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What was missing from the Budget?

Several businesses, investors and experts said the Budget was missing news on Brexit, insurance premium tax, pensions and stamp duty.

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Prime Minister Boris Johnson alongside Chancellor Rishi Sunak (House of Commons/PA)

Prime Minister Boris Johnson alongside Chancellor Rishi Sunak (House of Commons/PA)

Prime Minister Boris Johnson alongside Chancellor Rishi Sunak (House of Commons/PA)

The eye-catching Budget may have had lots of promises, huge cash splurges and policy changes. But what was missing for businesses?

The PA news agency spoke to several City experts and investors to find out where the Budget blind spots lay.

Budget 2020
Chancellor Rishi Sunak before heading to the House of Commons to deliver his Budget (Victoria Jones/PA)

Brexit

Investors and businesses had been hoping for signs that the Government might use the Budget to take a no-deal Brexit off the table.

With negotiations for a trade deal between the UK and EU ongoing, Seema Shah, chief strategist at Principal Global Investors, explained: “The only missing – but very important – piece from the Government is clarity on the Brexit timeline and removing the lingering fear of a no-deal exit.”

She added there is “next to no chance” the current timetable for a deal by January 2021 can be met and “the bigger boost to the economy would be if an extension were formally announced”.

Richard Carter, head of fixed interest research at Quilter Cheviot, agreed and said: “Understandably, the current focus is on dealing with the coronavirus but the longer-term challenge for the economy is going to be forging a new trading relationship with the EU.

“Where was the investment in ports, customs officials and new immigration systems?”

POLITICS Budget
(PA Graphics)

Insurance premium tax

Insurers had been hoping for a handout or two with cuts to the insurance premium tax (IPT) to help out motorists.

With the tax based on a percentage of a driver’s insurance quote, experts complain that younger drivers with higher insurance costs will end up paying more.

Dan Hutson, head of motor insurance at comparethemarket.com, said the company’s research found young motorists spend an average of £134 on the tax versus an overall average of £77 for the rest of the UK.

He added: “IPT remains a fundamentally unfair tax, as those that afford it least pay the most.

“While the Government has failed to address the issue in this budget, IPT is clearly an unsustainable cost and the Government must look at an exemption to IPT for young people at the next opportunity to allow this demographic to stay on the road.”

Stamp duty

Foreign-based UK property buyers may have seen stamp duty changes, but some experts were disappointed not to see anything to help UK residents.

They had hoped for stimulus similar to previous Budgets to encourage a housing market recovery, but, on Wednesday, there was none.

Craig McKinlay, new business director at Kensington Mortgages, explained: “The Government abolishing stamp duty in 2017 on homes under £300,000 made sure first-time buyer activity remained strong.

“However, there has been a clear stagnation in activity for those further up the ladder, like second-steppers and last-time buyers.

“Extending a stamp duty break to older homeowners (“last-time buyers”) would free up larger properties for growing families, enabling the next generation of homebuyers to step on to or even up the property ladder.”

Pensions tax relief

In the last manifesto, the Conservative Party made a commitment to resolving the anomalies that affect low earners who are members on certain defined contribution pension schemes.

Tim Middleton, director of policy and external affairs at the Pensions Management Institute, said: “We are disappointed that the Government has ignored some of the pressing problems around pensions tax relief.

“Solving this would have improved pension saving for those who can afford the least and the Government has missed an opportunity to provide urgently needed help.”

PA