July Budget 2015: From the pensions expert to the PwC economist, reactions to the chancellor’s statement
THE BUSINESS GROUP
Confederation of British Industry director general
John Cridland
Firms will welcome measures to boost investment but will be worried about paying living wage.
“This is a double edged Budget for business. Firms will welcome measures to balance the books and boost investment, but they will be concerned by legislating for wage increases they may not be able to deliver. Firms have been unwavering in their support for the chancellor’s deficit reduction plans and will welcome the clarity that the new fiscal rules provide. Other standout measures include making the Annual Investment Allowance permanent at £200,000, which the CBI called for, as well much-needed investment in our roads network.”
THE PENSIONS EXPERT
Redington co-chief executive
Robert Gardner
It was a step in the right direction, but a lot more needs to be done to encourage a savings culture.
“When we consider the scale of the pensions problem facing the UK, today’s Budget is akin to re-arranging deckchairs on the Titanic. Having made wide reforms to pensions in 2014, the government needs to continue to be bold and foster a dramatically different savings culture. However, we are encouraged by today’s announcement the government will not neglect those beginning to save for a pension, and agree radical reform is needed to help the younger generation. We await the publication of a green paper with interest.”
THE ECONOMIST
PwC chief economist
John Hawksworth
Austerity is set to end a year later than planned. However, there is still pain to come with cuts to welfare. Unprotected departments and local authorities will be on basic rations.
“The chancellor has decided to end austerity a year later than planned in his March Budget, but with broadly the same end point of a small budget surplus by 2019-20. This results in a smoother profile of real spending cuts, which is sensible in allowing affected government departments, local authorities and households more time to adjust. But there is still a lot of pain to come. Welfare cuts totalling £12bn by 2019-20 will weigh heavily on lower income working age households, although the new national living wage will offset this for some workers. Unprotected government departments and local authorities will face a further Parliament on basic rations.”
THE OPPOSITION’S RESPONSE
Opposition Leader
Harriet Harman
He has ducked the issue of Heathrow expansion, pulled the plug on rail, and has not done enough to stop tax avoidance. It is based on political tactics rather than economic strategy.
“The chancellor is said to be liberated without the ties of coalition holding him back. What we have heard today suggests he has liberated his rhetoric from its connection with reality. A Budget for working people? How can he make that claim when he is making working people worse off and scrapping grants for the poorest students.
Long term economic plan? What kind of long term economic plan when they are ducking it on Heathrow? Northern economic powerhouse? But he’s pulled the plug on rail investment? And as for One Nation Britain? How can he even stand and say those words when while he cuts tax credits for working people, he has not done enough to stop tax avoidance. More than seven years after the financial crisis – five of which were under this Tory chancellor – the country is still dealing with the consequences and the recovery is still fragile. Today’s Budget document shows growth has been revised down this year.
Of course there need to be tough decisions to get the deficit down.
Had we been in government, we would have cut spending outside protected departments and reduced the welfare bill. This Budget is less about economic strategy, more about political tactics designed by the chancellor to help him move in next door. The most important thing for working people is sustainable jobs, in productive firms, in a competitive economy.”
THE TRADE UNION’S VIEW
Trade Union Congress general secretary
Frances O’Grady
Young people will not get the boost minimum wage rises but will have grants and benefits cut.
“The chancellor is giving with one hand and taking away with the other. Massive cuts in support for working people will hit families with children hardest.
The chancellor has finally woken up to the fact that Britain needs a pay rise. The TUC has long campaigned for the minimum wage to rise faster and the chancellor has listened to us at last. For young people, it was all bad news as they will not get the minimum wage boost and will suffer from cuts to higher education grants and housing benefit. And it was not a one-nation budget for public sector workers who will face years more of cuts to real wages.
Massive tax cuts for the wealthiest show the Conservatives are still the party of the inheritors, rather than the workers.”
THE TAX EXPERT
EY head of financial services tax
Anna Anthony
The new system of a lower bank levy with profit surcharges will be good for the sector after 2021.
“A reduction in the rate and scope of the bank levy will be very welcome news for the sector, and can be seen as an acknowledgement from the government that the UK does need to remain a competitive location for global financial services companies. The introduction of an eight per cent surcharge sounds high, but is likely to be more acceptable than the levy because it at least has a direct link to the profitability of an institution.
However, the mismatch in the timing of the dawn of the surcharge and the sun-setting of the bank levy is significant – it increases the tax take from the sector considerably between now and 2021. So while the changes outline a direction of travel and a certainty of taxation for the sector that has been long called for, this is at the expense of additional pain in the short term.”
THE HOUSING EXPERT
Global head of research, Knight Frank
Liam Bailey
Changes to non-dom tax rules will not hit the prime London market.
“On their own, the changes to the non-dom tax rules will not have a profound impact on the prime London market as demand is driven by a number of factors, and non-doms form only a part of demand.
These reforms follow a series of changes in recent years that make it increasingly difficult to argue prime residential property is under-taxed.”
RETIREMENT SPECIALIST
Technical director, Key Retirement
Dean Mirfin
Raising the inheritance tax threshold will help pensioners to plan their estate.
“This news will be very welcome to the majority of pensioners who have invested heavily in their homes, and invested for a great many years. This move will enable many retirees to more effectively plan their estates and to secure greater protection for what for many is their most valuable, or only real, asset. Following the changes to death benefits held in pension assets, this makes effective estate planning more straight forward. However, it will still require appropriate advice and planning both in terms of the tax itself and also in ensuring that wills and power of attorney are in place to ensure that wishes are carried out to the full.”