The Budget 2014: What it Means for Franchising
When Chancellor George Osborne held at arms length the infamous scarlet briefcase outside Number 11 earlier this year, he marked the occasion by insisting this was for the “makers, doers and savers of this country.” The Franchise Magazine reviews how franchises, that are making, doing and saving, stand to gain and lose from the policies brought in.
The proposals laid out in the 2014 budget represent good news for the franchise industry in general, not least because people aged over 50 and savers, two key demographics for franchise recruitment, are set to become more affluent. New plans will allow savers to put away £15,000 tax-free in a new format ISA. In addition, and perhaps more importantly for franchising, those with large pensions will be able to withdraw bigger lump sums tax-free, giving older individuals more money with which to spend and potentially invest.
Managing Director of Franchise Development Services (FDS), Professor Roy Seaman comments: “This budget is a positive step for franchising. It means franchisors can look more seriously at taking money out of pension funds to raise their shareholding rather than looking for alternative sources of finance. Secondly, those people who are beyond or are approaching the drawdown age can look at taking more money out in one lump sum to invest in a franchise.”
Along with more potential investors coming onto the market, existing franchise businesses are set to benefit too through the following reforms.
Exports: Government plans to double the funding available to exporting businesses and cut interest rates on that funding means franchise brands that manufacture or export goods are able to obtain more funding to send goods overseas.
Apprenticeships Grants: In 2013, TaxAssist Accountants franchise was commended for its commitment to apprenticeships with a national award and indeed franchising has long had a strong link with the Government-encouraged apprenticeships scheme. Now franchise businesses looking to take on apprentices will be able to do more easily as £85 millon is being made available this year for employers to employ young people.
Frozen Fuel Prices: That the Government has announced a freeze in fuel duty will come as welcome news to the UK’s range of vehicle-based and logistics franchises in particular. Osborne proclaimed that the price of fuel at the pumps is currently “20p lower than it would have been under the previous Government.”
Research and Development:
In many ways franchising leads the way in technological advancement in business. Now the Government has promised to raise the rate of research and development payable tax credit, from 11 per cent to 14.5 per cent, in order to facilitate a drive in innovation. Many franchise concepts, such as sásta’s revolutionary weight loss pods, have developed into strong businesses after years of research and development.
Green Square’s Richard Hiblen on the 2014 budget and its environmental impact
There were no real surprises in the budget announcement following much publicised assumptions on the proposed freeze in the Carbon Price support to £18 per ton of CO2 from 2016-19. It will be a welcome relief to the large coal power generators, and good news for Energy Intense Industries, but it will surely have a detrimental effect on the growth of renewable energy.
George Osborne may well say there is no change in this Government’s ambition for deployment of new renewable energy generation, but actions speak louder than words. When there is a further £60m funding for innovation and adoption of carbon capturing technologies it again points towards a reduction in emissions and meeting targets using fossil fuels.
The focus seems to be in keeping the lights on at the lowest possible cost rather than building a sustainable future.
On the domestic front, there was some better news, with announcements of support to help increase house building. Earlier the renewable sector received a boost in an announcement concerning the possible scrapping of the much debated “Merton Rule” which relates to local councils having the ability to set renewable targets for new homes built within their areas. With loosened planning rules and the help to buy scheme extension, support for a further 200,000 homes is predicted and this should bring with it a rise in small scale domestic renewable energy installations. With claims of being the Greenest Government ever, the budget doesn’t seem to support either of these statements. The industry, for the moment, still awaits a long term energy plan and I don’t think we care whether it’s Green, Blue, Red or any other colour.