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2016 Budget Analysis

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Firstly a big thanks to Cowgill Holloway for hosting a great event at the AJ Bell Stadium and the hospitality of Rob Lord and the Cowgill team who did a great job. Assisted by our Chair for the day Michael Taylor, former parliamentary candidate for Marple amongst his many achievements, with social & PR guru Jess Wilkinsonproviding PR support for the event.

This budget always promised to be a prelude to the Chancellor’s efforts to “move next door” at the next election, with many seeing him as the natural heir to the current Conservative Party Leadership and part of the team that many believe have allowed the UK Economy to advance disproportionately against its competition in the G7 & EU, second only to the US in reducing debt.

To his detractors, this budget could also be seen as “Tory window dressing” from a Labour perspective and “anti-Brexit rhetoric” if you are Boris Johnson or part of the Brexit lobby. See my forthcoming Brexit blog if you want to hear my views on that…

Below are the key deliverables and my “verdict” which clearly are my personal views, but a serious attempt to at least not sit on the fence.

Key areas of note:

Budget for the young?

  • ISAs – changes welcomed and give the under 40s the chance for more flexible options and better tax options than the classic pension route.
  • Government backed starter homes – still pushing this but again reality is only time will tell and the fact is it will remain difficult for people to get on the property ladder, especially in the South East
  • Minimum wage – no change or mention (a real split of opinion on this)– changes to the ISA rules are a welcome compromise between encouraging spending in the economy and encouraging younger people to save for retirement. Increasing the ISA allowance to £20,000 will mean more people’s savings will stay outside the tax net. The new flexible lifetime ISAs – if they allow for withdrawals and replacement of savings – will help younger people save for a home and then top-up again as they get older.

If you are a young aspiring earner then this budget may be good for you, but the devil will definitely be in the detail on ISAs vs pensions and promises.


POSITIVE for the young, but with a lot missing. My personal view is this is as political as it is positive, the young still face bigger financial challenges than they should for a G7 economy. Putting the Next Generation First is great political fodder but I suspect many under 30s won’t feel that that is the reality.


Budget for the Small / Medium Business sector?

  • Capital Gains Tax – the Chancellor’s plan to reduce CGT rates (from 28% to 20% and 18% to 10% for higher rate and basic rate taxpayers, respectively) is welcome for entrepreneurs and others investing in businesses, as well as those with large share portfolios who may be hit from April 2016 by the higher taxes on dividends. It’s yet another disappointment, however, for owners of buy-to-lets and second homes who fail to benefit from this latest initiative.
  • Entrepreneurs’ relief – the reintroduction of the availability of CGT entrepreneurs’ relief on goodwill when a business is transferred to a company is welcome news. The tax relief has been backdated, so anyone who has incorporated since 3 December 2014 should check to see if they are entitled to take advantage of this pragmatic change.
  • Tax relief on historic company losses – on the plus side for many businesses, there will be welcome changes for the relief of losses from April 2017, bringing the UK system more in line with its G7 neighbours. It means far fewer SMEs will end up with trapped unusable losses in the future. For companies with profits over £5m there will be some restrictions, but the Government expects this to affect only about 1% of UK companies.
  • Rates Reductions – positive changes no doubt, especially for anyone renting in the under £1m business property category, but I can’t help think this was an easy call. The Councils are the ones who have paid for this and when they gain more autonomy they will be the “bad guys” politically who will need to eventually raise these to pay for local amenities.


10/10 for politics, 7/10 for deliverables.

Very positive that owners feel some reward and staff gain benefits too, but many of these “wins” are simply by moving finances from other sources, detractors would say “robbing Peter to pay Paul”. Overall, though, I think the SME sector has been looked after and a clear message to larger tax dodgers was, in my view, purely political and still disappointing that large international corporates will remain too big to take on by UK Government and HMRC.

Other points of note:

  • Major infrastructure investment can only be good for Leeds, Manchester, Liverpool and Sheffield in particular – for me this is keeping up with the EU and nothing more.
  • London gains with Crossrail 2 which “will be good for anyone living in North London who is heading South” (a veiled joke at the expense of Mr Corbyn).
  • Sugar Tax – great strides but a lot more needs to be done and if putting the next generation first is key then this will impact everyone, including the NHS.
  • Homelessness – a large sum of money may have been given to tackle this, in my view this problem is not a £150m problem, it is fundamental to society and needs to be properly looked at. This was window dressing in my personal view and was a low point for the Chancellor and UK Government as a whole. I travel a lot and most UK cities have big homeless issues. Gary Neville is doing more than George, and with their comparative financial clout, that simply isn’t good enough.


The Economics were positive for those people who George Osbourne sees as the captive audience he needs to attract to win the keys to No.10 and move into the role he is now clearly pitching for. Michael Taylor did a brilliant job of highlighting just how many times the Chancellor mentioned the phrases “Budget for the Young” and “Putting the Next Generation First” and I suspect we will find out whether the young and the poor truly believe that.

For established “middle England” and the Business Community, I can’t speak for everyone, but this felt like a safe pair of hands confirming that the Economy at least is protected as much as it can be from poor fiscal policy, and he made it clear we will never over spend back into a growing deficit. It’s a fine balance to tread but I think if Mr Osbourne wants to be PM, I personally would like to see him demonstrate the leadership skills to tackle big corporates and gain revenue fairly from those sources, removing any doubt that he has the metal to tackle bigger opponents on the global political stage.


Political – 10/10

Whether you love or hate George Osbourne, his goal was to turn this budget into his “pitch” to be the next PM and he delivered exactly that. However in my view, the Budget should be the pitch for him to prove he is delivering for the UK people and he should be judged on the execution and success, not just what he sets out to deliver. Governments are ultimately judged on performance, not how well their manifesto was written.

Reality – 6/10

In my personal view winning the political battle is a thing of the past. The average UK citizen can see through rhetoric and the next Election will hopefully have a large dose of reality fed by social media and better understanding. He has helped hard working people who are well enough to be able to earn and support themselves, but it will be fascinating to see whether the social issues affecting the young, the poor, the homeless and those less fortunate decide who holds the keys to Number 10.