses. Policies such as the new PAYE reporting system will create additional burdens on business at a time when they should be focusing on growth. Until these policies are made more flexible, deficit reduction will continue to be slow and growth will take longer.”
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