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Autumn Statement: A roundup of reactions from across the North East

After asking companies from across the region what they’d like to see from the Autumn Statement, Bdaily now brings you a roundup of North East business reactions following the Chancellor’s speech.

Don’t forget you can read our diagnosis of the statement here, detailing what the budget means for businesses.

Enterprise Zones

Rob Charlton, CEO of _space group

“It seems to be George Osbourne’s style to pull a rabbit out of the hat and there is no doubt that his reversal of tax credits is very much that. This is unquestionably a decision to help him become Prime Minister.

The continued support for Enterprise Zones has to be a positive for the North. Also, councils being able to keep business rates revenue will help local regeneration.

The increase in spending on housing is welcomed, the plan being to deliver 400,000 affordable homes by 2020. There doesn’t seem to be any detail as to how this will be achieved however his focus is on home ownership rather than rental. This would suggest that this programme will be delivered by volume house builders. He has also continued with the right to buy for housing association tenants - I still fail to see the logic in this policy.

Apart from the Tax Credit U turn there are few surprises and the government remain focussed on their policies and plan.“

Don’t miss Bdaily’s coverage of what the government’s new plans for Enterprise Zones means for the North East.

The Northern Powerhouse, Devolution & The North/South divide

Ross Smith, NECC Director of Policy

“The Spending Review was the opportunity for the Chancellor to put meat on the bones around the Northern Powerhouse and to confirm how the North East can play a significant part in it. The devolution deals announced last month were a big step towards this. However, what we heard today has mostly been said before and there was not enough to confirm real economic change.

What we had hoped to hear was a significant and lasting change in measures affecting the pattern of government investment and to direct private investment to the North East. A series of initiatives badged under the Northern Powerhouse brand, while welcome, are not enough to achieve this.

We are pleased that a significant number of smaller businesses will not be required to pay an apprenticeship levy and support is available to those who need it, although we look forward to hearing more details on this in the future.“

Robyn Peat, Managing Partner at George F White

“Today’s Autumn Statement reinforced the government’s commitment to ensuring its Northern Powerhouse agenda remains on track. Decentralisation was a key theme and George Osborne revealed more details around greater devolution powers, with local authorities gaining control of extra fiscal powers including authority over business rates, local services and creation of more job opportunities.

This will provide great impetus to address the North-South economic divide and enable the North to put in place the foundations required to equal the economic dominance of the Capital and South East. Indeed, the Chancellor confirmed that the North has grown twice as fast as the South and that the Midlands is creating jobs three times as fast as London and the South East. What’s more, Osborne pledged that one million extra jobs will be created in the North over the next five years.

The Chancellor’s pledge to spend £150 million on transport for the North demonstrates that there’s a genuine attempt from Whitehall to generate economic renewal in the North. It’s not just a lot of ‘pen pushing’ activity to “be seen to be doing something” about the long-term neglect of the North.

Although currently much of the focus is on key cities such as Manchester, Liverpool and Leeds, it is vital that the government do not lose sight of the ‘Real North’ and serve due diligence to the pivotal role the North East and the cities of Newcastle, Sunderland and Middlesbrough play in building a Northern economic force.

There’s so much potential in the North East - from Nissan in Sunderland to the array of innovative tech starts up across Sunderland and Middlesbrough. Of course, it still has some real challenges especially those arising from its dependence on heavy industry and the closure of steelworks and shipyards, but we have good reason to be optimistic.“

Tom Blenkinsop, Labour MP for Middlesbrough South and East Cleveland

“George Osborne’s fanciful claim that the North is growing faster than the South is completely devolved from the realities of the job losses Teesside and East Cleveland has suffered in the last couple of months. I’m certain that my constituents will have serious questions for the Chancellor and the Tory Government that has stood by whilst we’ve lost our steel industry and one of the biggest employers in East Cleveland cut 700 jobs.

Furthermore, the government still lacks a comprehensive strategy for the steel industry and the industry is still waiting on compensation for the carbon price floor tax introduced four years ago. Meanwhile, the majority of the 5 point plan presented by the steel industry at the summit in October seems to have been ignored.

Other issues from the CSR include the tax credits cuts U-turn - which is a welcome one and will come as a relief to thousands of families across Teesside. However, I fear the devil may be in the detail. For example, I fear that the cut hasn’t been completely abandoned and is just a transitional measure, deferred to tax credits form part of the Universal Credit – assuming the Government ever get to grips with that policy. Nevertheless, credit for today’s announcement must go to the campaigners who have forced this climb down from the Chancellor.

No doubt that, over the next few hours and days, as the details of the CSR are poured over the full extent of Osborne’s plans will become clearer – the massive cuts to local councils, cutting £360m from adult skills and the climate change tax exemption that will leave steel companies no better off in cash terms are just a few of the gremlins revealed so far.“

Infrastructure

Antony Hall, Partner and Head of Commercial at Mincoffs Solicitors

“Asked earlier in the week about measures I would like to see in the Autumn Statement, I asked for investment in infrastructure. I was encouraged to hear the Chancellor announce that transport capital spending would increase by 50%; we were told that meant the beginning of the construction of HS2 to link the Northern Powerhouse to the South.

The Chancellor should of course have said that HS2 will link part of the Northern Powerhouse to the South (but not the (all-important) North East part). This is not mere semantic hair-splitting - those of us involved in the digital sector in the North East know how important it is that the region’s part in the Northern Powerhouse is not overlooked.

Our North Eastern towns and cities stand to benefit from the newly created £400million Northern Powerhouse investment fund (established to help small businesses grow) announced in the Autumn Statement; the shared fund makes it even more imperative that the North East voice of the North Powerhouse is heard distinctly to ensure that our region gets its fair share of investment.“

Apprenticeships

Brad Groves, chief executive and chairman of Great Annual Savings Group

“I was pleased to see more detail around the apprenticeship levy announced by the Chancellor. The levy could act as an important catalyst to boost uptake of apprenticeships.

