The Government’s Autumn Statement 2014 | Days Contract Hire

04/12/2014 Chancellor of the Exchequer George Osborne delivered the Government’s annual Autumn Statement in the House of Commons yesterday (Wednesday, December 3). Sometimes described as a mini-Budget, he revealed to the nation the state of the country’s economy and public finances, in line with the latest economic forecasts from the independent Office for Budget Responsibility (OBR). The 50-minute Statement came just five months ahead of the general election, which is scheduled to take place on Thursday, May 7, 2015. The Chancellor told the House of Commons that the Government’s long-term economic plan was working and looking ahead to the general election he told voters they had a choice: “Do we squander the economic security we have gained, go back to the disastrous decisions on spending and borrowing and welfare that got us into this mess? Or do we finish the job - and go on building the secure economy that works for everyone.” He admitted that while the Budget deficit was falling, it “remained too high”, but pointed to economic growth of more than 8% since the 2010 general election making Britain the third fastest expanding of any major advanced economy since the turn of the decade. Amid “warning lights flashing over the global economy”, Mr Osborne said: “Britain cannot be immune to the risks in the global economy.” Nevertheless, he reported that the OBR forecast the British economy would grow 3% this year followed by growth of 2.4% in 2015, 2.2% in 2016, 2.4% in 2017 and 2.3% in 2018 and 2019. Having inherited the single largest budget deficit since the Second World War in 2010 at £150 billion, the Chancellor said forecasts showed borrowings falling from £97.5 billion last year, to £91.3 billion this year, £75.9 billion in 2015, £40.9 billion in 2016, £14.5 billion in 2017 returning to a £4 billion surplus in 2018/19 and a surplus of £23 billion in 2019/20. “Out of the red and into the black for the first time in a generation - a country that inspires confidence around the world because it seeks to live within its means,” said the Chancellor. “Britain back living within its means. Our long term economic plan on course.” He concluded the Statement by saying: “Four and a half years ago our economy was in crisis. People questioned whether Britain could remain among the front rank economic nations of the world. But we set a course to restore stability, get on top of our debts and show Britain was not going to be counted out. Now Britain is on course for surplus. A long term economic plan, on course to prosperity.” £15 billion “roads revolution” A £15 billion “roads revolution” has been announced by the Government signalling an investment in more than 100 new roads schemes over the remainder of the current Parliament and the next. Eighty-four of the schemes are said by the Department of Transport to be new, although the cash investment was first announced last year. The Government says the ‘road investment strategy’ will increase the capacity and improve the condition of England’s roads. More than 1,300 new lane miles will be added by schemes being delivered on motorways and trunk roads, tackling congestion and fixing some of the most notorious and longstanding problem areas on the network. Billed as the first ever ‘road investment strategy’ and the “biggest road building programme for a generation”, it has been developed to keep the population connected and the economy growing and was announced 48 hours ahead of the Autumn Statement. The Government’s “strategic vision” for the road network suggests that by 2040, without sustained investment and other action, congestion will become a serious problem for many important routes. The Department for Transport’s forecasts indicate that, by 2040, around 25% of the entire strategic road network, and 35% of the motorway network will experience severe congestion at peak times and suffer poor conditions at other times of the day. Those projections translate to: 16 hours stuck in traffic for every household each year 28 million working days lost per year A £3.7 billion annual cost to the freight industry, which could see prices increase on the High Street and beyond. As a result, the Department says difficulties could include: Impeded travel between regions that hampers business Longer travel times that constrain possible job opportunities Negative impacts on efforts to spur economic growth, with enterprise zones, potential housing sites and areas of high growth held back by bottlenecks Increased stress on roads to ports and airports, making it harder for British businesses to access export markets Safety and the environment suffering as congested traffic is more polluting and there is an increased risk of accidents. Chancellor of the Exchequer George Osborne, said: “Our long-term economic plan means we can invest an unprecedented £15 billion into Britain’s infrastructure to improve repair and expand our roads. “For years our roads have been neglected. Now that this Government is fixing the economy, we can afford to invest properly in our roads - unlocking jobs for the future and local growth by creating a road network that is fit for the 21st century.” Transport Secretary Patrick McLoughlin called it the “biggest, boldest and most far-reaching roads programme for decades” and promised it would “unlock Britain’s economic potential”. He said spending during the next Parliament on England’s roads network would be boosted further by maintenance funding worth more than £10 billion across the local and national road network. New road building projects include: South west: a commitment of £2 billion to dual the entire A303 and A358 to the south west, including a tunnel at Stonehenge. North east: setting aside £290 million to complete the dualling of the A1 all the way from London to Ellingham, 25 miles from the Scottish border North west and Yorkshire: driving forward the “northern powerhouse” by completing the smart motorway along the entire length of the M62 from Manchester to Leeds, together with improvements to transpennine capacity from Manchester to Sheffield North west: committing to improve links to the Port of Liverpool, as part of a plan of 12 projects designed to improve access to major international gateways on which the nation’s international trade depends South east: funding £350 million of improvements to the A27 along the south coast, tackling severe congestion at Arundel, Worthing and Lewes East of England: investing £300 million to upgrade the east-west connection to Norfolk, by dualling sections of the A47 and improving its connections to the A1 and A11, building on the recently