Comment from Greater Manchester Chamber on the Budget Speech

Christian Spence, Research Manager at Greater Manchester Chamber of Commerce

Commenting on the Budget speech, Christian Spence, Head of Research and Policy at Greater Manchester Chamber of Commerce, said: “The Chancellor has delivered the first Conservative budget for 18 years, and you can’t criticise him for being under-ambitious, as it will raise an additional £47bn in tax over the parliament according to the Office for Budget Responsibility (OBR).

“There are significant changes to many aspects of the tax and benefits systems, though many were confirmations of existing announcements such as the increase in personal allowance and upper rate income tax bands. The reduction of corporation tax to 18% by 2020 was a surprise, designed, alongside an increase in the small business National Insurance Employment Allowance, to mitigate the effects of his “rabbit out of a hat” at the end of the speech, the creation of a National Living Wage to start at £7.20 per hour and rise to £9 per hour by 2020.

"The reduction in headline corporation tax will be welcomed, particularly by large international businesses, but this does further rebalance the business tax system away from output taxes and onto input taxes, meaning a greater share of the tax businesses pay is not related to their profit or turnover. Focus must move from the headline corporation tax level and examine carefully the vast swathe of input taxes that many businesses now pay.

“Announcements on further devolution to Greater Manchester including control of the Fire Service, Land Commission, children’s services and employment programmes build on existing announcements, and the placing of Transport in the North on a statutory footing along with confirmation of a northern Oyster card (announced by Jim O’Neill at the Chamber’s annual dinner last month) is welcome. Sitting alongside a new roads fund to be paid for by road tax income, it is good to see greater commitment to this often forgotten aspect of infrastructure, but we must see progress on the future plans for east-west rail in the north if this grand ambition of a northern powerhouse is to be met.

“The many changes to the benefits system will need to be examined in more detail, alongside changes to apprenticeships and other aspects of encouraging greater investment in skills, but overall the Chancellor has managed to deliver a budget focused on some longer-term strategic changes to the economy whilst maintaining an eye on deficit reduction.”