Autumn Budget – headlines and analysis for business
Business organisations have broadly welcomed the Chancellor’s ‘business friendly’ Autumn Budget, which addresses a number of concerns that had been voiced by the country’s smallest firms.
Among the headline items in this week’s Budget announcement, Chancellor Philip Hammond brought forward a planned cut to business rates rises by two years to 2018, in a move he said is worth £2.3bn to businesses over the next five years.
From April, rates will rise in line with the Consumer Prices Index (CPI), rather than the higher Retail Prices Index. Business rates were due to go up next year in line with September’s RPI at 3.9%, whereas CPI for that month was 3%.
The Chancellor also promised a change in the law on the so-called ‘staircase tax’ that has recently led to companies operating out of communal blocks being billed as if they were separate premises -and therefore receiving much higher rates bills.
It was also revealed that the VAT threshold for small businesses will remain at £85,000 for two years, while more money has been promised for Brexit, mobile phone networks, research and development and digital skills learning.
The growth forecast for 2017 has been downgraded from 2% to 1.5%, as have productivity growth, business investment and GDP.
Other business headlines include:
- £500m for 5G mobile networks, full fibre broadband and artificial intelligence
- £540m for electric cars, including more charging points
- An additional £2.3bn for investment in research and development
- Another £3bn over two years for Brexit preparations
- £30m to develop digital skills distance learning courses
- An extra £2.5m for the British Business Bank to improve access to finance
- Another 600,000 people predicted to be in work by 2022 Representatives of business have given their initial views on the Budget.
Federation of Small Businesses
Mike Cherry, National Chairman of the Federation of Small Businesses, said:
“With costs rising and consumer demand flagging, small firms will welcome today’s business-friendly Autumn Budget.
It was good to see the Chancellor’s speech acknowledge our concerns about the VAT threshold. Dragging thousands of more small firms into the hugely complex VAT regime would have caused a significant drag on output at an already challenging time for businesses. “The end of the staircase tax will throw a lifeline to thousands of small firms that had no time to prepare for this completely unfair and retrospective levy. We hope the end of the staircase tax marks the first step towards wholesale reform of the regressive business rates system."
“FSB has campaigned for CPI-indexation of business rates bill increases for months now and it’s good to see that the Chancellor has listened to the small businesses that would have been hit hardest by an RPI-linked increase. A move to three-yearly valuations will go some way to making the rates system fairer over the long term. However, the delivery of this pledge must be carefully thought-through.” British Chambers of Commerce
Dr Adam Marshall, Director General of the British Chambers of Commerce, said: “Chamber communities wanted the Chancellor to focus on the basics – rates, roads and ringtones – and will be pleased that they will see some action on all three fronts.
“While more remains to be done to reduce the impact of business rates on investment and growth, the Chancellor’s decisions will lessen the impact of rate rises on hard-pressed firms in many parts of the country from next April. Chambers campaigned hard for a reduction in the relentless rises of this iniquitous tax and will be pleased that the Chancellor has listened and reduced the burden.
“Despite the inclusion of a number of announcements that will support business communities in the short term, more will still need to be done over the coming months to lay the groundwork for a successful Brexit transition. Businesses will expect greater boldness from the Chancellor – and more radical support for infrastructure and investment – once a Brexit transition period is secured and the shape of a UK-EU deal becomes clearer.” CBI
Carolyn Fairbairn, CBI Director-General, said: “Against a sombre economic backdrop, the Chancellor today gripped the steering wheel on the UK economy. This is a budget that balances support for people on squeezed incomes with vital action to help grow the UK out of austerity. But delivery is everything.
“Action on business rates, R&D tax credits, the National Productivity Investment Fund and Brexit planning will help firms to invest and grow today against an uncertain Brexit backdrop.
“The challenge now is turn words into action. For Government and business, this starts next week with the industrial strategy.”