Autumn Statement 2015: Lancashire's firms react

By Dean

25 Nov 2015

Chancellor George Osborne has delivered his first Autumn Statement as part of a Conservative government where he scrapped the business rates regime.

The headline announcements affecting businesses were:

  • Planned £4.4bn in tax credit cuts to be abandoned, with taper and threshold rates for working tax credits and child tax credits remaining the same
  • Business department funding to be cut by 17 per cent
  • 26 new enterprise zones to be created including one in Thornton-Cleveleys
  • Uniform business rates to be abolished, with elected mayors allowed to raise rates under certain conditions
  • Apprenticeship levy set at 0.5 per cent of employer wage bill, with £15,000 allowance for all firms taking part
  • Department of Work and Pensions budget to be cut by 14 per cent
  • Local government to keep revenue from business rates by the end of the Parliament
  • State pension to rise by £3.35 a week to £119.30 next year
  • Every individual and small business to have their own digital tax account by the end of the decade

Jason Street, senior consultant, Taylor Patterson

The Chancellor announces we are the builders! Building homes that support the working people as part of a five point plan.

Auto-enrolment increases have been pushed back to April 2018. The Chancellor announced that rate rises would change and be introduced at the end of the tax years to help businesses. This delays the proposed initial rise in Employer contributions levels from 1 per cent to 2 per cent, from October 2017 to April 2018.

The UK economy has grown faster than any other G7 country, with forecast growth in 2015 and 2016 of 2.4 per cent pa. These forecasts would make it faster than any advanced economy in the world. If economic growth remains a bumpy ride, at least we now have a permanent pot-hole fund!


Alan Frew, managing director, Community Life Choices

Mental health care is one of the biggest unmet needs of our time and it’s promising to see the chancellor pledge a further £600m in funding. What he failed to address is how we’re expected to raise standards when local authorities in England spend just one per cent of their annual health budget on tackling these issues.

In order to achieve this, individuals with chronic health needs require better support in managing their own health budgets and integrating them back into the community. However, this requires the Government to address the lack of knowledge and experience amongst its healthcare commissioners. Providing these individuals with fundamental skills will give those with mental health conditions greater choice and control, reduce their reliance on funding and ultimately improve standards.


Steve Warren, North West regional director, EEF

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.

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.


Jane Parry, managing partner, PM+M

The biggest not-so-big surprise was the chancellor’s u-turn on tax credits. In theory, it is positive news for employers as their lower paid employees will not be financially worse off. However – in the medium to long term - businesses will be hit by increases in the cost of employing these people when the National Living Wage is phased in.

Also, I was pleased to hear that local governments will now have the power to cut rates for businesses and to also keep all the revenues they collect. The ability to invest these monies in order to make their areas more attractive for investment makes common sense and should be based on local knowledge and needs.

Housing was a key area, but much of the announcements seemed like meddling and micro-managing as he’s simply tweaked various existing schemes and added a few more variations on the theme. I certainly hope that he delivers the 400,000 new homes by the end of the decade which will be both a great boost to the construction sector and a major improvement to the housing market.

All in all, the Autumn Statement was the Chancellor’s chance to show that there has been an improvement in public finances. Some of it was good for business, but the real test will be whether the private sector continues to grow over the coming years as much of it will be dictated by what’s going on in the Eurozone and further afield.


Jayne O’Boyle, tax manager, Haworths Chartered Accountants

The Chancellor’s U-turn decision to abandon tax credit cuts altogether rather than ease their impact, I think is a positive outcome of the Autumn Statement today.

Surprisingly, the hype surrounding proposed IR35 changes which could have had a massive impact on contractors across the UK was not mentioned, yet proposals to raise £5bn in a fresh crackdown on tax avoidance was announced. And I expect the talk of further restrictions on pension tax relief will come in the next Budget announcement in March 2016.


John Lyon, managing director, ICS

George Osborne kept his cards close to his chest in the Autumn Statement ahead of expected reforms to taxation of temporary workers.

Pensioners and those receiving tax credits emerged as the big winners in the Autumn Statement, with a dramatic U-turn on tax credit cuts, while the basic pension will rise to £119.30 per week.

Being self-employed doesn’t just mean contributing to a flexible workforce, which is what the government wants, but there is also potential entrepreneurship in setting up a Limited Company. If somebody goes down this route, then further down the line they might grow and take a couple of people on – that’s the start of the growth cycle that leads to an SME. So in part, this is also about moving forward and encouraging enterprise and entrepreneurship.


Carolyn Fairbairn, director-general, CBI

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.

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.

Many firms will be disappointed to have been kept hanging on for a much-needed review of business rates until next year’s Budget.

 


Colin Tice, tax partner, Cassons

Buy to let landlords are hit again in the Autumn Statement. Following the restriction on tax relief for interest payments, from April 2016 Stamp Duty on purchases of residential investment properties or second homes over £40,000 will be charged an extra 3 per cent stamp duty.

 


Damian Broughton, managing director, Danbro

This move could have a potentially devastating effect on some businesses that rely on freelance workers to provide the skills they need. If they want contractors to come to their site they will have to pay much more – many won’t have the capacity to do that.

The decision to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediary, such as an umbrella company or a personal service company will raise just £265m for the Treasury.

A survey conducted by the firm also found just 25 per cent of freelancers would take on a contract without tax relief on expenses from April next year.

The Chancellor repeatedly claimed ‘we are the builders’, but without a strong flexible workforce we won’t be able to build anything.


Richard Evans, senior partner, KPMG

At £13bn over a fifth of the £61bn national spend on transport is earmarked for Transport for the North. This is a seriously large number and as the Chancellor didn’t dally for detail I’m keen to learn how this will be spent.

Learning that HS2 is to begin construction is excellent news given the economic boost it will bring Northern cities through improved connectivity. And exploring the role of smart ticketing also promises to help oil the wheels of a more modern, integrated rail network.

Then we get into the very welcome more modest giveaways such as funding the North’s Rugby League World Cup Bid. These and a Great North Exhibition give business a boost.


Graham Lamont, chief executive, Lamont Pridmore

While there may not be any big moves to support SMEs, the fact that the Chancellor has decided not to make big changes to tax or regulations should be welcomed.

However, Graham points out that the Statement did contain some significant changes, especially for those looking to invest in the property market.

Individuals should consult a professional if this measure affects their future retirement or investment plans.


Claire Smith, president, Stay Blackpool

Lancashire has some of the largest shale reserves in the country. A shale gas wealth fund is fantastic news for the area. The news that 10 per cent of revenues can be put into the fund will help ensure the development of local reserves benefits the whole community. The fund will mean that shale delivers a real boost to local revenues.

 

 


David Evans, director, Bishops Chartered Accountants

The Chancellor’s latest Statement has been pretty quiet compared to the last few that he has delivered and may have surprised many small businesses.

Knowing that the next six to seven months will hold fewer surprises will allow business to plan, invest and grow more easily, without the fear of a sudden change to their operations.

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