Today’s Autumn Statement: “Backing British Businesses All the Way”
Often called the “mini-budget”, today’s Autumn Statement marks the second most important day of the Chancellor’s year. As ever, it’s a chance for Osborne to update the country on Britain’s economic recovery and spending plans, and outline any changes expected in the second half of the year.
This year, there was a strong focus on businesses, with the Chancellor detailing measures to increase exports, reduce the skills gap and get more young people into work. Small businesses, in particular, will also be comforted by a number of measures designed to reduce their tax burden and revitalise the high street.
Here at Sermelo, we’ve analysed today’s speech looking for the measures that will specifically impact business, so you don’t have to.
Making exports easier
In today’s Autumn Statement, George Osborne, bolstered by upgraded growth figures of 2.4% by the OBR, opened with a bold statement about the growth prospects of the UK. Despite this, the Chancellor announced that a strong focus on exports would be needed for a continued strong growth trajectory, saying, “yes, the forecasts show that growth is up, but business taxes are too high and exports are too low”.
In light of this, a series of measures to enable businesses to export more, particularly outside of the EU and America, were announced. Specifically, Osborne announced that the export support capacity for British businesses will be doubled to £15bn. This is extremely positive news for those looking to capitalise on massive growth markets in Asia and tied in nicely with Cameron’s recent trip to China.
In response, Labour looked to emphasise that while we might be starting to see economic growth, real wages continue to be down. Balls also looked to reiterate that while recovery is starting to finally look back on track, the growth figures do not match up to those promised three years ago.
Promoting apprenticeships and solving the skills gap
In other good news for the Chancellor, recent figures showed that employment is up with a “record number” of people in work. What is more, businesses have created three jobs for every one lost by public sector cutbacks, and we can expect 2.41 million new jobs by 2019, giving some credence to continued austerity measures and public sector cuts.
Off the back of this spike in employment, Osborne announced a continued commitment to falling unemployment rates. To do this, this Statement had a number of measures, which aimed to get young people back to work.
The welfare state will be reformed with an added requirement for job seekers aged 18 to 21 to start traineeships, work experience or community work after six months or risk losing their benefits. Funding for Jobcentres plus was also announced to support 16 and 17-year-olds in finding apprenticeships or traineeships. This will go some way to helping the skills shortage faced by a number of sectors including engineering.
Those businesses operating apprenticeship schemes and hiring young people, will be pleased to hear that the way they are funded is being revolutionised. Moving forward, HM Revenue and Customs (HMRC) will fund employers directly for apprenticeships, with an extra 20,000 higher apprenticeships created over the next two years. Furthermore the Government plans to remove employer National Insurance contributions on 1.5 million jobs for young people.
Reducing the tax burden
Moving on to tax reduction, Osborne began by saying that "the best way to help business is by lowering the burden of tax”. He argued that the loss of jobs and decrease in productivity caused by tax increases meant that to raise the burden of taxes on British business would be ‘economic madness’, committing to competitive rates for the foreseeable future.
Other measures included abolishing stamp duty for shares purchased in exchange traded funds to encourage those funds to locate in the UK, as well as extending film tax relief to regional theatre. Finally, he confirmed that in April the Government will introduce a new tax relief for investment in social enterprises and new social impact bonds.
One concern raised by Balls in response, was growing issue resulting from a lack of bank lending to small business, with the Shadow Chancellor saying, “didn’t the Chancellor pledge to get the banks lending? – but net lending to businesses is now over £100 billion lower than in May 2010”.
Help for the high street
In a bid to revive the British high street, Osborne announced that planning rules will be changed to help town centres compete with relaxed rules to encourage small businesses to open extra premises, and 50 percent relief for businesses reoccupying empty premises. What is more, retailers will be pleased to hear that he also revealed plans for a discount of £1,000 on business rates for retail premises with a rateable value of less than £50,000. It’s worth noting, however, that the Labour Government have also pledged to freeze rates businesses for properties worth less than £50,000, so this may be seen by some as an attempt to wrest control of this issue back from the opposition.
Small business lending
SMEs were a key focus of this mini-budget, with clear signs from the Chancellor that he sees them as key to the future of our economy. The SME rate relief scheme will be expanded for another year and increases in business rates are to be capped at 2%, instead of being linked to inflation. This is good news, as getting credit flowing to SMEs is essential for sustaining our recovery, and comes following intense lobbying from industry bodies, such as the British Retail Consortium. However, some industry bodies may argue Osborne has not gone far enough. In particular, the British Chambers of Commerce, who have been calling for a ‘root and branch review’, may be disappointed not to see deeper reform.
Osborne also revealed a big expansion of Start Up Loans, which is expected to help 50,000 more people set up their own companies, as well as an extension of the New Enterprise Allowance.
One final thing businesses should be aware of is future support for companies looking to set up employee ownership models. He nodded to this in his speech, praising John Lewis as a stellar example.
What this Autumn Statement showed is that the Chancellor is increasingly trying to demonstrate that he sees business, and in particular small business, as vital to the future of Britain’s economy. Businesses will be pleased by news that rates will be capped, though industry bodies may continue to push for deeper reform. Those in industries impacted by skills shortages, will be encouraged to see that apprenticeships and traineeships continue to be a key focus for the government. Relief for those companies who employee young workers and a commitment to revitalising the high streets will be welcome news, especially for retailers and SMEs. All in all, it was an Autumn Statement “backing business all the way”.