Budget 2013: the disappointments


In a incredibly tough climate with very little funds to spare, the Chancellor delivered a Budget scattered with welcome measures to help working families.

But what areas did he overlook amid the headline-grabbing announcements on childcare, property and beer?

No help for highstreet
The Chancellor overlooked our floundering highstreets in his Budget statement today, offering no help to boost the retail sector.

"This was the Chancellor's opportunity to maximise retailers' contribution to re-establishing growth by keeping more money in customers' pockets and leaving retailers with more money they can invest," said Helen Dickinson, director general of the British Retail Consortium.

"But, pressing on with a third-successive substantial business rates rise is very disappointing. Freezing rates would have made a real difference to our troubled high streets and the communities that rely on them."

Growth forecast down
The Chancellor was forced to backtrack on growth, making a forecast of just 0.6% for 2014 - 2% lower than the forecast made two years ago. Surely signs that his deficit reduction strategy needs a rethink.

"Chancellor George Osborne described the UK government's economic strategy as one of monetary activism and fiscal responsibility but the world is coming round to realise that a loose monetary, tight fiscal policy mix is unlikely to lead to a recovery in growth when interest rates are close to zero and consumers are intent on paying down debt," explains Trevor Greetham, director of asset allocation at Fidelity Worldwide Investment. "The UK should follow the successful US lead and ease back on austerity until a recovery is well under way."

Delay in Corporation Tax cut
The announcement to bring Corporation Tax down in line with the small business rate of 20% is welcome for a much-needed boost to British business, but why the delay until 2015?

"We are disappointed that it will be two years before this comes into effect," said Martin Hook, managing director of research and development tax specialists, Alma Consulting Group. "We would prefer for Corporation Tax to be reduced sooner to deliver immediate benefits to businesses and speed up the economic recovery."

Savers shut out
Anyone with cash in savings continues to see their pot eroded by inflation as the rate hits 3%, while average interest rates wallow at less than 1%. The Chancellor failed to address the issue, as well as ignoring industry calls to equalise the cash and equity limits of ISAs in order to boost savings.

"We're disappointed ISAs parity was overlooked in today's Budget," said Graham Beale, CEO of Nationwide."Parity would make ISAs fairer and simpler to understand, whilst raising the cash ISA limit would benefit pensioners, first time homebuyers and ordinary savers."

However, one nugget for savers is the Government's decision to consult on allowing parents to switch their Child Trust Fund savings into Junior ISAs (JISA) – a step in the right direction to boost saving for children.

Blow for pensions
Between the grand gestures today, the Chancellor slipped in that the Bank of England's controversial quantitative easing programme would remain in place.

This is a crushing blow for anyone who is nearing retirement, says Nigel Green of the deVere Group: "Further quantitative easing will keep gilt yields down which in turn are highly likely to keep annuity rates, on which future retirement incomes are based, near historic lows.

"Since it was initiated, QE has already made millions permanently poorer and many thousands more each week will now also receive a reduced retirement income as the programme is extended."

Green says the move could result in an even greater number of Brits transferring their pension funds out of the UK as they seek to "safeguard their hard-earned money from QE's adverse effects."

Budget 2013: Winners and Losers

Budget 2013: Winners and Losers