Budget Briefing: What the Chancellor announced

Mike Tuffrey

 

Posted in: Policy & Research

Budget Briefing: What the Chancellor announced

December 01, 1993

Training and Employment.

A modern apprenticeship scheme aims to increase the number and quality of young people trained through the workplace. It will be based on the current pilot arrangement for Youth Credits and will gradually replace Youth Training. Worst fears about cuts to TEC budgets have proved unfounded, with the government saying next year’s spending will be above this year’s expected outcome of nearly £1.7 billion. TECs are to be allowed to spend their reserves without prior departmental approval.

Community Action, the scheme introduced in the last Budget to provide opportunities to do part-time voluntary work in return for benefits plus £10 per week, is being expanded to 95,000 places.

A new childcare allowance worth up to £28 per week will be available to people eligible for the low wage supplement, Family Credit, for whom childcare costs are a barrier to returning to work. Informal childcare will not count.

SMALL BUSINESS

The main measures to assist small businesses are:

an Enterprise Investment Scheme to encourage new equity investment in unquoted trading companies by exempting capital gains and offering tax relief at 20% on investments. This replaces Business Expansion Scheme but excludes private rented housing. Investors can become paid directors, allowing the participation of ‘business angels’.

a Venture Capital Trust scheme offering tax free dividends and capital gains on pooled investments – a consultation paper on the details is to be issued early next year.

a consultation paper on late payment of bills was issued, giving options, on which interested parties must comment by March 31. A guarantee was given that on government contracts, contractors and sub-contractors will be paid on time

the relaxation of audit requirements for companies below £350,000 turnover

All companies will also be allowed tax relief on donations to the DTI’s new one-stop-shop initiative, Business Links, which assists new and small firms. This mirrors the concession already granted to contributions to TECs/LECs and local enterprise agencies. The time limit of all these reliefs is extended April 1, 2000.

CHARITABLE CAUSES

Unlike previous years, no announcement was included in the Budget concerning the changes to limits on tax relief for charitable donations, so they remain unchanged. The existing reliefs are: Gift Aid single payment minimum £250; Give As You Earn monthly maximum £75.

The overseas aid budget escaped uncut, despite fears beforehand; Britain’s total external assistance programme through the Overseas Development Administration will be £2,308 million in 1994/95.

The Business Sponsorship Incentive Scheme for the arts, administered by ABSA, is to get a 7% increase to £4.8 million, while the equivalent sports incentive scheme will get an extra 10% to £3 million. However the Arts Council will have about £3.2 million less to distribute in 1994/95.

However the severe squeeze on local authority spending continues and this will inevitably lead to more cuts in discretionary grant aid to local charities.

Comment

The package for small businesses is welcome, even if the details of the venture capital fund and a decision on £50 billion burden of late payments have been put off until next year. TECs will be relieved about their budgets and cautiously pleased their ideas on modern apprenticeships are being looked at. The new childcare allowance is a step in the right direction – 150,000 are expected to benefit. The main disappointment is the lack of measures for the long term unemployed. A start was made in the budget last March which introduced the trial ‘Workstart’ scheme, offering subsidies to employers to recruit the long term unemployed. No mention now of the results nor of any extension.

On funding, most government programmes have survived and even the Arts Council cut is less than expected. A knife has also not been taken to the new merged regional regeneration budget, worth about £1.4 billion.

The most significant impact on the voluntary sector is likely to be at the local level. Companies get more and more applications from small charities, desperate for funding as councils cut back. This will only get worse, yet the government has provided no new incentives to the private sector to fill the breach. Indeed more social tasks have been added this time, with the shift in responsibility for sick pay. Contrast that with their Herculean efforts to get essential capital schemes – public projects like roads, railways, hospitals and airports – funded by the private sector and now Alastair Morton, fresh from completing the Tunnel, is setting to work removing Whitehall obstructions. It is time government acknowledges the increasingly burdens placed on business to support the community.

Corporate Citizenship Briefing, issue no: 13 – December, 1993

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