The funding generated will go a long way to support the Government’s plans to create three million new apprenticeships by 2020, helping to develop the UK’s skills base and driving long-term productivity.

It transpires that the levy won’t directly affect the Great Annual Savings Group, however we continue to see apprenticeships as a good investment because young people can bring a vibrancy to the business and make it more productive. Apprenticeships are also a great way of providing career opportunities for local people, particularly in an area such as Seaham which has traditionally suffered from high unemployment.“

Taxation

David Elliott, Head of Tax at KPMG in Newcastle

“While entrepreneurs across the patch may be breathing a collective sigh of relief that the rumoured cuts to entrepreneurs relief did not come to fruition, there is a risk that replacing grants with repayable loans will be a false economy, with the unintended consequence of stifling innovation, rather than encouraging it.

There is a certain psychology attached to indebtedness, rather than the incentivisation attached to grant funding. So while any increase in availability of finance will always be welcomed, young fast-growing businesses don’t necessarily want to be burdened with short-term cash interest and the longer term spectre of repaying loans.“

Such foundation capital is particularly vital, for example, to the region’s start-up tech businesses and those that need to invest in building their intellectual property before they can turn a profit; exactly the kind of businesses we need to encourage.

Whilst it is evident that the Chancellor is seeking to create a supportive ecosystem for the UK’s SMEs, there was nothing in his statement today that will leave them with anything real to celebrate.

News of expanding enterprise zones into rural areas will be helpful and a low cost way for the Chancellor to show commitment to the SME community. However, the success of existing enterprise zones in the region is still largely untested.

Some sectors did better than others as the Chancellor announced (again) funding for small house builders, recognising the integral role they play in the supply chain in order to get these new homes built.“

Anthony Andreasen, director of corporate tax at Gosforth-based RMT Accountants & Business Advisors

“With the public finances still remaining stretched, there is still a huge emphasis being place on enabling HMRC to maximise the amount of tax revenues it can bring into the Treasury.

The campaigns that have been run in specific industries and geographical areas have met with some success, and the Chancellor’s announcement of an £800m investment to tackle evasion and noncompliance in the tax system that he wants to see deliver an additional £7.2 billion by 2020 shows the focus on this issue is not being diluted by wider spending constraints.

The management of the logistics around collecting Capital Gains Tax on property disposals within 30 days of a sale could present a challenge, and it will be interesting to see how this idea is developed before the measure is introduced.“

Ian Malcolm, managing director of ElringKlinger (GB)

“The u-turn in tax credits is absurd - the tax credits cost of £30bn per annum is completely unsustainable. Transport investment is welcomed if it becomes a reality but, if it is misplaced, HS2 won’t achieve dissemination of growth.

The Apprenticeship Levy is not going to help in the large scale problem of the skills gap; the Chancellor is robbing Peter to pay Paul. The increase in funding per head for apprentices is good news, as is protecting adult learning funding, though not in real terms.

Cutting BIS funding is contrary to building a better industrial base in UK and loans rather than grants for business will deter entrepreneurial investment.

Housing schemes won’t put a block on spiralling house prices – the London ‘help to buy scheme’ is likely to increase that spiral. Discounting house prices in the medium term will simply increase demand and speculative investment, and I don’t think it will help first time buyers in the long run.

I cannot see how the numbers are adding up and don’t think public will either, I also felt that the Labour response was very poor, with nothing substantial to say.“

Simon Whiteside, Tax Director at EY in the North East

“The Chancellor has delivered on one promise – to make the Autumn Statement more about the economy and less of the mini-Budgets of his predecessors. Today was less of a mini Budget and more of a trailer for what’s yet to come.

We saw Business Rates reform deferred until the Budget next year (so bad luck for Retailers and Manufacturers who pay 23% and 17% of the burden respectively). Also, those worried about salary sacrifice were given a further reprieve, with the depths of the document noting that the Government was ‘gathering further evidence’.

However, the sky blue document also heralded in almost £21bn in tax rises over the six year period, of which the Apprenticeship Levy is meant to raise over half. The rest will come from tax avoidance, evasion, and planning as well as those who seem to be portrayed as the new villains of the day, those who have buy-to-let or second properties.“

With limited detail announced today, we have to wait two weeks to Legislation Day on 9 December when we see the draft Finance Bill.“

Housing

Chris Endsor, Chief Executive of Miller Homes

“We are pleased that housing remains a key priority for the Chancellor and we welcome the measures announced today which continue to support the aspirations of those seeking to achieve home ownership.

Creating additional means by which people can realise these dreams, such as the Starter Homes initiative and Help to Buy Shared Ownership scheme, is important, however having a robust planning system which supports the supply side efficiently to meet this demand is critical. We therefore applaud the announcement today that there will be further reforms to the planning system and increased availability of more land for housing.“

Steve Urwin, Managing Director, Sales and Marketing at Newcastle Building Society

“The Chancellor’s commitment to increasing the supply of homes across the UK and enabling more people to get onto the housing ladder dovetails perfectly with the Newcastle’s core strategy of helping as many first time buyers as we can save for and then own their own homes.

The introduction of the Help to Buy scheme has had a clear and positive impact on the housing market in our heartland area, and our own Help to Buy ISA, which we will be launching on 1 December as the scheme is introduced across the UK, will add another very useful savings option for first time buyers across the region.

With the economic recovery taking hold, the Buy To Let market has seen something of a resurgence over the last couple of years, and it will be interesting to see what the impact on the market will be next year when the three per cent increase in stamp duty for buy-to-let properties and second homes that the Chancellor announced in his speech comes into force.“

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