Member Article

Autumn Statement 2016: What do North East businesses want to see?

Chancellor of the Exchequer Philip Hammond will deliver the Autumn Statement on wednesday, revealing the first Budget of Theresa May’s new government.

With much uncertainty surrounding Britain’s economy in the wake of the EU Referendum, Brexit and subsequent political upheaval, we present a comprehensive look at what the region’s business community is saying ahead of the announcement.

From SME support to tax, from innovation to Industrial Strategy, we bring you the region’s most comprehensive business preview.

Startup Support

Yvonne Gale, Chief Executive NEL Fund Managers

“With reports showing 2016 as a record year for the number of new startup businesses, it’s now more important than ever that these fledgling firms have the right support in place to enable them to grow quickly and sustainably.

Evolving a new enterprise into an employing business can be a daunting experience, but it is a necessity for those ambitious entrepreneurs looking to make an impact in the market place.

Having access to the talent to back their vision is vital and support is required to make the employment process as straightforward and affordable as possible.

The long-awaited apprenticeship levy, driven from the productivity agenda, should provide an attractive opportunity for employers looking to grow their workforce with young talent.

We call for the government to ensure the successful implementation of this levy and to make it work for our small businesses, so that they are able to work in turn for the health of the regional and national economies.“

SME Support

Nigel Mills, Chairman of the Entrepreneurs’ Forum

“The Autumn Statement is the ideal opportunity for the Chancellor to confirm the Government’s commitment to entrepreneurial businesses and the contribution they make to the economy.

To enable these businesses and other entrepreneurial companies across the country, to further enhance their role in the UK economy, it is vital that the UK creates a pro-business, pro-enterprise climate, which encourages investment and growth in the current, post-referendum economy.

Delivering an encouraging environment for entrepreneurs would create more businesses and encourage high net-worth individuals to invest in the kind of entrepreneurial companies the country needs to take the economy forward. Therefore, a commitment to supporting enterprising, privately-owned businesses in the Autumn Statement would send a clear message from Government that entrepreneurs are central to the economic prosperity of the UK.“

Tim Ward, MD at Bid and Research Development

“The Autumn Statement comes at what I see as pivotal time for our volatile economy. With a great deal of uncertainty around many factors which impact business I think the government should take a two pronged approach focusing on both the long and short term prosperity of the economy.

I think support for SMEs will be vital- with concerns about how attractive the UK is for large businesses to locate here I personally think there is a need to grow great businesses from within.

As a small business owner I would welcome investment in schemes such as the growth accelerator programme which was previously scrapped.

It would be nice to see some tax relief for small businesses which would offset the recent increase in personal dividend tax.

Recruitment is a big issue and a huge risk for most small businesses. I would like to see a scheme which subsidises the recruitment of graduates many of which are in my opinion not job ready so pose a huge risk in recruitment.

A huge issue for small businesses which regularly stalls progress is payment terms of larger companies/customers, it is not uncommon to hear of payment being delayed to 90/120 days or beyond. I hear more and more of large companies wanting to re-negotiate prices after the work has been done particularly in the construction sector. I think the whole SME community would welcome some sort of regulatory body or initiative to support prompt payment even an opt in responsible payment scheme.“

Stephen Sumner, MD at Explore Wealth Management.

“I think that the Autumn Statement needs to outline how the government plans to stimulate the economy to benefit not just businesses, but individuals too in the aftermath of the Referendum.

Thinking about businesses, the government should consider a reduced corporation tax incentive to discourage firms from leaving Britain post-Brexit, making the UK more attractive to overseas businesses looking to expand into the UK.

In addition to the above measures, the government could offer incentives to businesses such as reduced business rates on commercial properties, or one year’s free national insurance payments to companies looking to recruit extra staff.

Thinking about the public’s needs, in a recent survey, 70% of UK citizens claimed they had not seen any improvement in their standard of living in the last 10 years. To address this, the government could help by launching some new fixed-rate national savings products, or by reducing the stamp-duty tax payable on properties to rekindle the property market.

In my opinion, the government should tear up its austerity programme and look at ways to boost the economy in these uncertain times, by way of increasing expenditure on infrastructure projects such as road building, schools and hospitals.“

Jonathan Willett, director of Henderson Insurance Brokers Stockton

“Despite the High Court’s ruling, people need to realise and accept the wishes of the British public, who voted in favour of Brexit. As such, the Chancellor needs to support business now more than ever, and allay the fears of those who are sceptical about the UK’s prospects moving forward. We are seeing firms holding back on investments and deciding against recruiting more staff, so it is necessary to deliver an Autumn Statement which sets out a clear agenda that will support UK enterprise and its entrepreneurs and business people.

We are already seeing the effects on construction and housing, which remain key to the long-term economic stability of the UK, so there needs to be a concise and clear plan on how best to stabilise our housing market, which could spiral out of control, push prices further up and create an even bigger North-South divide.

