Reactions to the chancellor’s statement
20 March 2014 1:02am
THINK TANK’S TAKE
Director at the Adam Smith Institute
The libertarian think tank applauded the freedom granted to pensioners.
“At last Britain's private pension savers will be treated like responsible adults. As lifetimes have lengthened and financial uncertainty has abounded, annuity rates have fallen, leaving savers much worse off then they expected. The rule has long been that, apart from a proportion that can be taken as a lump sum on retirement, pensioners have had to convert their retirement pot into an annuity, paying them a lifetime income... From April 2015, retirees will be able to access their pension savings pretty much as they wish.
“Most people are perfectly capable of managing their retirement income and do not want to fall back on the state anyway. The new rules recognise that.”
THE VIEW FROM THE CITY
Chief executive of TheCityUK
The finance lobby group was upbeat about the Budget’s measures to foster investment.
“This Budget recognises that financial services are the powerhouse of the UK economy. The chancellor has sought to make it more attractive for people to take personal responsibility and save more for the longer term. That will add to the stock of capital available to fund business growth and stimulate infrastructure investment, making the UK even more attractive to foreign investors. The additional funding for the Financial Services Trade & Investment Board shows how serious this government is in supporting its largest export earning sector and encouraging inward investment. The chancellor has set out a positive vision for the economy beyond the financial crisis.”
THE BUSINESS GROUP
Director general of the CBI
The CBI had lobbied for the Budget to introduce policies that encouraged investment in businesses, energy and the supply of housing.
“The Budget will put wind in the sails of business investment, especially for manufacturers.
“This was a make or break budget coming at a critical time in the recovery and the chancellor has focused his firepower on areas that have the potential to lock in growth.
“It’s encouraging to see higher than expected growth in the short-term, but as the chancellor recognised, tough challenges remain ahead, so it’s right that the Budget reflected the fiscal reality.
“The economy needs to rebalance and this Budget will help businesses hungry to invest and export.
“Housebuilders of all sizes, in all regions, will welcome the chancellor's move.
THE OPPOSITION’S RESPONSE
Leader of the Labour party
The Labour leader responded to Osborne’s speech in parliament yesterday. The following is an extract from his reply.
“The chancellor spoke for nearly an hour. But he did not mention one central fact: the working people of Britain are worse off under the Tories. Living standards down: month after month, year after year. And since the election working people’s living standards £1,600 a year - down. You’re worse off under the Tories.
“And today the chancellor simply reminded people of the gap between the chancellor’s rhetoric and the reality of peoples’ lives.
“Living standards falling for 44 out of 45 months under this Prime Minister. Unmatched since records began. No amount of smoke and mirrors today can hide it.
“And the chancellor trumpeted the tax allowance today. But what he didn’t tell you is that it is the same old Tory trick. He didn’t tell you the rest of the story. He didn’t mention the 24 tax rises introduced since he became chancellor. He forgot to mention that he put up VAT. He taxed away child benefit. He raised insurance tax. And gave us the granny tax. It’s a classic Tory con.
“But there is one group who are better off. Much better off. We all know who they are. The chancellor’s chums. The Prime Minister’s friends. The Prime Minister rolls his eyes, he doesn’t want to talk about the millionaire’s tax cut. No mention of it in the Budget speech. The beneficiaries of this year’s millionaire’s tax cut.
“Because if you are a City banker earning £5m and you are feeling the squeeze, don’t worry because they feel your pain.
“At the heart of the argument we will have over the next fourteen months is this question: whose recovery is it? Under them it’s a recovery for the few not the many.
“Bankers’ pay in London rising five times faster than the pay of the average worker. This recovery’s not working for working people whose living standards are falling.
“There are more sides in the Tory briefing war than there are on the new pound coin. We don’t need a party for the privileged few. We need a party for the many.”
THOUGHTS FROM DIRECTORS
Director general, Institute of Directors
The IoD was disappointed by the lack of reform on the 40p tax rate.
“This is a responsible and imaginative Budget which should promote growth, exports and investment. It will be widely welcomed across the business community.
