Autumn Budget 2021: Philip Fisher's instant reactionby
In record speed, here is an overview of a Budget speech containing relatively few substantive tax measures but most of which was leaked in advance.
Many accountants might have sympathised with Sir Lindsay Hoyle as he railed against the Chancellor of the Exchequer and Prime Minister about pre-Budget leaks.
Those of relatively mature years will recall the genuine excitement that preceded a Budget speech each spring.
Nobody would have the faintest idea of what the country’s major money man had in mind and his pronouncements would be filled with the kind of shocks that persuaded teams of experts to write publications through the night and present intelligent analyses to packed audiences the following day.
Since King Canute has gone out of fashion, in this regard it might be reasonable to compare the Speaker of the House of Commons to a climate protester gluing him or herself to the M25 in the sure knowledge that nobody who matters will even notice, though Rishi Sunak did acknowledge his errors and promise to do better next time. Don’t hold your breath.
This year, the biggest tax change didn’t even make it as far as the week of leaks. Instead, the 1.25% increases in national insurance contributions and income tax were cynically dressed up as an opportunity to raise funds to pay for social care, even though regardless of theoretical hypothecation at some point in the dim and distant future, the money is primarily filling a wider economic black hole. Is it also possible that this bad news came early in order to make the Budget speech more bullish and palatable?
That change has been followed by over a dozen more recent authoritative leaks and early announcements about public spending, although relatively few regarding taxation, which also kept a relatively low profile on the big day.
So, was there anything of interest to the accounting community in the Budget speech itself? You didn’t need to wait until the man stood up in parliament to find out. Overnight he gushed: "[This] Budget begins the work of preparing for a new economy post-Covid.
"An economy of higher wages, higher skills, and rising productivity. Of strong public services, vibrant communities and safer streets.
"An economy fit for a new age of optimism. That is the stronger economy of the future."
That might sound incongruous to those who know Rishi Sunak’s austerity instincts and have observed Universal Credit cut just as inflation threatens to run wild with power, petrol and food all costing noticeably more over recent weeks.
What ensued sounded very much like a combination of Party Political Broadcast and pitch to become the next Prime Minister.
There were some new announcements as well as more details on a number of previously announced or leaked measures:
Air Passenger Duty
This is a strange one since APT is to reduce for domestic flights just before COP26. On the other hand, long haul flights which are relatively few and far between will cost more. Readers might note the suggestion that frequent flyers should pay more fell on deaf ears.
Rationalising alcohol duties
There will be swings and roundabouts for drinkers, as duties might soon be based on alcohol content, should proposals included in a consultation document need to change. In the meantime, all duties were frozen for the umpteenth year in a row, even though this was described as a tax cut.
Despite a lot of bluster, the purported cuts to business rates primarily take the form of reliefs for capital spending. That isn’t great news for businesses on the brink already after a tough couple of years. More positively, there will be a temporary 50% relief for those in the retail, hospitality and leisure sectors, although once again that might not be enough to save some of the hardest-hit.
There is also to be an overhaul of the business rates system including such measures as a revaluation every three years, although this does not appear to go nearly as far as many business operators would like and, in many cases, desperately need.
Nobody would have bet against the extension of 100% Annual Investment Allowance and that duly came along. Once again, this will be good news for those smaller businesses that have money to spend.
Fuel duty frozen
Another bad call ahead of COP26 was the freezing of fuel duty. It doesn’t take a rocket scientist to realise that this will not help those who have already switched to electric cars.
The Chancellor sounded especially smug while boasting of £2bn of support for lower paid workers on UC. For some reason, he neglected to mention that this was to compensate for a £6bn overall cut.
There was very little to suggest that the government was taking any real steps towards levelling up the country, but maybe this will be hidden in the small print. It isn’t likely though.
It is still some way in the future but a consultation document has been issued seeking views on whether companies should be able to re-domicile to the UK more easily. Whether many would want to, given the effectively much greater distance from European markets may be open to debate.
R&D tax reliefs
These are to be “modernised and refocussed”, which in principle should be good news for those in the sector, although some may lose out when the small print is published and can be analysed.