Autumn Statement: Chancellor pledges support for business on rates, skills and exports
- Credit: PA
Chancellor George Osborne today resisted any temptation to launch a pre-election give away, but said the Government’s economic management had left scope to help businesses areas including skills, exports, science and infrastructure.
Mr Osborne, who insisted that his package of announcements represented a marginal tightening of the public finances overall, said that the independent Office for Budget Resposibility, which a year ago had forecast economic growth of 2.4% for this year and had raised this to 2.7% at the time the Budget, had now lifted its forecast higher again to 3.0%.
Growth was expected to easy back to 2.4% next year, 2.2% in 2016, 2.4% in 2017 and 2.3% in both 2018 and 2019.
Unemployment forecasts had been revised down for each year and, with inflation also revised down, earnings growth was expected to remain higher than inflation, reversiing the trend of recent years.
Borrowing would be higher for the first two years of the forecast but would be lower for the next four years, representing an improvement overall compared with the forecast at the time of the Budget. As a result, the UK should return to surplus in 2018-19.
The deficit as a proportion of GDP had now halved since the present government took office, he added.
The ability of banks to offset past losses against profits, which would have meant some paying not tax for the next 15 to 20 years, would be restricted, bringing in around £4bn extra in tax over five years.
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Funding for Lending Scheme would be extended and R&D tax credits increased, as would small business rate relief, with a wider review of the business rates system also planned. National Insurance contributions for firms employing apprentices will be abolished and there would be more help for exporters targeting emerging markets.
On individual taxation, the Chancellor announced that the personal Income Taw allowance would rise to £10,600, rather than £10,000 a previously announced, and the higher rate threshold would rise in line with inflation, the first such increase for five years.
However, with a host of announcements on infrastructure projects having been made ahead of today’s statement, the biggest surprise in the Chancellor’s speech was kept to last, in the form of a major reform of Stamp Duty which will cut the amount payable on the vast majority of home purchases.
John Dugmore, chief executive of Suffolk Chamber of Commerce, said: “Business will welcome today’s Autumn Statement and announcements earlier this week on the A47 and the Great Eastern Mail Line which were issues on which firms have lobbied hard.
“More money available for SMEs and the £45million package for exporters is also good news but we have to see these announcements on investment bear fruit sooner rather than later. ‘Jam tommorrow’ promises don’t help business today.”
He added: “The review of business rates is long overdue but as with previous reviews further delays will not help. There needs to be proposals sooner rather than later.”
“The further freezing of fuel duty is expected but is important for logistic business across Suffolk who have substantial transport costs.”
David Burch, director of policy at Essex Chambers of Commerce, said: “Coming on top of the announcements earlier this week about future investment in Essex’s road and rail links there were some positive measures in the Chancellor’s statement that should be of genuine benefit to the county’s businesses.
“We fully support the proposal to review the system of business rates that cause so many problems for businesses of all sizes and hope that any new system will be far more equitable than the current one. This is yet to happen of course to the proposal to double the small business rate relief is a good interim measure.
“The freezing of fuel duty is again very welcome as is the reduction in air passenger duty for children. Whilst we would ideally like to see the latter abolished altogether this is nevertheless a step in the right direction”
“We also welcome the proposals to expand the British Business Bank and peer to peer lending to help give businesses more choice in accessing finance suitable for their needs. Similarly the support for the creative sector will provide a boost to what is fast becoming an important part of the Essex economy.
“Finally the abolition of national insurance for young people undertaking apprenticeships will hopefully lead to more employers recognising the benefit that they can gain from bringing an apprentice into their organisation.”
Jeanette Thurtle, East Anglia development manager for the Federation of Small Businesses, said: “The Chancellor has listened to the needs of business, despite tight public finances. The focus must be on reducing the deficit not just for this Government but whoever holds the keys to Number 11 next year.
“The FSB is delighted to see the double small business rate relief remain for another year and a full review of the outdated business rates system, something we’ve long argued for.
“The £400 million released to back the British Business Bank and an extension to the Funding for Lending scheme will provide much needed cash for small businesses.
“For our long-term growth, the Chancellor is right to support young people via apprenticeships and to spend on infrastructure. Our roads and rail urgently need updating. The £15 billion he has allocated for roads will upgrade our network and boost growth in our regions.”
