Partner Article

Autumn Statement: The reaction

On Wednesday afternoon, the Chancellor George Osborne delivered his Autumn Statement to the House of Commons. He said the UK is on the way to recovery, but still has a long way to go.

Vince McLoughlin, Partner at business & tax advisory firm, Russell New, commented on the Chancellor’s statement.

With regards to capital allowance, Mr McLoughlin said: “We need to get businesses investing again. I hope the Chancellor sees the folly of reducing the allowances available for investment in capital projects and will provide companies with more generous investment allowances.

“There are many companies out there who are delaying investments until they see what’s happening with the economy.

“Why not help them see that with greater relief, small and medium-sized companies have an incentive to make these crucial investment decisions.

“If we can get mid-sized businesses to unleash their capital now, it will stimulate much-needed growth. The Autumn Statement is not just about writing cheques; it is about targeted, modest and prudent intervention, and that’s what is needed.”

Mr McLoughlin went on the talk about multinational corporations, and how Britain can encourage these firms to stay in the country.

He said: “We know the moral goalposts have moved in recent times and large corporations are now easy targets for the Government’s aim to raise tax revenues to fund the deficit.

“With tax receipts falling, particularly corporation tax receipts, it is inevitable that larger corporations will be “asked” to increase their share.

“The Chancellor currently finds himself between a rock and a hard place. It’s tricky situation for both him and this current Government and many could be forgiven for suggesting that they’re delivering mixed signals – we all remember his comments that “Britain is very much now open for business”.

“However, it will come to no great shock for the UK to eventually wave goodbye to multinational corporations who are going to choose low tax countries in which to base their businesses.

“Maybe we should be looking at a more competitive tax regime to encourage businesses to locate here rather than forcing them to Ireland and elsewhere.”

From the construction sector, Jason Maguire, Director of Frank’s The Flooring Store in the North East, said: “If the Government focuses on housing and puts the support in place to help builders meet demand, then there will be a ripple effect throughout the wider economy.

“It will directly create employment in construction, as well as jobs in the supply chain and retail, as people look to furnish the properties.

“But it will not stop there, because retail has its own supply chain which will in turn be given an important boost.

“All of this will help the Treasury through increased tax revenue and come full circle by helping the Government itself.”

From the Construction Products Association, chief executive Diana Montgomery said: “The Government has grasped the importance and the need for improved infrastructure as part of the solution for growth.

“It is vital that the Chancellor focuses on capital investment in ‘shovel ready’ repair and maintenance projects that are quick to get off the ground with framework contracts and planning already in place.

“Current spending, such as spending on welfare and pensions, is set to rise from £629 billion to £674 billion by 2013/14, yet government is cutting capital investment, by 21% over the same period, even though independent economic research shows that for every £1 invested in construction, the economy benefits by £3.”

Audit, tax and advisory firm, KPMG commented on regional economies and infrastructure in relation to the Chancellor’s statement.

Mick Thompson, KPMG’s Office Senior Partner in Newcastle said: “We’ve just asked large businesses what single measure in the UK tax or regulatory regime the government should introduce over the next 12 months, and tax relief on infrastructure or capital investments was the stand out leader.

“It seems that such reliefs could unlock tens of thousands of jobs and provide a stimulus for double digit increases in capital expenditure, driving growth.

“The UK is the only G20 country which does not give tax relief for this expenditure and in fact our tax system actually deters it.

“Beyond infrastructure, more needs to be done to enable regional cities to make fundamental decisions to shape the prosperity of a regional economy. With this in mind, the promise of localism requires attention.

“A thorough understanding of the idiosyncrasies of each City Region is crucial in making the necessary changes to make all our cities world class. While initiatives such as the City Deals are a step in the right direction it’s not enough.

“One of the key roles of government is to create the right environment for all of the country to thrive and I hope the opportunity of this week’s Autumn Statement to improve the conditions for growth is grasped for the sake of this region.”

