The Chancellor of the Exchequer delivered his Autumn Statement to Parliament today, alongside the publication of the Office for Budget Responsibility’s updated forecasts for growth and borrowing.
But what does this mean for businesses? Our Managing Director Peter Gradwell deliberates.
“Osbourne started by saying ’The economy is healing… It’s a long road to recovery’. I somewhat agree, but then he went on to reveal disastrous growth. The Government could have done more sooner to encourage small business investment, for example lending by banks to make it easier to create jobs. Instead we had to wait until a triple-dip is looming before they took good action.
“The second point is that in order to make its deficit reduction targets, the government will need to keep a really tight lid on spending. I think that all business owners will also have to do this in business if we are to be successful in creating jobs and profits.
“I’m very pleased that Osborne backs the basics of Heseltine’s plan to devolve much spending on business, transport, skills etc. to regions. It’s important that local enterprise partnerships are able to make decisions that matter to support local businesses.
“There were a number of points that suggested the future is bright for businesses, but the government could still have offered more:
- The main rate of corporation tax is to fall from 22% to 21% from April 2014 – the lowest rate of any major Western economy. George Osborne says this sends out the message: “Come here, create jobs here, Britain is open for business.” This is excellent news, but why wait until 2014? We are running businesses and trying to make profits today.
- The most positive thing to come out of the autumn statement is 100% tax relief on investment of up to £250k. I suspect this will mean that many small businesses will pay very little tax, which is great news as the money will be invested in things they need, such as equipment.
- £600million on capital spending in research and development through universities is important, because this drives skills and jobs which helps businesses medium term.
- Employee shareholder status is welcomed now that’s going into law. Especially making it free of income tax and NICS. This makes it much more feasible for small businesses to give a moderate but meaningful thank you to a larger number of employees.
- The smaller business rate relief has been extended. This is good, but they should have increased the limit from their measly 6k (maximum 10 person business). If that were to be tripled, it would help medium sized companies as well.
“The new ‘One-in, Two-out’ rule will be imposed from January 2013, meaning every new regulation that imposes a new financial burden on firms must be offset by reductions in red tape to hopefully save double the costs. OFCOM is planning a lot of work: Switching consultation, 4G auctions, market reviews for broadband, business internet connectivity and phone calls/lines. Our challenge to the regulators is what are you going to throw out when you bring these new changes in?
“Finally, there’s a lot of incentive for the unemployed to get back to work, however there’s not anything here for the employer. If, for example, they were to have a reduced employee insurance rate, employers would be more likely to take them on. As it is, someone with a gap in their employment has a much slimmer chance of getting a position when up against someone who is coming directly from a relevant job role.
“On the whole, I feel that the Autumn Statement was positive but there remains a question over why we need to wait for some of these initiatives to be implemented. The sooner they come into play, the sooner businesses will benefit, as will the economy as a whole.”