ACE has undertaken a comprehensive analysis of the 2012 budget, the economic and fiscal outlook from the Office for Budget Responsibility and the Infrastructure Delivery Update.
The Chancellor of the Exchequer issued his budget this week, reflecting many of the issues and ambitions that ACE has been working towards on behalf of our industry.
The theme of investment in infrastructure seen in the Autumn Statement was carried through to a number of specific measures, while some attempts were made to better support small businesses and generate private investment in significant projects. However, concerns remain over certainty for investors as the Chancellor suggested that a number of programmes may be brought to a close.
Following the announcement in autumn that pension funds will be approached to fund a further £20 billion of infrastructure investment, the Chancellor announed the establishment of a new Pension Infrastructure Platform owned and run by UK pension funds. This will make the first wave of its initial £2 billion investment in UK infrastructure by early 2013.
On energy and decarbonisation, the Chancellor revealed that a new strategy for gas would be published in the autumn, possibly heralding a new dash for gas. At the same time the Green Investment Bank has been launched and will make its first green investments in April 2012. However, further uncertainty for green investment was created when the Chancellor revealed he would consider replacing the Carbon Reduction Commitment if significant administrative savings could not be found.
From April 2013 the Government will introduce a new cash basis for calculating tax for small unincorporated businesses so as to help reduce the addministrative burden of paying tax. The government will consult on the details of the scheme and whether to extend eligibility to businesses with turnover up to the VAT registration threshold of £77,000. ACE’s Benchmarking Lite report revealed that if small companies could increase their billable time by just 10 minutes a day in place of administration work, the average company would generate 3% extra revenue and average profits would rise by 30% from their current level.
Alternative means of financing infrastructure investment were set out. From 2013 all local authorities will be free to use tax incremental funding to finance projects. The government will also consider allowing city mayors to borrow against future Community Infrastructure Levy receipts where this can make a significant contribution to national infrastructure.
The Infrastructure Delivery Update was published alongside the Budget, setting out a range of projects underway and making progress across the country. These included proposals for enhancing capacity on the A14 and expansion of the Northern Hub programme.
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