Chancellor’s Autumn Statement divides employers and trades unions

The Chancellor of the Exchequer, George Osborne, delivering his joint Autumn Statement and Spending

The Chancellor of the Exchequer, George Osborne, delivering his joint Autumn Statement and Spending Review to MPs in the House of Commons Photo: PA Wire - Credit: PA

The Chancellor’s Autumn Statement and Comprehensive Spending Review today divided opinion between unions employers.

Business group’s largely welcomed a string of announcements in areas including transport, skills and reform of the business rates system.

But plans for cuts in the day-to-day operating costs of Government departments sparked fears among union leaders of substantial job losses, with warnings that the delivery of services would also be affected.

John Dugmore, chief executive of Suffolk Chamber of Commerce, said: “Businesses across Suffolk will welcome key announcements such as the capital funding for transport projects increasing by 50% and the uniformity of business rates being abolished.

“Changes to the apprenticeship levy will also be welcomed and giving small firms more control of their tax management will also make a difference.

“We are pleased that the Chancellor has used this opportunity to listen to business on infrastructure, particularly on repairing our broken road network. This will help move people and goods more efficiently across the country, which will help businesses to grow.”

But he added: “We do though need to see further details about the roll out of new announcements and how the big cuts to the everyday work of the Department of Transport and Department for Business, Innovation and Skills will affect any delivery of new projects.

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“Any new measures need to be implemented and delivered as soon as possible in order that business can continue to lead the economic recovery of UK plc.”

David Burch, director of policy at Essex Chambers of Commerce, said: “Once again the Chancellor has created a statement that the majority of businesses will applaud but as usual the devil will be in the detail.

“Increasing investment in science and technology is a boon to our dynamic businesses, especially in our thriving tech sector, so that they have room to grow. However it is important that the move to replace grants with loans from Innovate UK does not reduce our dynamism in the global economy. Businesses must continue to feel empowered to evolve and expand, otherwise we risk being also-rans in the global race.”

Mr Burch continued: “We were hoping that we would hear some positive news about investment in some of Essex’s road and rail infrastructure but this was not to be so we will continue our lobbying of local MPs to keep up the pressure for the improvements that we need to keep business moving.

“There was much talk of the Northern Powerhouse and the rebalancing of the UK economy but we would remind the Government of the contribution that Essex makes to the country and repeat the message that we need to address the infrastructure deficits our businesses have to contend with on a daily basis if that contribution is not to be diminished in future years and that we can continue to grow the county’s economy and create new jobs”

However, he added: “On a more positive note we welcome the announce of the establishment of a new National College for Creative and Cultural Industries to be based in Essex”

Carolyn Fairbairn, CBI director general, said: “This was a good spending review for longer-term investment in the economy but there’s a sting in the tail in the size and scope of the Apprenticeship Levy.

“Businesses will be pleased to see the Chancellor staying the course on deficit reduction, his commitment to an industrial strategy, and the emphasis on nurturing a vibrant business community.

“Standouts include maintaining spending on infrastructure; ramping up housebuilding; support for energy-intensive sectors and for advanced manufacturing.

“Business recognises there are tough choices to be made in balancing the books, but many are reaching a tipping point, where the cumulative burden of the living wage, apprenticeship levy and business rates risk hurting competitiveness.

“The Apprenticeship Levy, set at 0.5%, is a significant extra payroll tax on business and by widening the net it will now catch more smaller firms. We welcome the creation of a levy board to give business a voice on how the money is spent and will work with the Government to ensure a focus on quality.”

Richard Halstead, East and Midlands region director at EEF, the manufacturers’ organisation, said: “The Chancellor’s enthusiasm for an industrial strategy for Britain is hugely welcome, as is his promise to continue to support Catapult centres, the successful incubators of new business ideas and product development.

“By moving to protect science and research spending, he will give industry confidence and encourage many innovative companies to push ahead with the next generation of business ideas.

“Moving to an exemption of energy intensive sectors from the costs of renewables is enormously welcome and demonstrates that Government is dedicated to finding a long term solution to this problem.”

However, he added: “The apprenticeship levy is a blunt instrument, and the Government must work hard to ensure employers are not disadvantaged and that many smaller and medium sized businesses are exempted.

“What really matters is creating high quality, well trained apprentices who can look forward to successful careers in industry. This cannot be a simple numbers game where businesses are clobbered to pay for apprenticeships. The Government’s approach to this requires a lot more sophistication than we’ve seen so far.”

Luke Morris, Suffolk chairman for the Institute of Directors, described Mr Osborne’s performance as “another political statement from a political Chancellor with ambitions for the top job”.

“On tax credits, the best headline I’ve read was ‘George Osborne hailed as genius, for scrapping last George Osborne genius move’. Certainly, the Chancellor was looking his assured old self, having been properly shaken by the Lords’ put down of this flagship policy, last month. An incompetent performance from the opposition benches in response today did him no harm either.

“For business, the majority still want to see the books balanced and the deficit reduced as soon as possible.

“Whilst politically unpalatable, it can’t make sense long term for the state to subsidise low wages (mainly big business is guilty it must be said) through the tax credit system. But with the current turmoil in Europe, the slowdown in China, and the Neanderthal ISIS, the political landscape has moved on. For the time being.”

Brian Berry, chief executive of the Federation of Master Builders, welcomed the commitment to the construction of 400,000 new homes but warned that a growing skills shortage would have to be overcome in order to make his vision a reality.

“We’re already seeing housing developments starting to stall because the cost of hiring skilled tradespeople is threatening to make some sites simply unviable,” he said. “Unless we see a massive uplift in apprenticeship training in our industry, there won’t be enough pairs of hands to deliver more housing on this scale.

“That’s why we’re keen for the Government to tread carefully when applying the new proposed apprenticeship levy to the construction industry.”

Public and Commercial Services union general secretary Mark Serwotka said: “The scale of departmental cuts means services to the public will not just suffer, they will be torn to shreds.

“In the last five years, George Osborne has failed on his own terms and can now only claim to be trying to fix an economy he himself has broken.

“It is clearer than ever that stripping billions of pounds from our economy in the name of austerity is a political choice, not an economic necessity, and it is not working.”

Unison general secretary Dave Prentis said nearly three million working families had breathed a “collective sigh of relief” over the move not to press ahead with cuts to working tax credits, over which the Government suffered a defeat in the House of Lords in October.

“We’re pleased that the Chancellor has made good use of the thinking time last month’s Lords vote gave the Government,” said Mr Prentis.

“But the real credit for today’s decision goes to the many brave parents who talked publicly about their already stretched finances, and the distress and hardship the cuts would cause. Their stories convinced the Government this unfair tax credits grab was wrong.”

Vicky Redwood, chief UK economist at Capital Economics, said a surprise improvement in the Office for Budget Responsibility’s forecasts had “saved the Chancellor’s bacon”, enabling him to scrap the controversion tax credit cuts without abadoning his fiscal rule of achieving a surpluse by 2019-20.

“The OBR appears to have assumed that the disappointing trend in borrowing so far this fiscal year is just temporary, while ‘modelling changes’ seem to have boosted tax receipts by some £6billion or so a year by the end of the forecast,” she said.