The British Chambers of Commerce have put together a factual summary of the main points covered in the Chancellor’s Pre-Budget speech. For those who are interested, the full report is available on the HM Treasury website.

• The pre-budget report focussed on key themes of investment in transport, housing and skills. The PBR drew heavily on all the recent government commissioned reports - further information on these can be found below;
• No major tax changes were announced;
• The Chancellor has stated that his efficiency programme is on track. Baseline savings will be at least 3 per cent per year across local and central government whilst administrative budgets will be cut by at least 5 per cent over the 2007 CSR period. This will release an extra £26bn;
• £9.6bn planned investment in transport in 2007/08;
• Inflation-only rise in road fuel duty of 1.25p per litre from midnight;
• Increase in air passenger duty from 1st February 2007 from £5 to £10 in recognition of the environmental costs of flying;
• £8bn planned investment in housing;
• A time-limited stamp duty exemption on all new zero carbon homes;
• Capital investment in education to rise from £8.3bn in 2007/08 to £10.2bn in 2010/11;
• A four-year educational investment settlement was also announced - a total of £36bn is to be invested in educational institutions over the period;
• A further £130m will be given directly to schools in England in 2007/08 to support personalised teaching and extended services;
• From the 1st of April 2007, landfill tax will increase by £3 to £24 per tonne;
• A series of measures to tighten the tax avoidance regime were announced plus further strengthening of strategy relating to the Missing Trader VAT fraud;
• The Government is taking action against Managed Service Company (MSC) schemes which avoid paying employed levels of tax and NICS;
• Some modernising of the tax system were announced - simplification of tax rules governing life assurance companies and the introduction of a Construction Industry Scheme which aims to help the construction industry comply with their tax obligations whilst reducing regulatory burdens;
• Improving the enforcement of the National Minimum Wage to tackle non-compliance and raising penalties for those who are seriously non-compliant; and
• Individual Savings Accounts (ISAs) will become permanent beyond 2010;
• Lyons Review - Sir Michael Lyons is now set to report to the government at the time of the budget 2007. The Chancellor has announced that he and Ruth Kelly, Secretary of State for Communities and Local Government, have asked Sir Michael Lyons to consider the implications for local government of the Eddington report on transport, the Barker report on planning and the Leitch review on skills in the final report from his Inquiry into the role, function and funding of local government, and to make appropriate recommendations to government. This will mean a short extension to Sir Michael’s Inquiry. A further consultation on the planning gain supplement is also set for 2007.
• Gowers Review of Intellectual Property: In December 2005, the Chancellor of the Exchequer asked Andrew Gowers to conduct an independent review into the UK Intellectual Property Framework and the report has been published today. Intellectual Property (IP) is a critical component of our present and future success in the global economy. The UK’s economic competitiveness is increasingly driven by knowledge-based industries, especially in manufacturing, science-based sectors and the creative industries. The IP framework needs to create incentives for innovation, without unduly limiting access for consumers and follow-on innovators. The principle recommendations of the Review are aimed at: tackling IP crime and ensuring that rights are well enforced; reducing the costs and complexity of the system; and reforming copyright law to allow individuals and institutions to use content in ways consistent with the digital age.

Other commissioned reports:

Barker Report on Planning: Kate Barker published her final report on the land use planning system in England. The report highlighted the vital role planning needs to play to deliver sustainable economic development in the context of the pressures of a growing population, rising incomes, changing demographics, climate change and the competitive challenges of rapid changes in the global economy. The Report made a number of recommendations to enhance the flexibility and responsiveness of the planning system to support sustainable economic growth for the 300,000 business applications a year.

BCC Position: BCC believes the Barker Review has correctly identified the damage that the current planning regime has done and is doing to economic growth in the UK. The challenge for the Government now is to act on these proposals. The UK cannot continue to grow if our competitors can operate in countries that provide infrastructure projects that enable them to thrive. Stansted, Heathrow, the widening of the M6 and Thameslink 2000 are all examples of schemes that have or are facing unnecessary delays because of the current complexities of the planning process.

