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EEF reaction to the Autumn statement
The Chancellor’s speech today focused a great deal on the good that had been achieved by the coalition and big ambitions to keep better balanced growth on track. But what did the list of measures add up to for industry?
Every Chancellor’s script for these set piece fiscal events begins with the good news on our economy. There were a lot of numbers for the economic optimistic this time around. Growth is better than expected. The labour market is better than expected. And the deficit is better than expected.
And he rightly highlighted manufacturing as the leading growth sector this year.
But what of the OBR’s small print?
The deficit did go up in this financial year and big department cuts are assumed until 2017/8 to get the Budget back into surplus. The IFS will no doubt have unearthed others….
So after the good news, came the Chancellor’s plans on how to sustain it and keep the UK on the ‘path to prosperity’. While ahead of these announcements everyone is of the belief that there is no money, it usually turns out that there is scope for reprioritisation. Today’s statement was no exception. Even with modest fiscal tightening there were some winners.., and inevitably, some losers.
• Additional resources were found to support exporters and SMEs attending global trade fairs.
• A boost to apprenticeships should coming from scrapping NICs on these employees.
• Innovation companies will see a double benefit from increases in the R&D tax credit and more support for Catapult Centres.
• Road users – following Monday’s announcement of a clear strategy for improvements to the Strategic Road Network.
• Businesses seeking finance from Banks and other providers with a boost to the British Business Bank and an extension of Funding for Lending.
Non-business winners include taxpayers with further increases in the personal allowance and ISAs and house-buyers, through changes to Stamp Duty.
The money for all of this had to come from somewhere and they main targets were the banks (again) with limits to the losses which could be carried forward and tax avoiders.
A few of potential issues also fall out from today’s statement. The first is about the sustainability of increased funding for some our priority areas, particularly innovation. The single year uplift is good, but a longer term plan would really have put the UK on course to be a location of choice for innovation businesses.
Which leads to our second concern – the pace of cuts pencilled in post-election means that further increases for Catapults and science is far from a racing certainty.
The review of Business rates – scope to be confirmed – adds another note of uncertainty. This review must not be rolled into some of the other welcome proposals for devolution to English cities and regions.
Finally, it would have been helpful to hear more about supporting energy intensive industries. The package of compensation announced in the Budget was the right move, but this doesn’t kick in until 2016, and ideally this needs to be brought forward. An opportunity in the March budget perhaps?
For business there is enough to welcome in today’s statement. In the coming months the commitment to rebalancing the economy and sustaining investment in policies that can help to deliver it will be what business want to hear more about from all the parties.
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