Luke Morris, chairman of the Suffolk branch of the Institute of Directors, said: “Fiscal conditions mean that the Chancellor didn’t have a great deal of wiggle room today: all serious commentators are clear that deficit reduction remains priority number one. So, against this backdrop, this is a sensible and long-term statement with some welcome reforms for businesses and employers.
“The review of business rates is long overdue and will be welcomed by the region’s retailers, particularly the independents. The increased R&D tax credit and £45m in export support is also good news, particularly for our manufacturing and engineering businesses.
“The IoD has long argued for radical reforms to Stamp Duty. So changes here are very good news and the right result, if inevitably a political attempt to take the wind out of Labour’s Mansion Tax sails.
“For individuals, the higher rate tax threshold is heading in the right direction, but more can be done to end the scandal of fiscal drag. Too many people are still caught by a higher rate that was never designed with them in mind. It needs to get to £50,000 as soon as possible.”
Jim Davison, East of England region director at EEF, the manufacturers’ organisation, said: “The Chancellor was right to place his emphasis on boosting productivity and the long-term resilience of the economy.
“He rightly said manufacturing is leading growth and firms will welcome positive step in making the UK a centre for innovation, with measures including the strengthening of the R&D tax credits and cutting tax on young apprentices. The investment in science and the boost for infrastructure are also helpful measures on the road towards rebalancing the economy.
“However, ultimately manufacturers would have liked to have seen greater levels of funding and longer-term commitments to spending on innovation.”
John Cridland, director-general at the CBI, said: “These major changes on stamp duty and business rates will be a shot in the arm for families and growing firms as they look towards 2015.
“The targeted focus on enterprise is right, but business innovators would have liked to see more on research and development (R&D) to boost UK investment.
“International tax rules are in urgent need of updating, but the decision for the UK to go it alone, outside the OECD process, will be a concern for global businesses, and moving the goalposts on offsetting losses risks creating a worrying precedent.
“We welcome the continued commitment to deficit reduction, but real challenges lie ahead to reduce future public spending, and fresh thinking on public services will be essential.
“In the long term, growth is about people, science and infrastructure, and we warmly welcome the financial support for postgraduate science students.”
Nicola Currie, eastern regional director for the Country Land & Business Association (CLA), said: “Businesses across the rural economy are suffering from business rates that increase year after year. We will engage with this important review and make the case for reducing the burden of tax to promote investment and growth across our rural communities.”
However, she added: “We are disappointed the Chancellor has once again failed to remove the tax on empty properties that is essential to allow owners to afford the investments needed to bring these properties back into use.”
Mrs Currie continued: “We recognise the role that investment in roads, rail and other vital infrastructure will play in supporting long-term growth across the national economy. These projects will require acquisition of land, some by compulsory purchase. The law that makes this possible is in need of urgent reform to ensure fairness and provide certainty for landowners and the taxpayer.
“The Government’s consultation coming forward on this is an important breakthrough for CLA campaigning on this issue.
“Tax relief for businesses investing in flood defence is an important recognition of the role landowners across the country are playing in protecting vital agricultural land and rural communities. We will continue to press for the support needed for all businesses engaged in this critical work.”
NFU director of policy Andrew Clark said: “The freezing of fuel duty for a further year, exempting apprenticeships from national insurance, and a further extension to small business rate relief all have the potential to help farmers. However it is disappointing that the changes to Stamp Duty Land Tax relate to residential property only.
“The Chancellor again suggested a need for a more balanced national economy but confined this to building a northern powerhouse in northern cities. We think there is a need to encourage business investment and growth in productive capacity throughout the whole of the UK.
“It is disappointing that no mention was made of the annual investment allowance or encouraging investment in business infrastructure or managing business volatility – some of the NFU’s key asks in our submission.
“Although news of tax relief for business contributions to flood defences is welcome, it is disappointing that flood-related announcements all relate to pre-planned capital expenditure and do not address our concerns over maintenance investment.
“We will study all relevant announcements in greater depth, including the government departmental spending reductions and assess the full impact of the Chancellor’s plans for agriculture.”