Businesses left unmoved by Autumn Statement

The Autumn issue of Think Global People magazine is out now

Chancellor of the Exchequer Jeremy Hunt told the House of Commons that the government's priorities were "stability, growth and public services" as he unveiled a plan for tax rises and spending cuts amounting to about £54 billion.

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'Fiscal drag' to weigh on household income

However, spending on the National Health Service and education will increase by £3.3 billion and £2.3 billion, respectively, for each of the next two years.Mr Hunt also announced the construction of new nuclear power plant at Sizewell in Suffolk; committed the government to continued R&D spending to make Britain "a science superpower...the world's next Silicon Valley"; and pledged that infrastructure projects aimed at 'levelling up' UK regions and nations would go ahead as planned.But while the chancellor said the highest, 45 per cent rate of income tax would now be applied to those earning over £125,140 - instead of the current threshold of £150,000 - he also revealed that there would be a freeze on most people's tax-free thresholds, rather than lifting them in line with inflation. It means millions of people will pay more tax due to ‘fiscal drag’.Smaller companies will also suffer from the freezing for the next three financial years of the VAT registration threshold.

A 'stealth-creation' Autumn Statement?

Martin McTague, Chair of the Federation of Small Businesses, commented: “Today’s Budget is high on stealth-creation and low on wealth-creation, piling more pressure on the UK’s 5.5 million small businesses, their employees and customers."Stealthily freezing the VAT threshold at a time of sky-high inflation will both drag more struggling small firms into scope for the tax, while dis-incentivising others from growing."Mr McTague also described the freezing of the threshold for employer National Insurance contributions at a time of high inflation as "a stealthy hike in the jobs tax, just as recessionary pressures threaten an increase in unemployment".Shevaun Haviland, Director-General of the British Chambers of Commerce (BCC), described the government's plans as being light on green innovation, failing to address current labour shortages and doing nothing to boost export-led-growth.In the teeth of a recession, she said, the Autumn Statement would fail to increase business confidence.“It is good news to hear plans to improve energy efficiency across the economy, but we need to see greater urgency as firms battle with their bills in the here and now," she added.“It is also good news that Sizewell C will proceed, and we are relieved that HS2 and Northern Powerhouse Rail have not been cut further. These projects will provide a major boost to regional economies as well as improving our national infrastructure.“The government must do more to improve conditions for businesses to invest and grow, otherwise we will be starting from a weak base to power our recovery once global economic conditions stabilise."

No response to immigration relaxation calls

The BCC and the Confederation of British Industry (CBI) have been among the major business organisations to call recently for a more liberal immigration regime to make it easier for companies to hire the overseas talent they so badly need, but Mr Hunt made no such undertakings in his speech.Stephen Phipson, Chief Executive of the manufacturers' organisation Make UK, said that while he welcomed Mr Hunt's move to stabilise the economy and to ease the business rates burden, rising energy costs and access to labour remained manufacturers’ biggest problems."We currently face a labour crisis and today’s statement did little to address this," he said. "Without a fast improvement, government will need to urgently consider options such as radical changes to the shortage occupations migration list or access to labour from our closest neighbours, if we are to deliver growth.“Furthermore, energy support for business has been very welcome and helped many firms survive. However, the apparent decision to end support next April when prices are likely to remain high for much longer is troubling. "While a focus on growth sectors is welcome, there remains an absence of an overarching plan for how the big drivers of growth such as skills, innovation and science are brought together."And while the Institute of Directors welcomed the commitment to stability in the speech, Kitty Ussher, the organisation's Chief Economist, said that, in the longer term, the Autumn Statement would be judged on whether it had set the stage for a sustained period of growth once the current economic problems had eased."The Chancellor rightly recognised the importance of capital investment...but he failed to follow through on the possibility of using tax policy to incentivise employers and sole traders to upskill in national skills shortage areas," she said.“As a result there remains a hole in government policy around how to address adult skills shortages.  We would like to see a comprehensive and systematic plan to anticipate and address labour shortages across the whole economy, not just – as he announced today – in the NHS."We are calling on government to establish an independent Shortage Occupations Agency to advise on a granular list of priority skills and to be bolder in what it will do to achieve change, including incentivising organisations to train up their staff to meet national skills shortage needs."

Ambitions left unmet without boost to workforce skills

Ben Willmott, Head of Public Policy at the Chartered Institute of Personnel and Development (CIPD), agreed that the government’s growth ambitions would not be realised unless "improving workforce skills and training is placed at the heart of its three growth priorities - energy, infrastructure and innovation".He added: “Ensuring young people leave the education system with the skills they need is of course vital, but at least 80 per cent of the 2030 workforce are already in employment."There needs to be a stronger focus on addressing the long-standing obstacles that have held back vocational education and training across the workforce and contributed to rising technical skills shortages."Miles Celic, Chief Executive of the financial services lobby group, TheCityUK, said it was positive to hear the government voicing support for an ambition to make the UK the most innovative and competitive international financial centre."Given the recent market turmoil, it is essential that the government balances prudent fiscal action with the need for the UK to remain internationally competitive and a place where investors, firms and talent want to locate and do business," he said."It is vital that the government now remains focused on delivering much-needed economic stability and does not lose sight of the need to bolster UK growth and international competitiveness."

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