The view from the chair
I write this on Friday 13 December 2019: a date which is likely to be seared into the collective memory for many years.
It is hard to think that since the last newsletter we have not only seen an election announced, but also a complete and fierce election campaign followed by what will be, for many of us, the most decisive political event we have seen. We have also seen a particularly wet autumn which will impact on farm profits for a couple of years – as set out in the new “snippets from the committee” section of the newsletter.
As the dust settles and the political landscape re-emerges our clients will be facing a new set of challenges. At least the spectres of wholesale nationalisation, appropriation of development land and marginal tax rates approaching 70% will fade away - which must be good news for the economy. We should also have a much more stable basis for forward planning, with a known five year window to work with. No doubt there will be a welcome element of “Brexit boost” as businesses across the whole financial spectrum can proceed with investment plans which have been deferred for the last few years.
On the other hand, we now have a new set of threats, or at least, some of the known risks will take form. It seems highly likely that the much deferred Agriculture Bill will be reintroduced and will rapidly pass into law, setting out a timetable for the removal of direct payments. One would HOPE that the original promise of ring-fencing the agricultural support budget for the lifetime of the current parliament (which previous promise turned out to be shorter than it sounded) will be reinstated. Really there can now be little excuse for clients not to grasp the nettle of preparing for the removal of BSP and putting in hand the structural changes to ensure that their businesses can survive the next decade.
In addition to the known risks, there are also unknowns. It remains to be seen how the new trade agreements will impact on agricultural markets and prices, and how the government will seek to find a balance between consumer prices, food quality and an economic return to producers. The election campaign has shown that there are significant pent up pressures in government spending plans and at least some of the pre-election promises will need to be kept. This will not only mean that agricultural support will become one of the bargaining chips in internal spending rounds, but also that, in the medium term, the government will be looking to find new sources of tax to fund the NHS, infrastructure spending, defence shortfalls and long term care, to name but four. With key taxes fixed by the “triple lock” one wonders whether some of the areas of capital taxation set out in opposition manifestos might start to gain some traction.
Returning to the positive side, the prospect of dealing with many tax driven restructuring projects in the short window between an election and a radical new budget has at least now disappeared, so the likelihood of working long hours in the “100 days to a new society” has evaporated. I for one will be looking forward to NOT spending Christmas Day assessing the risk of anti-forestalling legislation!
My first year in the chair is now drawing to a close, so it only remains for me to thank your committee for the support which they have given me, to promise you another good conference in 2020 and to wish all our members a happy Christmas and a prosperous (and less exciting ) New Year.
Aloysia Daros
The views expressed are the author’s and not ICAEW’s.