Osborne to slash support for industry
GEORGE OSBORNE is set to cut direct support for industry in a “challenging” autumn statement and spending review this week.
Funding for science and technology will be in the line of fire as the chancellor unveils the tightest fiscal squeeze of any advanced economy over the next four years, amounting to about 3.5% of GDP.
The move will be seen as a reversal of Osborne’s pledge in 2011 to unleash a “march of the makers”. Some of the country’s biggest manufacturers, including Rolls-Royce, have warned of dire consequences for the economy if direct grants are slashed.
Whitehall is believed to have agreed cuts of more than £20bn across unprotected ministries, including the business department, as the chancellor struggles to meet his pledge to deliver a surplus by the end of this parliament. The civil service is braced for a further 50,000 job losses.
Osborne could also hit entrepreneurs, one-man companies and motorists to make his sums add up. Business owners fear that entrepreneurs’ relief, which offers a lower rate of capital gains tax on profits of up to £10m, could be halved.
Industry insiders confirmed last week that part of the budget for science and technology — £4.6bn and £600m a year respectively — will be switched from grants to “a range” of funding options including loans. This will allow Osborne to claim that the overall funding pot has increased, even though direct government support has been cut.
The job of balancing the books has been made harder by worse-than-expected public finances this year. The House of Lords has blown a hole in the budget by voting down Osborne’s £4.4bn reduction in tax credits.
Fuel duty could also be a target. Duty on diesel and petrol has been frozen since 2011 and the chancellor may decide that, with oil prices down by more than half over the past year, the country could shoulder a 1p or 2p rise in the duty.
About 400,000 contractors could lose out by about £400 a year from measures to clamp down on tax avoidance. The Treasury is expected to announce that those who work on short-term contracts, such as nurses, will no longer be able to claim tax relief on travel to a temporary place of work.
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