Banks must give up extra £1.8bn over five years
Banking
Britain’s banks and building societies were hit by the third increase in the levy on their balance sheets in the space of a year.
The increase will cost them an extra £1.8 billion over the next five years, according to Treasury estimates, making this one of the single biggest revenue-raising measures in the Budget.
The Chancellor said that the increase was necessary to prevent the banks benefiting from his planned cuts to corporation tax and also to ensure that the original revenue target for the levy was reached.
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The Government introduced the levy in 2010, which followed the one-off tax on bankers’ bonuses in 2009. It was raised in last year’s Budget and again in last year’s Autumn Statement.
The levy has raised less than the £2.5 billion originally targeted because banks have shrunk their balance sheets and won more retail deposits — moves that have the affect of reducing their tax bills.
The latest rise in the levy is from 0.088 per cent to 1.25 per cent. The tax is levied on a bank’s balance sheet after stripping out its high-quality capital and UK deposits.
The smallest banks are exempt. About 30 pay the levy, with HSBC paying the single biggest sum last year.
£60m will help aerospace expertise to fly higher
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Aerospace
Britain’s aerospace industry will get £60 million to create a new “virtual centre” for the co-ordination of research efforts. The money will be spent combining the work of existing aerodynamics facilities into one unified multi-site body, in the hope of maintaining the competitiveness of a sector in which Britain has a 17 per cent global market share.
About 100,000 people are directly employed in the aerospace sector in Britain. With the civilian aircraft market predicted to be worth £2 trillion over the next 20 years, industry leaders had feared that the country’s aerodynamics research base, spread between Bristol, Cranfield University and Bedfordshire, could be too fragmented to maintain Britain’s position as the largest aerospace manufacturer in Europe. The new funding aims to ensure greater cohesiveness between these sites and was welcomed by the industry.
Marcus Bryson, from ADS, the trade body, said: “Aerodynamics capability is key to the industry’s pole position in the European Aerospace Industry. This investment will keep the UK at the forefront of this technology.”
More funds for research in higher education
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Universities
Higher education will receive £100 million to boost private investment in research.
They will forge long-term research partnerships with companies or charities, which will be expected to make significant contributions to the cost of setting up large capital projects. This will help the economy but also be a fillip to a sector that, like many other, has suffered substantial cuts to budgets in recent years. Many universities already exploit their expertise and have set up lucrative “spin-out” companies that innovate in areas such as computer games graphics, medical technology, and advances in aerospace.
The money being put in by the taxpayer is expected to attract more than £200 million in additional private investment.
David Willetts, the Universities Minister, said: “Industry and universities have a vital role to play in collaborating to achieve sustained growth in our economy. We know from experience that targeted funding can be successful in attracting significant business investment to our university research base.”
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Universities UK (UUK), which represents vice-chancellors, welcomed the announcement. Eric Thomas, president of UUK and vice-chancellor of the University of Bristol, said: “This announcement is extremely good news for students, universities and business. The links between universities and business are already strong but this will kick-start new research projects, encourage innovation and bind universities and industry even closer together. This is the kind of confidence-boosting project our economy needs.
“The UK has highly talented students and world-class universities — industry and the country as a whole can only benefit from such an initiative.”
Gambling machine levy ‘puts 13,000 jobs at risk’
Gambling
Bookmakers warned that the Government was putting more than 13,000 jobs at risk with its £50 million raid on high-stakes gaming machines. Proposals to tax offshore internet gambling operators that take bets from British punters could generate another £240 million, although the new regime will not come in until December 2014.
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The decision to switch from VAT to a machine-games duty of 20 per cent will also hit casinos and bingo halls, and the pub sector could lose £14 million a year. Although machines with low stakes and prizes will be subject to duty of only 5 per cent of net takings when the rules take effect next year, bookies said that the standard rate of 20 per cent would put 2,600 betting shops and 11,000 jobs at risk. Bookies rely increasingly on the thousands of roulette machines they have installed in recent years to mitigate the impact of internet betting and reduced use of betting shops.
Dirk Vennix, chief executive of the Association of British Bookmakers, said: “Bookmakers pay over £1 billion in tax each year, which is roughly £400 million more than we make in profit.”