The Law Society has responded to the main announcements made by the chancellor of the exchequer in the 2013 budget.
Law Society director of legal policy Mark Stobbs said:
'The UK legal services market is directly worth £26.8bn to the UK economy, employs up to 340,000 people and contributes a net £3.3bn to the UKs balance of trade. So the health of this sector is vital for wider economic growth and to the chancellor's aspirations for fiscal balance.
'A strong legal services sector is also a catalyst for economic growth in the wider economy. The advice and expertise offered by law firms helps other businesses to efficiently settle disputes, reduce transaction costs and expand into new markets.
'Our legal system is also known across the world for providing the stability, predictability and clarity demanded by businesses when choosing to invest.. Investors will only invest in the UK if they are certain that if things go awry contracts will be enforced and assets protected, that courts are impartial, and that cases can be resolved quickly and efficiently.
'There are few sectors of the British economy which can be said to be truly world leading these days, so we must play to our obvious strengths in legal services and make clear that the sector has a central role in the economic recovery.'
A more competitive business environment
'Solicitors' firms are often themselves small and medium sized businesses at the heart of local communities. Their role in facilitating growth in the wider economy means their success is of particular importance. The Society therefore welcomes:
- the continuing downward pressure on corporation tax rates, particularly for small and medium sized enterprises (SMEs).
- measures to control local business rates
- renewed efforts to ensure that bank lending targets to SMEs are met.
'The largest UK law firms are successful international businesses, with networks of offices across the globe. Measures to further bolster the UK's position as an international centre for legal excellence are therefore welcome. The government should:
- maintain a pragmatic immigration system that allows the UK to access the world's best and brightest
- keep the 20,700 quota on skilled workers under review
- re-examine the criteria for intra-company transfers
- treat global connectivity as a priority, including assessing airport capacity.'
Promote the UK's reputation for legal certainty and predictability
'The UK legal frameworks reputation for stability, certainty and predictability is a major factor in encouraging investment and bringing new business to the UK. The government must tread carefully in its efforts to tackle tax evasion to ensure that these principles are maintained.
'Government efforts to tackle tax evasion – abusive, contrived and artificial arrangements to avoid paying tax – are to be welcomed. However, the proposed General Anti-Avoidance Rule is potentially very wide in its application. Consequently, it risks introducing considerable uncertainty into UK tax law and therefore adversely affecting the attractiveness of the UK as a place to do business.
'The Law Society will be working with the Treasury and parliament to improve the rule so that it effectively tackles tax evasion while causing minimum damage to the wider economy.'
Opening up international markets to legal services
'The government must take all opportunities to open up international markets to UK legal and related professional services.
'For the global economy to recover from the worst crisis in many years, trade and investment are central to re-generating strong, sustainable and balanced growth in the UK and overseas. This cannot be done without solicitors.
'Our solicitors are already developing wider networks and relations with firms overseas, internationalising their operations, and taking advantage of the benefits of English law to assist their clients, whoever they are and wherever they are. London has a central role in advising businesses in emerging markets as they continue to drive global recovery.'
Proportionate employment law reforms
'Tackling the substantial burden of regulation faced by businesses is an important part of stimulating economic growth. However, the proposed scheme for employee shareholders, who will trade in some of employment rights for a share in the company, are ill-considered.'
'The proposals are so complicated that the possible benefits are likely to be far outweighed by the additional administrative costs, the complex tax arrangements and the potential for costly satellite litigation at the end of an employment contract.'
Read our summary briefing on the budget