The Association for Consultancy and Engineering (ACE) gave a cautious welcome to the Chancellor’s emergency Budget. Today’s announcements included year-on-year reductions in corporation tax rates, an increase in the national insurance threshold for employers, a pledge not to cut overall capital investment levels any further than already planned and specific support for a number of transport projects.

A new regional capital investment fund was also announced, along with measures to exempt start-up businesses outside of London and the south east from national insurance for the first ten employees. There was also a commitment to establish a national green investment bank, similar to a topic that ACE has previously explored.

These measures were tempered by a rise in VAT to 20 per cent from 4 January 2011, along with commitments to reduce overall government spending every year of this parliament.

ACE welcomes the intent to address the Budget deficit and try to ensure that the most vulnerable in society and business are not disproportionately targeted. We also welcome the specific support for transport programmes and the commitment not to cut the overall level of capital investment this year. More than anything, business needs a degree of visibility about investment intentions in order to prepare for the future.

However, the detail of how public spending efficiencies will be achieved is crucial. October’s spending review will highlight where capital spending will be targeted in particular. The recent announcement to put regional transport spending decisions on hold has generated significant uncertainty in the construction industry, which will be looking for clear signals from the Government from this point forward.

The Budget and the spending review present opportunities for the UK to redefine what “best value” means. It would be unwise to abandon projects unnecessarily without a clear focus on the UK’s long term growth prospects, as noted in a recent paper by ACE. ACE has also devised a set of principles as to how best value for the public purse could be assessed.

Some notable announcements are summarised below.

Tax

• Corporation tax headline rate to fall by 1 per cent per year up to 2014.
• National insurance threshold for employers to increase by £21 per week, above indexation.
• The capital gains tax higher rate will rise to 28 per cent immediately, with the entrepreneurs’ 10 per cent rate extended to the first £5 million of lifetime gains.
• Income tax personal allowance to rise by £1,000 from April 2011, except for higher rate tax payers.

Small businesses

• Enterprise Finance Guarantee to be extended.
• Small companies’ corporation tax rate to fall to 20 per cent in 2011.

Regional measures

• A new regional capital fund to be created.
• Start-up businesses outside of London, the south east and eastern England will be exempt from national insurance payments on their first ten employees.
• A white paper on encouraging regional enterprises will be published.

Infrastructure

• No overall cut in capital spending this year.
• Specific support for the following transport enhancement projects:
  - Tyne and Wear Metro
  - Manchester Metrolink
  - Birmingham New Street redevelopment
  - Sheffield area rail improvements
  - Liverpool – Leeds rail improvements
• Fixed telephone line levy to be cancelled.
• Support for private investment in broadband, partly paid for by TV licence under-spend.
• A per-plane duty will be explored.

Other measures

• A bank balance sheet levy will be introduced from January 2011.
• A financial activities tax is being explored.

The Association for Consultancy and Engineering (ACE) notes the Secretary of State for Transport’s announcement on the future of major local and regional transport schemes.

ACE understands that this is a difficult climate for public sector investment, and agrees that any spending decisions should be made only after careful consideration.

ACE has made the case for investment in transport as part of its Budget submissions, which were published today.

The Comprehensive Spending Review will take place in October 2010. This will provide more clarity on the likely shape of public sector spending.

However, we would be concerned if schemes already committed were to be abandoned unnecessarily ahead of the spending review. The impact of cancelling such programmes could potentially be damaging to consultancy and engineering businesses.

ACE will continue to make the case for responsible investment in transport infrastructure where this is affordable, supports economic growth, helps to meet environmental objectives and widens social opportunity.

ACE chief executive Nelson Ogunshakin and ACE international business manager Naomi Bari visited ACE member firms in the United Arab Emirates (UAE) while attending the Arabian World Construction summit in Abu Dhabi last month.

The ACE team also attended the ACE Middle East Group (MEG) meeting which was held in Abu Dhabi. The group discussed the current state of the industry and gave an update on the recent developments in regards to the non payment issues. The regional grouping welcomed new members including a member of the Spanish ACE sister organisation, and also set up a core steering group which will be driving forward the overall group agenda including the next ACE GCC Conference to be held in Abu Dhabi this October 17-18 at the Sheraton Corniche Hotel.

The visiting ACE team, ACE MEG chair, Ian Clarke and ACE MEG secretary, Simon Harden had the opportunity to meet with influential key clients and stake holders at government and industry level during the visit to the UAE. The meetings were very productive and gave an excellent platform for ACE to discuss the best way forward to improve current UK consultancy and engineering business relations across UAE.

Nelson, Ian and Naomi also met with HM UK Ambassador to Abu Dhabi, Dominic Jermey, who will be opening the next ACE GCC conference this October. The Ambassador was updated on the actives of ACE in the Middle East and will continue to liaise with the ACE Regional Group to support the UK companies within the industry in the UAE.

Nelson also visited Riyadh in Saudi Arabia and engaged with ACE members involved in the huge scale of activities in Saudi Arabia. The country is still booming with numerous construction work and an impressive number of ACE members involved in the delivery of iconic structures such as the new Riyadh financial centre commissioned to Buro Happold and Scott Wilson’s involvement in the rail project. ACE has been in continuous dialogue with the Saudi Council of Engineers to establish a platform for ACE to further engage with key local clients and government officials.