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George Osborne continued the government’s theme of rebalancing the economy in his first spring Budget in office. Alongside measures aimed at reducing the impact of price rises on household budgets, there was a greater emphasis on how to stimulate business growth.
These business growth measures were outlined in the Plan for Growth, which aims to increase the UK’s competitiveness in terms of tax, business development, exports and education.
Investment and regulation
The Chancellor announced extra funding and an earlier start for the Green Investment Bank. This will see additional money made available for the new institution to start supporting green investment. There was also a commitment to consider allowing it to borrow commercially in future.
Proposals were also revealed to establish Enterprise Zones and development corporations to help to stimulate economic development, particularly outside of London and south east England.
In the first wave eleven such zones were announced, with the door open for a further ten as different locations apply for the status. These areas may benefit from incentives to invest through lower business rates and eased planning requirements.
There was also a welcome commitment for planning authorities to presume in favour of sustainable development. Planners are expected to better prioritise growth and jobs. It is hoped this will help to ensure a balanced view of development at a local level.
Investment in infrastructure is vital for economic growth. Without a rigorous focus on overcoming barriers to private sector investment, the economy will continue to face challenges. As such, the announcements represented a starting point, but leave much more to be done in the years to come.
While these measures were talked of with a view to strengthening private sector investment, there were few other detailed proposals to encourage investment in infrastructure. Nor were there further proposals to increase transparency across government.
“There is scope for further structural reforms to tax, procurement, planning and regulatory regimes, as well as prioritising education spending to support technical skills,” said ACE chief executive Nelson Ogunshakin OBE. “All of this will help to encourage economic growth and prepare the UK for a low-carbon future.”
Housing stimulus
The government announced a new scheme to safeguard jobs in the construction sector by re-invigorating the housing market. This will see first-time buyers provided with loans paid for in part by government, and in part by housing developers. In return both parties will retain a share of the property until it is later sold by the original buyer.
The Chancellor also offered business a larger-than-expected 2% cut in corporation tax rates and announced an extension of the business rates holiday that will also be welcomed by companies.
However, there was little attention paid to reform of regulated infrastructure to achieve lasting efficiencies. There will also be questions over whether the proposed carbon price floors are high enough to drive investment in low-carbon energy.
Much of the detail remains to be developed, though. While ACE would query the lack of progress on some issues, there is still an opportunity for industry to help shape the UK’s approach to growth. “Business is keen to help make this happen,” said Nelson Ogunshakin. “Meaningful collaboration and a concerted effort from industry are vital to make the most of the possibilities open to the UK.”
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