30/06/10
The Emergency Budget was dominated by measures to reduce the deficit, but the government wisely accepted that capital spending on essential infrastructure must be maintained to generate badly needed growth.
The position of Infrastructure UK was confirmed. The organisation's role is to facilitate private sector investment in infrastructure and improve long-term planning and delivery. Decisions on departmental budgets will come in the autumn, so impact on the water sector is still unknown. The Defra budget is not protected and faces significant cuts.
In advance of the Budget, the welcome given by business to a proposed cut in corporation tax was moderated (particularly in capital-intensive sectors) by the government's intention to pay for it through a reduction in capital allowances.
In the event, the Budget reduction in allowances was lower than advertised and will not take effect immediately. It is too soon to be precise, but for water companies and their customers, the impact of the original package – increases in industry costs and customer bills – appears to have been alleviated.
Chancellor confirms focus on infrastructure investment
Contact: Rob Wesley