Eddington Report on Transport: Sir Rod Eddington published the findings of his study: Transport’s role in sustaining UK’s Productivity and Competitiveness: The Case for Action. The report highlighted the vital role that transport plays in supporting the continued economic success of the UK - setting out clear steps to ensure that investment in infrastructure in the UK rises to the challenges it faces. He identified three strategic priorities: to invest in congested and growing city areas; to spend money on improving links between important urban areas; and to invest in improving gateways or links between the UK and the countries with which we trade and do business. He also examined the possibilities for road pricing, road building and rail and airport investment.

BCC Position: Responding to the review, the BCC understands that the introduction of road pricing in the UK is becoming increasingly inevitable. The challenge for business is to ensure that we are not penalised for necessary journeys on the road network. The BCC’s transport survey showed that congestion in the UK has reached such a point that 87 per cent of businesses are in favour of some form of road pricing. The caveat to this is that any money raised must be offset by a reduction in other forms of tax and that it only be channelled towards improving transport infrastructure. BCC are encouraged by Eddington’s recommendation that increases to the road networks capacity in certain cases should not be ruled out. We hope that the Government chooses to act upon the recommendations and begin the road improvement schemes that are clearly necessary around the country.

Leitch Report on Skills: Lord Leitch published his final report, ‘Prosperity for all in the Global Economy: World Class Skills’, which examined the UK’s long-term skills needs. It set out ambitious goals for 2020 which, if achieved, would make the UK a world leader in skills. Lord Leitch recommended radical change across the whole skills spectrum including some of the following: Increasing skill attainments at all levels; Routing public funding of vocational skills through Train to Gain and Learner Accounts; Strengthening the employer voice on skills through creation of a new Commission for Employment & Skills, increasing employer engagement and investment in skills, reforming Sector Skills Councils who will simplify and approve vocational training; Launching a new ‘pledge’ for employers to voluntarily train more employees at work. If insufficient progress has been made by 2010, introduce a statutory right for employees to access workplace training; and, Increasing employer investment in higher level qualifications, especially in Apprenticeships and in degree and postgraduate levels; significantly more training in the workplace

BCC Position: There are many positive measures outlined in the Review. BCC fully supports the focus on giving incentives to business so that they provide the right training packages rather than forcing them to send workers on training schemes that are not relevant. Train to Gain is a scheme that business believes works and we welcome the greater focus placed upon this. It is also encouraging to see the desire to cut bureaucracy through the Employment and Skills Commission and make the skills system easier to navigate for employers and employees. However, government must deliver on this promise. The focus upon leadership and management skills is also appreciated as these are skills that are so important to a successful economy.

Davidson Report on Goldplating: The Davidson Report on Goldplating examines the implementation process of European legislation in the UK. The review acknowledges that there are areas in the stock of existing legislation which have led to unnecessary regulatory burdens on UK business, but casts doubt on the extent of inappropriate over-implementation. Proposals included the simplification of MOT tests, fisheries marine bill and insurance mediation.

BCC Position: Lord Davidson’s report is something that the BCC had keenly been awaiting but we had already made clear our concern about the terms of reference. We are disappointed the remit for the review was so narrow and we would have liked to have seen greater emphasis on international comparisons to provide a greater understanding of the extent of gold plating.

Macrory Report on Regulatory sanctions and penalties: The Macrory Review sets out a vision of broad flexible sanctions for regulators. Macrory hopes that this will deliver a transparent system with fair and appropriate sanctions. This builds on the work of the Hampton Report which labelled the UK’s current regulatory regime as “cumbersome and ineffective”.

BCC Position: Macrory’s recommendations are welcome and should allow regulators to enforce consistently in a fair and proportionate manner. The key is that this goes hand in hand with light touch risk based enforcement which reduces the burden of enforcement for businesses. In a tough global environment it is critical that businesses are able to focus on running their operations rather than dealing with the additional red tape of inspections