The UK budget provided little in the way of surprises for industry with Alistair Darling, the Chancellor of the Exchequer, hampered by the country’s economic problems. Steve Elliott, chief executive of the Chemical Industries Association (CIA) said that ‘business will be relieved that there were no unexpected tax increases’ but described the budget as a string of ‘missed opportunities’.
The UK economy contracted 6% during the recession and growth in 2010 is forecast to be 1–1.25%. Public borrowing is expected to be £167bn in 2010 – £11bn lower than forecast, which gave the chancellor some ‘wriggle room’ for some industry sweeteners before the election, now confirmed for 6 May.
The introduction of the patent box, which provides industry with a lower rate of corporation tax for income from patented discoveries, was confirmed in the budget. In addition, small businesses will benefit from an increase to £100,000 of the amount they can claim as capital allowance – reducing their tax bill.
Science and maths received a boost, with an extra 20,000 university places announced and £270m of funding to enable universities to create them. However, cuts of £600m to universities’ budgets are already in the pipeline and Nick Dusic, from the Campaign for Science and Engineering, said that it is difficult to see how these two conflicting policies can be reconciled.
Universities will also benefit from a £35m enterprise capital fund to fuel business innovation and strengthen links between universities and businesses.
Green energy received a boost with the announcement of a £2bn investment fund to back low carbon industries, such as offshore wind. The government will provide half of the money for the ‘green bank’ through the sale of assets. But the CIA said it was ‘extremely disappointed’ that no reference was made to energy security or competitive power prices. The reduction in the Climate Change Levy rebate from 80% to 65% also came in for criticism (C&I 2010, 2, 5).