By Scott Wright
THE first Budget from the new Conservative Government has provided “powerful incentives” to boost business investment, one of the country’s biggest lobby groups has declared.
Chancellor Rishi Sunak’s debut Budget contained a raft of short-term measures to help steer small firms through the coronavirus crisis.
But it also handed large businesses with incentives to invest, according to the Confederation of British Industry (CBI).
While corporation tax remained unchanged at 19 per cent, Mr Sunak extended R&D (research and development) expenditure credit from 12% to 13%, and increased the structures and buildings allowance from 2% to 3%.
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And there was a commitment to increasing investment in R&D by £22 billion by 2024/25 to encourage innovation, a move welcomed by Anton Muscatelli, principal of the University of Glasgow. This includes £800m of “blue skies” funding to emulate the US Advanced Research Projects Agency (ARPA) in the UK.
Dame Carolyn Fairbairn, director-general of the CBI, said: “The Chancellor has listened to many calls from CBI members, with decisive action on vital long-term issues.
“The significant uplift in R&D funding, creation of a UK version of ARPA, a fundamental review of business rates (in England) and spending promises on infrastructure will all bring real benefits to people, business and communities.
“The Chancellor has set out some powerful incentives to get businesses investing, increasing the R&D tax credit and the structures and buildings allowance.
“The £5bn of new export loans will encourage the best of UK business to look to new global markets.”
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But the Scottish Retail Consortium appeared less sanguine in its response.
Director David Lonsdale noted that, with economic growth not forecast to exceed 2% in any year of this parliament, there could be an impact on consumer spending and government revenue. Mr Lonsdale warned: “If there is an economic shock due to the virus, the Chancellor may need to take further action to support consumers later in the year.”
The Scotch Whisky Association welcomed the decision to freeze spirits duty, at £28.74 per litre of pure alcohol, though it had been calling for it to be cut in light of the damaging import tariffs on single malt imposed by the US in October.
The Chancellor also committed £10m to help distillers “go green”, and £1m to promote Scottish food and drink producers.
Elsewhere in the Budget, the Chancellor increased the gas rate under the Climate Change Levy to help drive down carbon emissions, and removed relief on the use of red diesel for sectors other than rail, home heating and agriculture.
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