Finance & Legislation
VW Capital support budget for tourism
Tourism Minister Alun Ffred Jones has commented on the new arrangements for tourism after the closure of the Single Investment Fund. He said "The Economic Renewal Programme launched on 5 July makes it perfectly clear that tourism, whilst no longer being a priority sector for the Department of Economy and Transport (DE&T), is still very much a priority for the Welsh Assembly Government and will be driven by Visit Wales within my department.
Visit Wales' relationship with the industry will be strengthened by having the capital support budget, known previously to the industry as Section 4, transferred back to it from DE&T. The criteria for eligibility will mirror those for the DE&T capital support and are currently being developed.
They will clearly support the Welsh Assembly Government's priorities of sustainability and environmental protection. Whilst the capital budget available to Visit Wales will be roughly similar to what the former Wales Tourist Board had on merger, very large and strategic projects will be able to bid into DE&T for support.
Whilst existing applications will continue to be processed under the former Single Investment Fund we will communicate both the process and criteria for new applications as soon as we possibly can."
Furnished Holiday Lettings Consultation
The consultation documents on FHL were issued on 27 July by the Treasury and HMRC with regards to proposed changes to the special tax rules for furnished holiday lettings.
The consultation “is on proposals to ensure the tax rules for furnished holiday lettings are fully compliant with EU law and are better targeted at businesses that are run commercially for profit rather than for personal use”.
The proposals are to:
• increase the minimum period over which a qualifying property is available to let to the public during a year from 140 to 210 days;
• increase the minimum period over which a qualifying property is actually let to the public during a year from 70 days to 105 days;
• restrict the use of loss relief from furnished holiday lettings so it can only be set against certain income from the same business.
The consultation seeks views on the impacts of these proposals, and is an opportunity to influence the detailed policy implementation.
The consultation runs until 22 October 2010, (Jacqueline Latter of the Personal Tax Team, HM Treasury, will be leading this work) and responses should be sent to:holiday-lettings consultation@hmtreasury.gsi.gov.uk.
The Government will publish its response by the end of the year and intends to implement the changes in the 2011 Budget.
The full document can be downloaded from: http://www.hm-treasury.gov.uk/consult_holiday_lettings.htm
For reference, at Budget 2009 HMRC published a technical note “Furnished Holiday Lettings in the European Economic Area”. http://www.hmrc.gov.uk/budget2009/furnished-hol-lets-1015.pdf
HMRC published a further technical document at the pre-Budget report 2009, “Withdrawing the Furnished Holiday Lettings Rules from 2010-11”.
http://www.hmrc.gov.uk/pbr2009/withdrawing-lettings-rules-3760.pdf
This document was accompanied by an impact assessment on the effect of repealing the rules.
http://www.hmrc.gov.uk/pbr2009/furnished-holiday-ia-3760.pdf
The June 2010 Budget reversed the repeal and announced that a public consultation would be held over the summer.
TB Eradication Programme
Elin Jones, Minister for Rural Affairs, issued the following statement to AMs on 14 July. “I am writing to formally update Members on the TB Eradication Programme and the recent Court of Appeal Judgement following the Oral Assembly Question this afternoon.
I remain committed to eradicating bovine TB in line with the original One Wales commitment. Over the past three years we have put in place a comprehensive programme consisting of a package of measures aimed at tackling the disease across Wales.
We know that we can make inroads into tackling bovine TB by reducing the risk of cattle spreading the disease. My second Annual report to the Rural Development sub committee which I published last week highlights the considerable progress made across the programme including:
• annual testing of cattle herds in Wales,
• changes to the policy on inconclusive reactors so that we remove infected cattle off farms more quickly,
• the recent introduction of changes to Pre-Movement Testing and compensation payments using the new TB (Wales) Order 2010,
• greater enforcement - for example on Monday this week officials obtained a warrant to test a cattle herd where the owner was not complying with our testing requirements,
• the work of the Regional Eradication Delivery Boards.
This is also the first year that the Commission has recognised and agreed a bovine TB eradication plan for Wales, in conjunction with England and Northern Ireland.
I have no intention of changing this approach and so the cattle controls and other measures will remain in place across Wales. However, as with other infectious diseases, you need to deal with all sources of infection to have any chance of eradicating it. It is for this reason that the TB programme includes a wildlife element.
Before deciding on how to proceed with a wildlife control strategy to deal with this reservoir of infection, I will carefully consider the detail of this judgement and take account of the updated evidence and current circumstances”.
Westminster consultation on alcohol strategy
The Home Office consultation on alcohol strategy is expected to be launched shortly which will deal with alcohol related issues including banning the provision of alcohol at below cost; this could impact on promotions such as “free glass of wine with a meal”.
Currently, The Treasury is seeking comments on the taxation and pricing of alcohol; details are available at:-http://www.hm-treasury.gov.uk/alcohol_taxation.htm
Bank of England’s Agents’ summary of business conditions for July
• There had been some signs that consumer spending growth had slowed through Q2.
• Activity in the housing market, which had been rising gently for much of 2010, had also eased back.
• Investment intentions remained consistent with a gentle rise in spending, rather than a more robust recovery.
• Export volumes rose at a steady pace, with a growing number of contacts selling to new, fast-growing markets.
• Services turnover had continued to grow modestly, reflecting higher demand for professional services, as well as a small increase in distribution activity.
• Manufacturing output had risen further, on the back of stronger external demand and, to a lesser extent, domestic demand.
• Construction output had been little changed in recent months. But the level of activity remained lower than a year earlier, and contacts feared a further contraction over the next year or so.
• Credit conditions remained tight for many firms, although the Agents sensed that the availability of funding had improved a little during 2010.
• Contacts expected a small increase in private sector employment over the next six months, but public sector employment was expected to fall.
• Pay growth remained muted overall, although the upward creep in wage settlements noted in the past couple of months had continued.
• Businesses’ input costs had risen further, reflecting increases in global demand as well as some supply shortages for certain components.
• Corporate margins had, on balance, been little changed over the past year.
• Consumer price inflation remained elevated. Most contacts had expected a rise in VAT to be announced in the June 2010 Budget, but it remained too early to assess the degree to which the rise would be passed on to consumers.
Turnover in the consumer services sector, which had been little changed in recent months, showed some signs of easing. Spending in restaurants and pubs had been subdued. That said, visitor attractions reported increases in demand, and many contacts hoped that the low level of sterling and concerns about travel disruption (from airline strikes and the volcanic ash cloud) would encourage domestic residents to holiday within the UK.
A full copy of the report can be found at http://www.bankofengland.co.uk/publications/agentssummary/agsum10jul.pdf