Hope and concern in run up to Pre-Budget Report


Economists, politicians and pressure groups are expressing a mixture of hope, concern and demands ahead of tomorrow's Pre-Budget Report.

Sue Bonney, head of tax, KPMG Europe:

"Without the tax cuts and substantial public borrowing that the prime minister says are needed to help the UK economy, the chancellor would have very limited room for manoeuvre. Public finances are clearly stretched but so are household budgets - and there is an election in the next couple of years to consider.

"Business and the corporate tax world has had a very long wait to find out the next development on the changes to the way that foreign profits are taxed. So, we'd expect to see something on this in the pre-budget report. A full consultation document with detailed proposals on all the areas of foreign profits taxation under review is very unlikely - but updated proposals on changes to the controlled foreign companies regime and a new restriction on interest expense are likely before the end of the year and could be unveiled in the pre-budget report. We would like to see this accompanied by a clear statement on the UK's tax competitiveness.

"The chancellor may take the opportunity to help the property investment sector at the pre-budget report with an easing of the stamp duty rules for property investment funds. Currently portfolio purchases by property funds are subject to stamp duty at 4 percent where the aggregate value is over £500,000, even if the values of the individual properties are below this £500,000 threshold. This is a result of a specific anti-avoidance rule that applies equally and arguably unfairly to such bona fide transactions. A relaxation of this rule could especially benefit housebuilders and residential property funds as it could pave the way for a possibly transfer of unsold housing stock into investment funds.

"We could well see draft legislation on new HMRC powers covering penalties for late payment and interest charges on outstanding tax in the pre-budget report. It will be interesting to see if any draft rules contain provision for HMRC to make allowances for businesses struggling in the current climate or if they will point to a more draconian approach to help the authorities raise more revenues from errant taxpayers."

Kate Green, chief executive of the Child Poverty Action Group:
"In a recession, you have to do right by children. It wasn't them who played fast and loose on the financial markets and put the economy in crisis.

"The moral case for keeping the promise to halve child poverty by 2010 is now matched by the economic urgency of giving our ailing economy a cash boost through family purses.

"The poorest families need most help during the economic downturn and are far more likely than wealthier families to go straight out and spend in the local economy on the things their children need. Family security is essential to regaining economic security.

"A total package of up to £20 billion is expected in the Pre-Budget Report to keep the economy moving. Just £3 billion is needed to help keep the promise to halve child poverty by 2010."

Mervyn Kohler, special adviser for Help the Aged:

"In today's serious economic circumstances, it is imperative that older people receive the financial help they need so that they can keep contributing to the economy. Meeting their needs is a win for the economy and a win for older people.

"Tax cuts won't help the majority of older people - what's needed is a significant injection of new money, especially to help with winter fuel. Energy and fuel cost issues are at the top of older people's concerns. The simple fact is that older people need crisis payments, just to get through the winter. But the government can't just plaster over the cracks. In the longer term, we need to fuel-poverty-proof older households through much more serious energy efficiency policies and programmes, such as Warm Front in England and its equivalents in other parts of the UK

"Investing in the Disabled Facilities Grant could support older people to live at home and help stimulate work for tradespeople at the same time.

"While we wait for an overhaul of the social care system, it's vital that care services aren't allowed to wither on the vine. People's care needs can't be put on hold while discussions around social care reform happen, so we cannot allow support to be put on hold either."

Caroline Lucas, leader of the Green party:

"It's time to put to rest once and for all the false option of choosing between economic success and environmental sustainability. We must engineer the green economy of the future to compensate for the collapse of a discredited economic model dependent on credit binges, gravity defying house prices and increasing consumption. In short it's time for the Green New Deal:

"A £30bn stimulus package, creating thousands of green-collar jobs in environmental works that will dramatically reduce the carbon emissions of UK buildings.

"The creation of new national investment products, such as local government bonds, to fund this work and provide a safe haven for pensions and savings.

"Keeping interest rates low to encourage investment in the green economy.

"Shifting from VAT to pollution taxes, cutting the standard rate of VAT to 15 per cent, and reducing it to five per cent for some items, and abolishing road tax whilst increasing pollution taxes on fuel.

"Closing offshore tax havens to stabilise the financial sector, discourage tax avoidance and to help provide funds for the Green New Deal

Leslie Morphy, chief executive of Crisis

"Within the Pre-Budget Report we want to see urgent action to keep ordinary people in their jobs and homes.

"The package of measures must be bold and wide-ranging, protecting not only mortgage holders but private tenants too - they are the hidden victims of the credit crunch. Within the expected tax cuts, all those living in poverty must be helped including adults without children. They are the forgotten poor and are most vulnerable to homelessness.

"The government's recent guidance on making repossessions a last resort must be enforced, with understanding and sufficient flexibility shown from lenders and courts.

"We welcome reports of proposed three month grace period as a step in the right direction but they do not go far enough to prevent a potential homelessness crisis.

"New more radical measures are needed to do everything possible to keep people in their homes, including the state taking a stake in properties

"Landlords facing repossession and their mortgage lenders should be obliged to give at least two months' notice to tenants and their local authority so that they have time to find somewhere else to live - currently the first notice private tenants can get of repossession is the bailiffs appearing on their doorstep

"Government should introduce new measures to enable tenants to stay in their homes by transferring the ownership to a housing association or allowing the tenant to buy the property from the landlord over time

"Local authorities should have a new duty to prevent all people from becoming homeless including a responsibility to provide temporary accommodation for all who need it, not just those who meet the current stringent statutory criteria - a genuine safety net for all

"Government must build more social housing across the country to help those already on housing waiting lists and the many thousands more who will be in need as the recession bites. This would also boost the construction industry and provide more desperately needed jobs.

"Housing benefit is in need to radical reform to ensure those renting privately can afford to stay in their homes if they lose their jobs and to remove the current traps and disincentives that act as a barrier to people moving back into work.

"Any tax cuts announced by the government must help all those in poverty. Since Labour came to power we have seen a reduction in the number of children and pensioners living in poverty. However there has been an increase of 500,000 people without children living below the poverty line - from 2.5 million in 1997 to 3 million today. These are the 'forgotten poor'.

"The government has pledged to end rough sleeping by 2012. This pledge will not be honoured while local authorities are able to be very and variably selective in who they choose to label as being in priority need for social housing. The statutory safety-net must be widened to ensure a universal safety net for all those who need it."


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