Whilst there is still some considerable ground to cover, the modest measures Mr Healey announced can be called steps in the right direction.
Businesses wanted something – anything – from this year’s Budget, and they got a little bit. The rise in the threshold at which retail businesses start paying business rates, accompanied by an extended taper arrangement, will be particularly welcome in Norfolk.
Likewise, improvements to the capital allowance first year allowances and the increase to the authorised mileage rates to 55p and 35p are small but nevertheless positive measures. They point to a Chancellor who gets that businesses should not be regarded as cash cows, but as crucial drivers of growth in the economy which need support.
The introduction of ‘Founders’ Relief’ to encourage high-growth, high-value innovative businesses is welcome, but is accompanied by a further erosion of Business Asset Disposal Relief, which is relevant to a far greater number of entrepreneurs. However, increases to the rate of Capital Gains Tax did not materialise as initially floated, which is a positive result.
The Budget was notable for what was not included: no shift in policy on the family farm tax, no mention of the imminent imposition of inheritance tax on pension pots, and no movement – even by the rate of inflation – in the £5,000 employer’s national insurance threshold which has been so damaging to many businesses.
Mr Healey has also clearly kicked some major spending decisions such as defence and welfare down the road. These are significant issues which will impact on the wider economy, and can’t be ignored for ever.
We can characterise the Chancellor’s first Budget as safe, lacking boldness, but ultimately responsible. Business will give a cautious welcome to a speech which indicates a new approach: a good start, but plenty more to do.
