Autumn Statement: Your reaction
In yesterday's Autumn Statement, the government unveiled changes to the business rates system which will cut taxes, aimed at supporting the region’s small businesses and high streets.We canvassed the opinion of experts and across Lancashire:
In the Autumn Statement, the Chancellor employed some wonderful catchphrases in his speech "fixing the roof whilst the sun is shining" , "a job rich recovery for all" and "Britain's moving again, let's keep going!"The Chancellor’s Autumn Statement should be good news for business and retail.
In terms of substance, there were some welcome announcements on business rates, including a 2 per cent cap on 2014/15 increases and a further year's extension of the doubling of the Small Business Rates relief scheme. He also announced £1,000 discounts for small retail businesses and a reoccupation relief for empty retail premises. Whether these will be sufficient to create any regeneration on our high streets remains to be seen.As regards corporation tax, he is commited to continue his plans to reduce the main rate of corporation tax to 20 per cent by 2015. There was also much talk of reforming apprenticeship scheme funding and encouraging more students to go into science, technology and engineering, both of which could be good news for the Lancashire manufacturing sector in the future.
Measures to increase the financial support and advice for exporters, particularly to the key Indian and Chinese markets are also welcomed.PM+M Chartered Accountants
Among the benefits will be, from April 2015, the abolition of employers’ National Insurance Contributions for employees under the age of 21 earning up to £813 a week. That should lead to a tax saving of £500 for every under 21 year old earning £12,000 and £1,000 for every under 21 year old earning £16,000, and further encourage employers to back the Government’s drive on youth employment.In addition, and in order to ensure that all young people can compete in the global economy, the government intends to remove the cap on university places so that an estimated 60,000 more young people can attend university each year.
The general message from the Chancellor is that the economy is back on track but we need to keep working to reduce the deficit. And there is some good news for Lancashire businesses in the Statement, particularly with regards to the abolition of NI contributions for young workers, rate reliefs and the freezing of fuel duty.Small business rate relief has been extended for a further year from April 2014, with a cap on overall business rate increases set at 2 per cent.
- Helen Cowley, senior tax manager at Cassons Chartered Accountants and Business AdvisersWe have always advocated the dual approach of tackling the deficit and driving growth – the OBR forecasts confirm it is working. Let’s stick with what works.
The pressure on the high street has been recognised; the 2 per cent cap on business rates and discount for very small businesses are positive, as is the reoccupation relief.Abolishing a jobs tax on employing young people under 21 will make a real difference and help tackle the scourge of youth unemployment.
But it was a missed opportunity not to support our hard-pressed energy intensive businesses which are also struggling with rising costs, and the package on housing supply could have been more ambitious.As we enter the festive season, positive news on growth is clearly welcome but much remains to be done if the benefits of economic recovery are to reach every home in every corner of the UK.
- John Cridland, director general, CBIAs we’ve been saying for a long time, the lack of housing supply is crippling the property market. If Help to Buy is to remain, Right to Buy extended, and expensive social housing sold off then the Government’s commitment to building houses simply must be extended.
The £1bn of loans to unblock housing development across the country will contribute towards housing need and will drive construction jobs. However, we still believe housing is not at the centre of a coordinated property-led growth that supports a balanced regional recovery where all can access the market. The increase in the HRA borrowing cap will only make a very minor dent in the housing deficit.It was also disappointing to see long overdue changes to stamp duty have been ignored, particularly as the amount of revenue generated from this is rising sharply. The government plans to collect more than £60bn over the next five years in stamp duty receipts from British householders. Moving away from stamp duty brackets to a marginal system would be a boost to those struggling with the cost of living and help boost the number of property transactions. This will remove the so-called ‘dead zone’ created by the previous structure which saw a dearth of properties on the market between £250,000 and £270,000.
Business rates are currently imposing a very heavy burden on SMEs and today’s measures provide real support for business growth. The reoccupation relief will go a long way to regenerate the high street at time when the latest RICS Commercial Survey shows an upturn in interest in retail space.- Simon Rubinsohn, chief economist, Royal Institution of Chartered Surveyors
While the Autumn Statement contained some useful measures on apprenticeships, skills and business rates, it failed to send a clear signal to industry that now is the right time to invest and create new jobs. In particular, it failed to address the growing threat to investment from energy prices that are squeezing margins and racing ahead of our competitors.The Autumn Statement contained few surprises, with announcements on pensions simply confirming what we already knew – that the state pensionable age will need to increase in line with increases in life expectancy.
