At the start of the month, we made our predictions of what would happen in the 2014 Budget speech, which was delivered by Chancellor of the Exchequer George Osborne in Parliament this week. How did we score? Well, we’re not claiming to have been spot-on with everything we said, but we don’tRead More
At the start of the month, we made our predictions of what would happen in the 2014 Budget speech, which was delivered by Chancellor of the Exchequer George Osborne in Parliament this week.
How did we score? Well, we’re not claiming to have been spot-on with everything we said, but we don’t think we did half bad!
Here’s a rundown of what we predicted, and what actually happened on Wednesday.
We singled out export as a major area for focus, drawing on the Autumn Statement and on Mr Osborne’s recent visit to Hong Kong.
And on Wednesday, he made clear that “we are backing our exporters – so that wherever you are around the world, you can’t fail to see ‘Made in Britain'”.
He also outlined an increase in lending to businesses for export finance, making it doubly clear that international trade is high on the agenda.
We predicted specific support for innovative start-ups and for the newest businesses.
Mr Osborne announced increased tax credits on research and development in loss-making firms – helping to offset the initial costs of starting a new innovative firm.
We predicted the Chancellor would potentially introduce specific support for flood-affected businesses.
Instead, he outlined an additional £140 million to repair and maintain flood defences in general – not quite what we expected, but action nonetheless.
We predicted a “fairly toothless” pledge to support alternative lending.
In fact, the Chancellor was even more concrete on this, as peer-to-peer lending is coming within the remit of ISA allowances, allowing it to be a tax-free investment for those with funds to lend.
We suggested action might be taken on tax evasion and avoidance.
The Chancellor announced plans for those who use disputed tax avoidance schemes to have to pay that tax upfront, before the dispute process is completed – a move that is unlikely to be welcomed by many affluent individuals, but which represents action all the same.
With income tax allowances steadily increasing, we were unsure of whether the Chancellor could afford to play a taxation trump card this time around – and while he proved us wrong on that count, we were pretty close in our predictions of where any moves might be made.
Gambling duty changes came as a surprise to us, but it’s worth noting that reducing bingo duty is more than compensated for by increasing duty on machine-based gambling – meaning the Budget has actually increased revenues from gambling duty overall.
Fuel duty was never likely to fall, and the freeze that was ‘announced’ had already been made public; the drop in duty on methanol as a vehicle fuel is so niche as to be almost meaningless to the vast majority of people.
Alcohol duty was a coup though – another penny off the pint is a big crowd-pleaser, even if the ill-judged ‘Beer and Bingo’ ad circulated after the Budget alienated the social networks.
But there was also action on specific categories of drinks, just as we predicted.
Duty on Scotch whisky (and other spirits) was frozen for 2014-15 – perhaps a political move, with the Scottish independence referendum on the horizon.
The wine duty escalator has been abolished, so wine and beer will face similar duty in future.
And duty on ordinary cider has also been frozen for this year – that’s everything except for strong sparkling cider (above 5.5% abv).
Overall, the moves made on alcohol duty had much greater reach than expected, especially as part of an ‘austerity Budget’, but we’re pretty pleased with the accuracy of our predictions in general.