The Chancellor, Philip Hammond, made his first Autumn Statement today. It was also his last, as he abolished it!
His reasoning is sound though, and for businesses, it should lead to more stability (and certainty), which is only a good thing for longer term planning and investment decisions.
So, what were the key policies you need to know about as a business leader and what were some of the key reactions?
Let’s start with some bad news, economic growth forecasts have slowed due to the impact of Brexit, and so the Government’s finances are also now £122 billion worse than expected earlier in the year.
However he’s still committed to lowering corporation tax down to 17% (and he’s committed to keeping it the lowest in the G20).
According to Philip Slater, writing for Forbes, “His commitment to honour the planned drop to 17 per cent corporation tax should be welcomed, as should the Prime Minister’s ambition, stated earlier this week, to keep it the lowest in G20. This is significant given Donald Trump’s plans to bring the US corporate rate down to 15 per cent.”
That said, the National Living Wage is going to increase, from £7.20 to £7.50, making it more expensive for businesses to hire staff (but it’s obviously good news for those who do get hired.)
On this, Clive Lewis, Head of Enterprise at ICAEW, also writing in Forbes said “Additional taxes on employers through National Insurance, coupled with rises to the living wage and some of the Chancellor’s other measures suggest this statement will not be particularly well-received by some small businesses.”
Unfortunately staff benefits are also taking a hit, with the tax breaks previously offered now being withdrawn, so perks like gym memberships are going to get more expensive.
This has not received a warm reaction from business groups, with the CBI saying “While exempting important areas like pensions and childcare, this measure sends the wrong signal to companies wanting to invest more in employee health and wellbeing.”
Chris Bryce, Chief Executive, IPSE also has concerns over another policy announcement in the budget, writing “We are seriously concerned at the developments for the UK’s freelance community in the Chancellor’s speech. The changes to rules on the intermediaries legislation, commonly referred to as IR35, are going to inflict irreparable damage to the public sector at a time it needs its contractors the most.”
Reacting to the budget overall, Mazars, an independent organisation, specialising in audit, accountancy, tax, legal and advisory services were not too impressed about the budget’s small business friendliness, saying “the Chancellor missed an opportunity to encourage investment in the UK,” and “unless your business invests in housing, transport or digital technology, then it is unlikely the Autumn Statement will get you too excited.”
In summary, it’s a mixed bag with quite a few negative reactions from businesses. But then again, you can’t please everyone, and he really doesn’t have a lot of financial give to play with for handing out goodies. I would say core infrastructure spending, stability, tax incentives and a flexible outlook on borrowing ‘as needs must’ are pretty good baselines for his first statement.
What’s your reaction? What do you like or not like about the Chancellor’s statement?
You can watch the full statement below.