The Osborne Budget created something of a stir and with some late comments from trade associations below, there’s another occasion to reflect further on what it contained
If you read us last week, when we trumped the other weekly online publications with views on the George Osborne Budget, you would have gathered that as far as businesses were concerned, there appeared to be more in the pot than anticipated. Helping manufacturers, be they big or small with their investment plans, was generally welcome with measures like the doubling of the annual investment allowance to £500,000.
This was a point that the Council for Aluminium in Building (CAB) highlighted in its initial response. “The Annual Investment Allowance increase is particularly welcome to our sector,” stated Justin Ratcliffe, chief executive, CAB.
Where he was less than impressed was the usual decision by governments of any persuasion to accept that VAT on building repair and improvement should be lowered to 5%. House building was still well below the necessary annual 250,000 units necessary and on the subject of apprenticeships, the UK had much work to do to improve this and skills for the industry.
In this respect, Ratcliffe’s remarks were echoed by the last trade association to respond; the Glass and Glazing Federation (GGF). For years now, the GGF has campaigned for a VAT reduction to 5% and for years, the UK government has resisted such a move. Nigel Rees, chief executive, couldn’t hide his dismay. “…we are disappointed that there was no movement on the VAT rate on home improvements, repair and maintenance work”.
But this feeling went deeper than that and he was particularly fed up with the ‘green’ aspect, especially as Prime Minister Cameron had promised this government would be the greenest ever. “In addition, the distinct lack of incentives in this Budget to encourage homeowners to invest in energy efficient home improvements was quite incredible; particularly when you consider the extremely poor uptake of the Green Deal and how ambitious the Government was four years ago with its plan to reduce carbon emissions.”
No one can really blame Rees and others in the building sector, for finding governments, notably the Treasury, so obstinate when it comes to fiscal matters relating to VAT. It must have given quite a few mandarins palpitations over the years at the thought of reducing the rate to single figures.
In historical terms, that concept is not so outrageous. After all, up until 1979 it was 8% but once the owner of the Handbag moved into Downing Street, it was almost doubled to 15%. The two subsequent increases were based on government need to correct appalling decisions in which they had played a key part. In the first, in 1991, it was a 2.5% increase by John Major to pay for the fatal error by his predecessor to impose a poll tax. (Strange how the rate didn’t return to 15% after the governmental cock up was paid for by the citizens.) Another hike to 20% was because of the inexcusable decision by Gordon Brown of giving the leading lights of the financial services sector carte blanche to make the trough and swill bigger for themselves.
Perhaps it comes down to expecting too much in one afternoon in March to those who make up the Westminster bubble, for a politician to take out from his red box a series of announcements that will really answer all the problems besetting the national economy. But we must never underestimate the ego of every politician to be the focus of attention and waving order papers.