A focus on getting people back to work but does it go far enough?

Alongside the expected announcements on extending energy support and inflation reduction, the chancellor’s budget focused heavily on getting people back in to work to fill the over 1 million vacancies in the economy. While many of these measures are welcome, they may not be enough or come soon enough to have a major impact on the economy in the short term.

In particular the focus on getting over 50’s back to work, who have left the workforce to re-join, feels slightly short of the mark, with “midlife work MOT” and “returnerships” perhaps not being enough to tempt people back to work, although the unexpected  scrapping of the pension’s lifetime allowance and raising of the tax free annual pension contribution to £60k per year will be welcomed by higher earners, including Doctors and Surgeons. The flagship announcement involved increasing free childcare to 1 and 2 year olds to try and get mothers back in to the workforce, although the staggered approach to this from April 2024 onwards will probably result in little impact to the economy in the short term.

There was a lack of major announcements for businesses, although he confirmed corporation tax will rise as planned to 25%, and that every single penny invested in IT or plant and machinery can be deducted in full from taxable profits, although it’s not clear from the Budget papers whether this is going to be limited to companies only.  The first year allowance of 50% will remain for other items such as for solar investment. Surprisingly (and disappointingly) there was no incentives announced for businesses to take on additional workers despite a major focus on getting people back to work.

From a South-West point of view, it was disappointing to see that no local region (or indeed any region south of Birmingham) was labelled as having the potential to be one of the 12 named investment zones (although we will get help with our potholes!). So often the South-West seems to be the region overlooked by both of the major political parties.  Having nuclear power classed as being environmentally sustainable and thus eligible for the same support as other renewable sources will no doubt be a boon for Hinkley and the surrounding economy. Carbon capture storage support could be a benefit for the rural sector who already provide a great deal of environmental stewardship.

To end on a positive note, it was good to see draught ale relief for pubs to help our wonderful local pubs of which we have many to compete with the supermarkets.

By Tracey Watts, Tax Partner at Albert Goodman

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