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South West

To help build an economy that works for the South West, the Budget announces:

A Regional Growth Fund will operate in England and support proposals from private and public-private bodies that create sustainable increases in business employment and growth.

A new three-year scheme will exempt new businesses from up to £5,000 of employer National Insurance Contributions (NICs).  Any new business set up from 22 June which meets the criteria set out in the forthcoming announcement will benefit from the scheme. Up to 54,000 businesses in the South West could benefit.

The impact of the employer NICs rate rise previously announced will be largely reversed. This will lead to a saving of around £260 million in the South West.

The Budget 2009 proposal to repeal the special tax rules for furnished holiday lettings will not be implemented. Instead, the Government will consult over the summer on an alternative proposal. This will benefit an estimated 13,200 individuals in the South West who receive an income from furnished holiday lettings.

The Income Tax personal allowance for those aged under 65 will be increased by £1,000 in cash terms, taking it from £6,475 in 2010-11 to £7,475 in 2011-12. In the South West over 2 million basic rate taxpayers will gain by up to £170 from this measure.

The Government will increase the basic State Pension in April 2011 by the equivalent of Retail Price Index. This will benefit 1.2 million pensioners in the South West.

The Budget sets out the path that the Government will take for reducing spending over the course of this Parliament. Full details of the Spending Review, which will have implications for the South East, will be set out on 20 October.

The following statistics illustrate the current economic landscape in the South West

In the South West in the latest reported full year, 2008:

• the South West contributed £97.8bn to UK economic output. This was 7.8 per cent of the UK’s total economic output [1];
• the average economic output per person was £18,782. This was below the UK average of £20,520 [1];
• 21,025 new businesses were started, accounting for 7.8 per cent of new business started in the UK [2];
• the public sector employed 499,000 people, which accounted for 19.3 per cent of total employment [3]; and
• the private sector employed 2,1 million people, which accounted for 80.7 per cent of total employment [3].

The latest labour market figures for the South West, from the three months to April 2010 [4], show:

• that 2.50 million people aged 16 and over were in employment. This was 75.2 per cent of people in the South West aged 16 to State Pension age; and
• 161,000 people aged 16 and over were unemployed. This was 6.1 per cent of all employed and unemployed people aged 16 and over in the South West.

Sources

1. Office for National Statistics: Regional, sub-regional and local gross value added, 9 December 2009 (PDF, opens in new window)
2. Office for National Statistics: Business demography 2008, 30 November 2009 (PDF, opens in new window)
3. Office for National Statistics: Regional analysis of public sector employment, September 2009 (PDF, opens in new window)
4. Office for National Statistics: Labour Market Statistics Regional Monthly Data, 16 June 2010 (opens in new window)

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