completed full dualling of the A11 from London to Norwich London and the south east: improving one-third of the junctions on the entire M25, to aid frustrated commuters stuck in traffic around the capital Midlands: improving the M42 to the east of Birmingham, improving the connectivity to Birmingham airport, the National Exhibition Centre, the local Enterprise Zone, and pave the way for the new High Speed 2 interchange station Fuel duty and motorway fuel comparison signs The Chancellor announced that fuel duty would be frozen, despite speculation that due to falling pump prices in recent weeks a rise could be introduced to compensate for HM Treasury losses. The decision to freeze fuel duty continues the Chancellor’s pledge made a year ago not to raise fuel duty for the remainder of the current Parliament. It means duty will have been frozen for almost four-and-a-half years, the longest freeze for more than 20 years, and, said the Chancellor, his actions since 2011 will have saved a typical motorist £675 by the end of 2015/16 The Autumn Statement also saw an announcement that motorway fuel price comparison signs would be installed in 2015 showing fuel price comparisons on the M5 between Bristol and Exeter. It signals the start of a promised Government initiative to highlight the higher cost of fuel at motorway service stations than at other forecourts in a bid to help promote competition and lower fuel prices. The Department for Transport will begin work early next year on trialling the new fuel comparison sign at five service stations on the M5 between Bristol and Exeter, with a view to introducing the signs by the end of 2015. Transport Minister Robert Goodwill said: “For too long drivers have been ripped off by petrol prices on motorways. This Government wants to support the hardworking people of Britain and build a fairer society. [The] announcement will ensure people can see the cheapest places to fill up, encouraging greater competition between service stations.” The trial follows a report by the Office of Fair Trading (OFT) in January 2013 which called for more public information on UK petrol and diesel prices. The OFT found fuel sold at motorway stations was on average 7.5p per litre more expensive for petrol, and 8.3p per litre for diesel, than across the rest of the country. The aim of the trial will be to determine whether traffic signs are effective in providing information to road users, and successful in bringing down prices. Car fuel benefit charge 2015/16 Employees who are in receipt of company-funded fuel used privately will see their benefit-in-kind tax bills rise from April 6, 2015. The Chancellor announced in the Autumn Statement that the fuel benefit charge multiplier for company cars will increase from £21,700 in 2014/15 to £22,100 in 2015/16. Van benefit charge 2015/16 The van benefit-in-kind tax charge will increase from £3,090 in 2014/15 to £3,150 in 2015/16, the Autumn Statement has confirmed. Van fuel benefit charge 2015/16 From April 6, 2015 the van fuel benefit charge multiplier will increase from £581 to £594, the Autumn Statement has confirmed. Tax simplification and payrolling The Chancellor announced that the Government will continue to work to introduce measures to simplify the tax administration burden on businesses and employees and that could impact on company cars and private car work-related journeys and other travel. In the run-up to the 2014 Budget, the Office of Tax Simplification (OTS) published two reports aimed at simplifying what it called “the complex system” for the reporting and taxing of benefits and expenses for four million employees and 300,000 employers. In the Autumn Statement, the Chancellor said the Government had accepted and would further consider 51 of the 58 recommendations made by the OTS, although it did not spell out which ones. The small print of the Autumn Statement explained that the Government had commenced work on many of them, with details to be published in due course. However, the Government did say that it: Will provide from April 2015 a statutory exemption for trivial benefits-in-kind costing less than £50. Will remove from April 2016 the £8,500 threshold below which employees do not pay income tax on certain benefits-in-kind and replace it with new exemptions for carers and for ministers of religion. Additionally, following an OTS recommendation, the Government says it has undertaken the initial stages of a thorough review of the rules underlying the tax treatment of travel and subsistence expenses and continued to take the work forward towards a full public consultation on the framework for new rules. In the 2014 Budget, the Government also said that it would introduce a system of voluntary payrolling for benefits-in-kind. In the Autumn Statement, the Chancellor said that the 2015 Finance Bill would outline a statutory framework for the process. Payrolling arrangements aim to include the value of benefits-in-kind and expenses provided in taxable pay as if they were cash payments and to deduct the tax due in each pay period, at the same time as the tax and Class 1 NICs due on cash earnings. The result is that the tax due on benefits-in-kind and expenses is deducted and accounted for in the year of provision rather than through estimates in the coding with an end of year reconciliation. Support for ultra low emission vehicles The Autumn Statement contained a string of announcements linked to support for the uptake of ultra low emission vehicles. The measures include: Up to £50 million set aside between 2017/18 and 2019/20 to support innovation in manufacturing of ultra-low emission vehicles in the UK, based on a government contribution of £25 million for which it will seek match funding from industry £15 million between 2015/16 and 2020/21 for a national network of chargepoints for ultra-low emission vehicles. The establishing of three funds totalling £85 million to support ultra-low emission taxis, buses and cities. An additional £10 million between 2017/18 and 2019/20 to increase ultra-low emission vehicles in London, in support of London Mayor Boris Johnson and Transport for London’s ambition to introduce an Ultra-Low Emission Zone by 2020. Driverless cars Last year, the Government said it would review the legislative and regulatory framework for developing and testing of driverless cars in the UK and planned to create a £10 million prize for the development of a town or city as a testing ground. In the Autumn Statement, the Chancellor announced an additional £9 million to increase the prize fund for driverless car testbeds - enabling trials in Bristol, London, Milton Keynes and Coventry to start from next year.