Government faces demands before Budget - Economy - News - Moneyfacts


Government faces demands before Budget

Government faces demands before Budget

Category: Economy

Updated: 18/06/2010
First Published: 18/06/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
A number of associations have called on the coalition Government to take care of their interests before next week's emergency Budget.

George Osborne will unveil his first Budget to the House of Commons next Tuesday, with a number of cuts expected across various sectors.

The expected announcement on Capital Gains Tax has raised the ire of the Association of Residential Letting Agents (ARLA), which has called on the Chancellor to ensure that landlords are not driven from the market by any rises.

ARLA has said that increasing the rate of CGT could create a dire shortage in the rental property sector as investors will look to sell off their portfolios.

"If rental homes are removed from the sector because of changes to CGT, it will put further strain on an already struggling market and will result in fewer people being able to put a roof over their head," said Ian Potter, operations manager at ARLA.

Staying with the housing market, the National Association of Estate Agents (NAEA) has called on the Government to use the announcement as a chance to give the sector a much needed boost.

The body has recommended a three-pronged approach, starting with a review of Stamp Duty, with the aim of ensuring lending criteria for home buyers is sensible, as well as exploring fiscal incentives to attract first time buyers into the market.

The NAEA has also asked the Chancellor to consider replicating an American scheme which saw an $8,000 First Time House Buyer Tax Credit introduced to great effect last year.

Mr. Bolton King, chief executive of the NAEA, said: "Mr. Osborne should not be too proud to use someone else's idea. The evidence suggests that the US tax credit was worth billions to the housing market."

First time buyers are a hot topic in the mortgage market at present. A recent report by Santander suggested that the time is ripe for them to enter the market, but that has yet to be borne out by figures, with hefty deposit requirements widely blamed.

Another area of the financial services sector that has attracted much chagrin is the pensions industry.

The National Association of Pension Funds (NAPF) has said the Government must use the Budget to help revitalise and support good workplace pensions.

"The UK economy is in a very difficult place, but the Government must not neglect the need to boost saving for retirement," said Joanne Segars, NAPF chief executive.

"In particular, we urge them to rethink the recent changes to pensions tax relief. This move would ensnare many others beyond the higher earners targeted and would weaken the approach to workplace pensions."

Meanwhile, the AA has fired a warning that a rumoured increase in Insurance Premium Tax (IPT) could lead to a sharp increase in the number of uninsured drivers on Britain's roads.

There is growing speculation that IPT, which is applied to car, home and all other insurance products, could double from 5% to 10%.

"My fear is that increasing IPT will be the last straw for many people and that they will just not bother with insurance at all, which in turn, will put yet further pressure on the premiums paid by honest motorists," Edmund King, president of the AA, said.

"It can also lead to more hit-and-run casualties as the uninsured don't want to wait around to face the music."

Lastly, the Government has received praise for the prospect of reintroducing weekly bin collections.

"At last we have politicians talking rubbish, and we mean that as a compliment as it shows the new Government has listened to peoples' concerns," said Paul Green, head of communications at SAGA.

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