Budget: National living wage up, fuel duty frozen and sunday trading laws relaxed

Chancellor George Osborne has vowed to introduce a "national living wage" of £9 an hour for over 25s by 2020 in the budget.

Gail Soutar - image:HW
Gail Soutar - image:HW

The Annual Investment Allowance was set permanently at £200,000 while he also vowed cut corporation tax to 18 per cent by 2020.

Fuel duties were frozen for the rest of the year and sunday trading laws are to be relaxed at the discretion of councils and elected mayors.

There are also changes to in-work benefits and the introduction of an apprenticeship levy. The levy is expected will see every employer paying in, with training subsidised by the funds. The employer of the apprentice will determine where training takes place (from approved institutions).

The chancellor will make savings by imposing a four-year freeze in working-age benefits and changes that include tax credits being limited to the first two children.

Housing benefit will be withdrawn from those age between 18 and 21, while tax credits and universal credit will be targeted at people on lower wages by reducing the level at which they are withdrawn.

NFU chief economist Gail Soutar said: "We are pleased that the Chancellor announced that he would be setting the Annual Investment Allowance permanently at £200,000. The NFU highlighted the need for the government to set a long term, substantial level for AIA in our manifesto in order to give some security to our farmers and growers who can better plan for the future by investing in their businesses – which is particularly important during these volatile times.

"Like many people across the country, our members will be relieved that fuel duty will remain frozen for the remainder of the year.

British Retail Consortium director general Helen Dickinson said: "There are some welcome changes in today's budget that will help retailers support job creation and drive growth. However, without knowing the detail of the fundamental reform of business rates the gains from today's budget for retailers and their customers are not clear.

"We welcome the Chancellor's focus on increasing productivity. This is a crucial issue for retailers and we are looking forward to the plan which will be published on Friday. I'm hopeful that it will contain more measures to give cheer to UK retail businesses.

Dickinson also welcomed the continued freeze in fuel duty and the increased personal tax allowance which "will provide consumers with significant extra help when balancing household budgets."

She added on Corporation Tax: "For every £1 retailers pay in corporation tax, they pay £2.30 in business rates. The high burden of business rates combined with other challenges retailers experience means that the cut to corporation tax in 2017 to 19 per cent and then 18 per cent by 2020 is welcome but not enough.

On the Sunday trading announcement, she added: "Clearly, devolving decisions on Sunday trading times to major towns and cities is a very significant step. A key issue will be how local authorities reach decisions around altering trading hours. Effective consultation with business and the community, clarity and certainty are essential. We will be looking very closely at the plans and working with our members to understand their views and priorities and develop and industry position as the consultation moves forward".

Local authority parks departments were braced for further cuts to local government funding, which would have hit them and other non-statutory services. However the budget did not include further cuts to in-year local government funding.

Cllr Gary Porter, chairman of the Local Government Association, was pleased no further local authority cuts had been made.

"Councils already have to find £2.5 billion in savings this financial year and these are proving the most difficult savings to find yet," he said.

"Councils will now be looking to the Spending Review in the autumn which will decide the future of our public services over the next decade. It is likely to see councils continue to face challenging funding reductions and spending pressures over the next few years. Government's goal should be to see how overall public money can be spent smarter and more efficiently.

"Without reform of the way public services are paid for and delivered, we predict councils could face a further £3.3 billion reduction in central government funding for local services in 2016/17 and a funding gap of £9.5 billion by the end of the decade.

"This will add pressure on vital services with many councils forced to make tough decisions, for example whether to close a children's centre to keep looking after vulnerable elderly people, or whether to switch off street lights to fix potholes in local roads."

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