Julian Foster, managing director of Computershare Voucher Services, the UK’s largest dedicated childcare voucher provider, said: “The news about the cancellation of the fuel duty rise will be a welcome relief to many, as will the small rise in pensions next year.

“However, we work with thousands of hard working families and it is disappointing to see there is nothing in the Autumn Statement offering them support to deal with their crippling childcare costs.

“Whilst the reduction in corporation tax is good news for business, it is a shame that the Chancellor did not also take the opportunity to support burgeoning entrepreneurs by extending the childcare voucher scheme to the self-employed, which would have been a simple initiative to support future growth in the economy.”

Stefan Knox, founder of Bang Creations International, said: “We work with businesses and start-ups who have an idea for a new product and need our help making it a commercial success. What we often see is that investment can prove a key part of this process. There are investors out there, so we need to create a healthier economy and to make this country a strong prospect for those outside of the UK. This will help start-ups by generating more routes for funding and investment. From this aspect, moves to cut corporation tax are a step in the right direction.

“We are also pleased to see a focus on training for young people, who are so important for the future of the economy and our industry.”

Martin Palethorpe, founder of The Pragma Group, said: “Reducing the main rate of corporation tax has to be a good thing for business, but the Government needs to ensure it closes the loopholes. As a society we shouldn’t tolerate the Amazons and Starbucks of this world avoiding paying the morally right amount of tax. And the government cannot afford it either!

“No surprise that the growth forecasts have been slashed. We’re still recovering from a traumatic credit crunch. And were the forecasts realistic in the first place? Or was there pressure to forecast high? People are often over optimistic and want to make a forecast situation better than it is really likely to be.

“The measures that will encouraging people to get back to work, rather than be on welfare is also a positive step. So let’s accelerate this. Our system needs to encourage people to work. As well as reducing the burden on our government finances, it’s good for people. Research shows work is an important part of personal wellbeing and life happiness.”

Charlie Mullins, MD of Pimlico Plumbers, said: “SMEs need more support and I think that the Chancellors Autumn Statement announcement has proved that the government is prepared to do just that.

“We (SMEs) are the engine that drives the economy, but it will stall if we’re not given the opportunities to grow so the business tax cuts, extra funding for the new business bank, no 3p fuel duty increase, and more funding for the Regional Growth Fund are a good call and very welcomed. I even go as far as saying we couldn’t have asked for much more.

“The Chancellor is showing he understands the role businesses have to play in the recovery. AIA cuts and a 1% Corporation Tax cut, £1bn of extra funding for a new business bank to lend to small businesses and the scrapping of the 3p fuel increase all proves this. Its not just about a change to using less petrol. Fuel is a contentious issue for many businesses that rely on vehicles. A plumber can’t carry his tools on the Tube! Cancelling the rise will help better plan our fuel costs.

“The Chancellor has listened to businesses that have said it is time to stop using fuel rise postponments as Budget sweeteners and give a clear long term view to help plan our fuel costs.

“1.2 million jobs created in the private sector proves that, even in these tough times, businesses can grow – so improving the business landscape for SMEs and allowing them to grow further is essential otherwise this will stall.

“Youth unemployment maybe dropping, but we need the right opportunities for kids in the sectors that need it most - engineering, science and traditional trades, not supermarket shelf stacking apprenticeships!

“George has been forced to rob Peter to pay Paul and the civil servants in Whitehall will have to work within the budgets their given – just like businesses have since Labour placed a stick of dynamite under the economy. Historically in times of austerity pumping money into infrastructure creates jobs and boosts the economy. Improving schools and roads will boost the construction sector and have a trickle-down effect into other areas of the economy.

“Tax avoidance has become as socially acceptable as drink driving - hopefully the anti-abuse rule with formalise finger wagging and public outcry! It’s about time someone cracked down on them.

“Yes it pays to work. So, why not turn the Job Seeker’s Allowance into a Job Reward Allowance. Give the Allowance to employers who can use it to subsidise the wages of those they employ from the dole queue. Don’t get a job - don’t get the allowance.”

This was posted in Bdaily's Members' News section by Miranda Dobson .