CHANCELLOR George Osborne arguably served up more aces in yesterday’s Budget than Andy Murray was able to muster when defeating Vasek Pospisil to reach his sixth Wimbledon semi-final. And although SMEs may see the introduction of a higher minimum wage as something of a double fault, Osborne’s first all-Conservative Budget was nothing if not audacious.
The Budget, which Osborne used to deliver a “new settlement” for British politics, was arguably a mix of Labour policies – a higher minimum wage, the abolishment of non-doms and a surcharge on bank profits – and those of the Conservative heartland; chiefly slashing welfare spending, cutting corporation and inheritance taxes and raising the higher rate of tax.
But should finance directors be cheering the Budget? Undoubtedly, the inclusion of another cut to corporation tax is a welcome surprise, while providing certainty the annual investment allowance – which has tended towards extreme highs and lows – will be also be welcomed.
Nevertheless, there were some nasty surprises. Smaller businesses will have to cope with increased staff costs through the introduction of a ‘living wage’ of £9 by 2020, which will only be partially offset by changes to the national insurance employee allowance.
The true test of Osborne’s success will be in his attempt to move the economy towards one centred on higher wages and lower taxes. It will also hinge on the government’s ability to boost productivity through smart transport investments, new enterprise zones and the Northern Powerhouse agenda the chancellor was so keen to promote.
Only then can the Budget be judged a Grand Slam victory for the chancellor.
Richard Crump is deputy editor of Financial Director & Accountancy Age