2023 Autumn Statement: A Reflection of Political Priorities, but Do They Go Far Enough for Suffolk Businesses?
A day on – what do we think of the Autumn Statement now?
Perhaps inevitably, given the point we are at in the electoral cycle, the 2023 Autumn Statement reflected the Administration’s political imperatives rather more than those of businesses.
Set against a backdrop, according to Suffolk Chamber’s Quarterly Economic Surveys, of muted performance indicators, such as cash flow and investment, and embedded concerns about historically high corporate taxation and interest rates, there was something of small comfort to most businesses in yesterday’s announcements.
But the question remains: do they go far enough?
We certainly welcomed the decision to make 'full expensing' permanent, but believe that the Chancellor could have gone further in entrenching more systemic support in the tax system for innovative investments, including addressing mounting concerns about the HMRC’s go-slow with the current R&D Tax Credit system.
The abolition of Class 2 National Insurance contributions, the reduction in Class 4 National Insurance from 9% to 8% and the extension to the business rates discount for hospitality, retail and leisure firms will improve the cash flow for some businesses, albeit at the margins. Yet, many of these ‘gains’ are likely to be offset by the National Living Wage increasing by 9.8% to £11.44 an hour for eligible workers, with 21- and 22-year-olds being included for the first time.
Whilst raising wages as part of a longer-term programme to upskills workers and boost sustainable productivity is a laudable aim, the individual steps towards implementation cannot be totally reality blind and must take account of trading conditions at any particular point in time.
For 2024-25, the small business multiplier in England will be frozen for a fourth consecutive year at 49.9p, although the standard rate multiplier will be uprated in line with CPI. Such tinkering is all well and good, but is a further reminder of the missed opportunity by the Government to deliver on its 2019 election manifesto promise to conduct a full review into the antiquated business rates system: the Non-Domestic Rating Act 2023 notwithstanding.
Suffolk Chamber will increase it lobbying of all the main parties to commit to such a review, to include a full review of alternatives, in the next Parliament.
We remain somewhat sceptical in a tight labour market with millions of working age on long-term benefits, whether the reduction in Employee National Insurance contributions from 12% to 10% will increase the labour supply by the estimates 100,00. We hope to be proven wrong, but we doubt we will be!
Suffolk Chamber appreciated some of the other supply side reforms in planning, access to the Grid and through encouraging more people on benefits into work (eg mandatory work placements) are also encouraging. But yet again, they only begin to address the much-needed systemic reforms we and others have been calling for.
Taking the planning reforms as an example, the introduction of guaranteed accelerated decision dates for major planning applications and fee refunds wherever these are not met are likely to result in planning authorities ‘gaming the system’ by developing a culture of haste over hassle - with delays merely push downstream through appeals and judicial reviews.
We would have hoped for a spending commitment to boost the numbers of experienced planners in the system so as to improve turnaround times and quality of decision-making for all planning applications lodged by businesses, regardless of size. Alas, nothing.
And finally, there still appears no further news on Treasury sign-off for previously announced essential capital infrastructure projects in the county. In particular, Suffolk Chamber has been pushing hard for funds to be released – in whole or in part – to update the OBC for Ely/Haughley rail junctions. We understand that Network Rail has a plan in place to redeploy the necessary staff to both do this and accelerate the design phase. We are stepping up our arguments that the project should be delivered in phases, starting with Haughley Junction, for which third party funding remains in place.
Paul Simon, Suffolk Chamber’s head of public affairs, reflections on what was and was not included in yesterday’s announcements. We’d appreciate hearing your views and insights -not least to influence our policy thematic groups’ lobbying activities: firstname.lastname@example.org