Industry, especially energy intensive users, will be dismayed that government has failed to address the genuine concerns surrounding the uncompetitive price of energy for UK manufacturers.Companies looking to invest and create jobs in the UK need a long-term commitment by government to control costs increases and compensate those most affected. Without this commitment, making the case in global boardrooms to invest in the UK will get increasingly difficult.
Darrell Matthews, North West region director, EEF
What the Chancellor has done, however, is outline a clear timetable for these changes. Businesses do need to start thinking about how they will accommodate an older workforce as this will have operational and financial planning implications for many. Disappointingly, the Chancellor did not use the Autumn statement as an opportunity to put changes in the pension system into any context against the backdrop of auto enrolment. The Statement fails to provide any assistance to SMEs with regards to managing the admin and financial burden of auto enrolment, which many are struggling with.The big news for SMEs though was not in the pension changes but in the business rate announcements. The hoped-for business rate reduction has not materialised but the 2 per cent cap on business rates will help to create greater certainty on operational costs, enabling more accurate financial planning.
Similarly, the National Insurance payment breaks for employers of staff aged 16-21 announced today will also create genuine financial savings for SMEs with a younger workforce. It will also provide an incentive to employ young people, which is good news for locations with high youth unemployment like Blackpool.- Chris Bardin, director at Taylor Patterson
The chancellor chose his words carefully, making clear this was an Autumn Statement aimed at what he called a ‘responsible recovery’ and reiterating that ‘the plan is working’. While this was a fiscally neutral Autumn Statement there were a few sweeteners for the business community.The cap on the inflation increase in business rates for all premises at 2 per cent from next April will be welcomed, as will moves to allow businesses to pay their rates in 12 monthly instalments instead of 10, which should help businesses manage their cashflow more effectively.
The £1,000 discount on business rates for business premises with a rateable value up to £50,000 should also help boost some smaller businesses on the high street. While there was always more that could have been done on business rates, this has to be seen as a positive move.News that fuel duty is to be frozen again will be good news for businesses that rely heavily on fuel, such as transport and haulage businesses, with government claiming that the freezes they have implemented have saved drivers 20p per litre.
- Damian Walmsley, partner, Moore and Smalley
It is heartening that the Chancellor is listening to business, and is planning to limit the damage caused by relentless business rates increases.But a tax rise is still a tax rise. Although the cap on rates will spare businesses £millions in tax hikes, and reliefs help many of the smallest firms, companies of all sizes will still be paying hundreds of millions more in rates to the Exchequer next year than the £27bn they are expected to pay in this year. The business rates system is still iniquitous, still broken, and still in need of fundamental reform.
Businesses in Britain still pay far more in property taxes than their counterparts in countries like Germany and France – which undercuts the government’s stated aim of maximum tax competitiveness. A cap on rate rises is better than nothing, but not nearly good enough.- Babs Murphy, North and Western Lancashire Chamber of Commerce
There is no doubt that Britain is recovering from the worst of the recession and the global economic crisis, albeit slowly. The Statement was broadly neutral, and very much in line with the Coalition’s ‘responsible recovery.’It was welcomed, as you might expect, by the British Retail Consortium and it was attacked, again unsurprisingly, by Shadow Chancellor Ed Balls, who accused the current Chancellor of “economic complacency.”
Whilst there were no real out-and-out ‘winners’ and ‘losers’ from the Statement, you could say that it was a good day for married couples, especially those with children under 7. Other measures, such as the removal of the extra 2p on a litre of petrol, may not make such a significant difference to people’s everyday lives.Young workers were arguably the main losers, as they face having to work for much longer to receive their state pensions. Similarly, the Statement was not good news for foreign property owners but, with the Capital Gains Tax not being introduced immediately, you suspect that many may take advantage of the delay to re-arrange ownership of their properties.
The BBC’s political editor, Nick Robinson, characterised it as a ‘good news, bad news’ Autumn Statement. The Government have a ‘long term plan’ for the economy (expect to hear plenty more of that phrase between now and May 2015) and the Statement was very much part of that plan. The UK economy, whilst recovering, remains vulnerable to any new downturn in Europe and the wider world, and the Chancellor is clearly not going to put what has been achieved so far at risk.He knows that the votes will not be counted until May 2015 and a lot of water will flow under the bridge before then. For now, the UK economy is steadily recovering: a broadly neutral Autumn Statement with a few hints of better things to come was exactly what the Chancellor wanted to deliver, and that’s precisely what he seemed to do. - Questa Chartered