On tax…
Caroline Colliston, Partner leading DWF's tax practice in Scotland, said:
"With COP26 opening in Glasgow this weekend, many had hoped that the Chancellor, Rishi Sunak, might pull the proverbial green rabbit out of the hat and take a serious look at introducing environmental taxation designed to tackle carbon emissions.
"Instead we have been offered the scrapping of a planned rise in fuel duty, and from April 2023 there is to be a reduction in air passenger duty for domestic flights with only ultra-long flights facing increased air passenger duty (affecting only c.5% of UK passengers).
"On the plus side there was the announcement of a 'guilt free gilt' : Green Savings Bond and investment relief from business rates encouraging businesses to investment in technologies such as solar panels. Also, the implementation of plastic packaging tax is still going ahead as planned with some amendments to that tax being announced.
"Overall it was somewhat disappointing that the Government missed the great opportunity COP26 presents to innovate its approach to environmental taxes and to use tax as a tool to curb demand for high carbon activities."
On shipping…
Jonathan Moss, Partner and Head of Marine and Trade at DWF, said:
"By modernising the UK’s Tonnage Tax regime and announcing today that the first Freeport tax sites in Humber, Teesside and Thames will be able to begin initial operations from November, the Chancellor seems to be showing a commitment to not only expanding the UK's shipping industry but also encouraging jobs and investment in areas where economic opportunities have previously been lacking.
"On a number of occasions, the Chancellor has expressed a desire that "our shipping industry remains highly competitive in the global market." The UK’s long-term vision for its shipping industry, Maritime 2050, was launched in January 2019. This anticipated the establishment of a ‘maritime innovation hub’ at a UK port by 2030 in an effort to accelerate the pace of innovation in Britain’s maritime sector. Maritime 2050 referred to the ongoing digitisation of the maritime sector, using blockchain based ledgers, digital documentation for seafarers, autonomous vessels and investment into navigation and communications technology. In January 2019, the government said it would lead on improvement in Arctic navigation and take advantage of emerging shipping routes with a focus on the future of navigation.
"Sceptics could be excused for thinking that this was political posturing. British shipbuilding remained buoyant up to the end of the 1950s but from the 1960s its percentage share of the sector declined rapidly as the UK shipbuilding industry failed to expand owing to low levels of investment and poor industrial relations culminating in job losses and in turn low employee morale and productivity, absenteeism, rapid staff turnover, resistance to change and strikes.
"The Chancellor's statement today may be the acknowledgement that leaders of the UK's shipping industry have been waiting for. The UK has an unparalleled tradition of excellence in maritime law, arbitration, insurance, P&I, shipbroking and finance which for centuries has made the UK the first choice for those in the international shipping community seeking maritime business services of the highest quality. The Chancellor has already expressed an interest in attracting the world's largest fleets to Britain indicating that he will rely on freedoms provided by Brexit to make the UK’s “generous tax regime” accessible for global shipping giants. The Chancellor announced that "The UK has always been a proud and preeminent maritime nation, with 95 per cent of our trade in goods carried out by sea". Time will tell whether the Chancellor's support for the industry will translate into actions but the moves today set forth in the Budget to modernise the UK's tonnage tax regime and create the Freeport tax sites in the identified locations provide hope for the UK's proud shipping sector."
On transport and connectivity…
The Treasury has announced that close to £7 billion will be allocated to English cities in order to develop urban transport links, but doubts remain over the Government's commitment to bring HS2 to the East Midlands and Yorkshire.
Paul Hopton, transport sector specialist and Legal director at DWF, said:
"As part of the Government's Autumn Budget, £5.7bn has been allocated towards sustainable transport in regional cities, with a further £1.2bn for improving bus services. Recipients of the funds include Greater Manchester, West Midlands and Liverpool City Region, with the intention of funding expansion to tram networks, railway stations upgrades and bus priority schemes within these areas in order to improve local infrastructure and further the Government's Levelling Up agenda.
"Although much of this funding is not 'new', the successful recipient schemes have now been announced and the funding will no doubt bring improvements to these areas. Meanwhile, following the recent completion of works to reinstate regular train services to Okehampton, the Government's policy of re-opening branch lines also receives renewed funding commitments.
"This move to prioritise local transport is likely to be welcomed by the public, with DWF's recent survey into the views of voters in the North and Midlands, Will Levelling Up meet voter priorities?, finding that those surveyed placed a greater importance on local transport over regional or national links. Improving local roads and bus services were a particular priority.
"This sentiment additionally appears to be reflected in the Government's continued reluctance to commit to funding the eastern leg of HS2 from Birmingham to Leeds and other inter-urban upgrades in the North, shifting the focus away from national inter-city transport infrastructure towards improving local links. The reduction in Air Passenger Duty for domestic flights also risks reducing modal shift to inter-city rail on the Anglo-Scottish routes.
"For proponents of high-speed rail, the continued delay to funding confirmation may cause disappointment, whilst the fact that only a relatively small proportion of the funding announced is actually new money may also temper excitement. Even so, the prominence in the Budget of local public transport improvements across the regions has to be welcomed and encouraged."
On the shared prosperity fund…
Alexander Rose, Legal Director at DWF, said:"Today's announcement appears inconsistent with the 2019 manifesto pledge that the replacement for EU funds would as "a minimum match the size of those funds in each nation". Indeed, between 2014-2020 around c.£7.7bn was provided through EU Structural and Investment Funds. This dwarfs the £2.6bn that the Chancellor has stated will made be available between 2022 – 2025. This tapers up, so in the 2022 financial year only £400m will be available, which will be allocated through a competitive process run from Whitehall. Regeneration funding is important and therefore this seems like a missed opportunity for the Government to prove its Levelling Up credentials."
On pensions…
Following the news that the Government will consult on the Regulatory annual charge cap that applies to default pension funds (currently runs at 0.75pc), Marcus Fink, Partner and pensions law expert at DWF, said:
“There is an appetite amongst many pension savers to invest in greener funds. However, with the vast majority of pension savers pots invested in default funds, the current charge cap is a barrier to greener investment. This is because green funds generally require active management. As usual, the devil will be in the detail - the government will need to strike the right balance between protecting consumers and aligning pensions investment with its climate change goals.”