“We applaud the strengthening of the link between savers and business investment, through Isa and pension reforms. This has the potential to bring profound change, shifting our culture from debt to savings.
“Whilst we support the increase in the income tax personal allowance, we are disappointed that more and more workers will be dragged into the 40 per cent income tax band, as the chancellor has failed to raise the higher rate tax threshold by any meaningful amount.”
WHAT CITY HALL THINKS
Mayor of London
London was earmarked for funding and support in the Budget, including work on a rail extension at Barking and housing redevelopment at Brent Cross and several housing estates.
“London is the throbbing engine that powers the UK economy and the government’s Budget recognises the arguments made doggedly to them by myself and my team, which are that with the capital’s population increasing at a simply staggering pace this engine requires more fuel.
“The commitments being made today will allow us to motor ahead with putting a platform in place that will allow us to deliver the new homes and jobs that are critical to the continued growth of this great world city.”
The Mayor’s office also hailed the chancellor’s pledge to provide VAT relief for development work at Old Oak Common, a project that it thinks could be worth £6.2bn for London’s economy.
THE COMMERCIAL REACTION
British Chambers of Commerce head
The chancellor gets the stamp of approval from the chamber of commerce, which had hoped for more help for young workers.
“Business wanted a Budget that was disciplined, focused, and geared towards the creation of wealth and jobs – and that’s what the chancellor has delivered.
“With a huge confidence gap still separating employers from young job-seekers, we are very pleased to see the chancellor heed our call to help firms take on and train tomorrow’s workforce.
“Osborne’s focus on investment, exports, house-building and economic resilience passes the business test. By making a better business environment his top priority, the chancellor has recognised that successful and confident companies are the key to transforming Britain’s growing economic recovery into one that is felt in homes and on high streets.
“As with any Budget, there were some populist measures that were not at the top of business’s wish list. Luckily, these were far outweighed by considered measures to support business growth and wealth creation.
“Many of these measures are excellent for now, and for the future. Yet the nurturing of a truly great economy requires more action than one Budget can deliver. At the upcoming general election, Britain’s entire political class must commit to a long-term programme that delivers better infrastructure, a stronger skills base, access to finance for growing companies, even more export support and a clear, consistent tax environment. Otherwise some of the chancellor’s welcome moves might not have the desired effect in years to come.”
THE UNION’S REPLY
Unite general secretary
The union thinks the Budget benefited wealthy savers at the expense of the rest.
“Ordinary people will be asking themselves are they better off? The simple answer is no. This was a blue rinse budget for the stockbroker belt who will celebrate their tax reductions and help with their savings.
“But for real Britain, this is devoid of hope and genuine effort to tackle the crisis in living standards facing ordinary people. Where we needed action to boost wages to stop the biggest fall in living standards since the Victorian era, we got the promise of endless austerity and more cuts to the services our communities rely on.”
THE TAX EXPERT’S RESPONSE
Deloitte’s head of tax policy
“Today the chancellor produced a Budget focused on savers, with additional funds devoted to bingo players and drinkers.
“The proposed changes to defined contribution pensions – which now cover 13m people – will help individuals manage their own savings more effectively. It is good to see that the Government is providing funds to help prospective pensioners with advice to cover the much wider range of choices.
“The main business tax measure is the boosting of the annual investment allowance... This allows businesses to get immediate tax relief on investments in plant and equipment. While the relief is welcome, constantly changing this relief is complicated to understand and may not have quite the beneficial effect intended.”
WHAT A FINANCIAL ADVISER THINKS
Chief executive of Brewin Dolphin
“Today’s Budget has unleashed a raft of measures that will be hugely welcomed by our industry and our clients. We have long campaigned against the iniquities of the annuity market and so we are delighted to see savers freed from those restrictions and that pensions have been underpinned as a key plank of the nations’ savings. The reforms announced will allow us to go forward with certainty and advice our clients that pensions are no longer seen as an easy target for stealth taxes. We look forward to working with the Treasury and the industry to see how the ‘right to advice’ can be delivered.
The increased Isa allowance and the new flexibility for Isas is significant too for our clients and the industry.”