“So, how to sum up the Budget yesterday? If we were to use the plays of William Shakespeare as our guide, the Tories would no doubt hope it is a case of "All’s Well that Ends Well" Labour on the other hand would say it was "A Comedy of Errors". In truth, it was probably a case of "Much Ado about Nothing".
To be fair to the Chancellor, having decided he was going to stick to his mantra of ‘not borrowing to spend’ (although it could be argued that borrowing has actually increased in real terms), there was very little he could actually do. Without borrowing, the only way to inject ‘new’ money into the economy to try and stimulate growth is by cutting government spend. What he announced therefore was a series of small measures covering a wide a scope of people as possible, specifically:
LOWER PAID – Increase in the Personal Allowance (the amount before any tax is paid) to £10,000 from 2014 (but National Insurance will still apply below this amount!);
MOTORISTS – Planned 3p rise in fuel duty for September scrapped;
HOUSING – 2 schemes here. 1st – extension of shared equity schemes and interest free loans for homebuyers on up to 20% of value of newbuild properties. 2nd – Bank guarantees to underpin £130bn of new mortgage lending for 3 years from 2104;
DRINKERS – "Penny off pint" – beer duty cut by 1p;
SMOKERS – Cigarette duty unchanged (just inflation increase);
FAMILIES – 20% tax relief on childcare up to £6k per child from 2015;
BUSINESSES – 2 measures. 1st – Corporation Tax reduction to 20%, single rate from 2015. 2nd – Employment allowance to cut National Insurance by £2k for every firm.
So it is really only these last two measures that will affect our travel businesses and whilst they will both be welcome, the silence on APD – meaning it will simply increase in line with inflation – was likely more deafening! Must also bear in mind the usual ‘health warning’ that accompanies any Budget nowadays – the ‘soundbites’ are fine, but full judgement will be reserved until all the details are known!
Mark Caldicott is partner at White Hart Associates