Our customers and the people they serve, which includes homeowners, also need to be supported as much as possible with cost effective initiatives and increased awareness on the various energy saving and renewable energy methods that are available to them. It is not only business that needs support, but everyday people, who are trying to make an honest living for their families.“

Phil Pallister, managing director of 0800 Repair Gas

“Business investments must be supported if the UK is to drive through this period of uncertainty. Favourable Government grants will help ease the burden of operating in uncertain times, as well as allow our region’s businesses to improve their infrastructure, hire new people, as well as look to the workforce of the future by investing in apprenticeships.

“Working people also need to be supported through initiatives like the Renewable Heating Incentive (RHI), which, to my relief, wasn’t scrapped last year. As renewable technology has advanced, there are so many different cost effective energy systems available to people, so continued support and financial backing of such initiatives is another a must for the Chancellor.”

Tax

Malcolm Massey, Owner of TaxAssist Accountants in Durham

“Local business owners need a well-deserved boost and a break from more tax rules, administrative responsibilities and costs we already face huge demands on our time and hard-earned income – from compulsory contributions to staff pension pots, changes to the way that dividend payments are taxed, onerous business rates and digital tax reporting.

With over 5 million small businesses in the UK, contributing a massive £1.8 trillion to our economy and providing 15.6 million jobs, we’re urging the Chancellor to hear the voice of small business and recognise their vital role in the future success of the country.“

Neil Harrold, North East chair of insolvency trade body R3

“We live, I hardly need remind you, in turbulent times. As such, it is essential that the government continues to focus on providing a business-friendly environment to support our economy and jobs.

Whilst building our infrastructure is essential for our long-term prosperity, the government must not overlook that many businesses are trying to survive the next year, let alone the next decade.

With the greater degree of stability that we all crave will come greater confidence that we can make a success of Brexit and other challenges that we are facing.

This will, in turn, give North East businesspeople the best possible chance of simply getting on with running their companies successfully, and creating regional jobs and wealth along the way.

I’d therefore like to see measures announced in the Autumn Statement which will make it easier for businesses to interact with the government in all its forms, in particular by building on its commitment to make dealings with HMRC more straightforward for millions of people and businesses.

By doing so this will maximise the chances that those experiencing some short-term distress linked to our current economic challenges will still have a positive future given the right kind of supportive environment.

Creating a framework that removes obstacles to business will allow them to operate in a stable and predictable environment concentrating on what they do best, which in turn will create confidence to invest, grow and create jobs.“

Innovation

Steve Guest, MD of Wilton-based recruitment specialist Techconsult UK

“As a nation we have some hugely intelligent people with lots of innovative ideas. These should be nurtured so that in future they can help drive up prosperity and commercialise some of the excellent ideas currently marooned at R&D stage.

I understand that the Chancellor wants to invest heavily in road and rail projects and while this is important, he shouldn’t ignore the significance of funding for offshore energy schemes.

Many oil and gas workers are currently retraining for a career in offshore wind so the skills are there to carry out the work.

The energy sector is one of the North East’s key strengths and if the Chancellor could divert public funds to this type of scheme it would have a huge positive impact on the regional and national economies.“

Industrials

Chris McDonald, CEO of the Materials Processing Institute

“I will be looking to the Autumn Statement to see an indication of the Government’s approach to infrastructure investment. Low interest rates on Government debt and the need, in the wake of the referendum, to switch the UK economy to international trade outside the EU, creates an ideal environment for Government investment in infrastructure.

The carbon price floor is damaging the viability of energy intensive industries, such as steel, glass and chemicals. The industry has called for the tax to be scrapped and replaced with measures that support the decarbonisation of industry, without offshoring production.

Industry has called for Government to support a new innovation ‘Catapult’ for the metals and materials industries. Whilst I don’t expect such a Catapult to be announced in the Autumn Statement, I will be looking to what support Government intends to provide to the Foundation Industries in particular, that is distinct from, for instance, other aspects of high value manufacturing.“

George Rafferty, Chief Executive of NOF Energy, the business development organisation for the oil, gas, nuclear and offshore renewables sectors

“The Chancellor has the opportunity with his Autumn Statement to demonstrate that the Government supports the efforts of the energy industry to become more efficient and collaborative. Oil output from the North Sea has increased to the highest level in four years and a collection of offshore wind developments are coming on line, which are supported by supply chain companies that have developed and implemented technology-led solutions and innovative services that are addressing the challenges of the energy sectors.

Further gains can be made by increasing incentives and tax reliefs for research and development and capital investment in kit and equipment that will enable supply chain companies to develop new and effective solutions and maintain the UK’s position as a leading player in the discovery, extraction and generation of a balanced mix of energy resources.“

An Industrial Strategy or a Northern Powerhouse?

Mark Stephenson, Head of public affairs for Invicta Public Affairs

“The Chancellor is expected to deliver a ‘steady as she goes’ Autumn Statement on 23 November. It comes at the end of a tumultuous year and therefore at the beginning a of a period of enhanced uncertainty so businesses will be watching closely, looking for reassurance and encouragement to assist in forward planning.

It will be good also to get more clarity on the government’s Industrial Strategy. The North East has a unique role to play in this and sectors such as utilities, ports and logistics and automotive could do with greater certainty on energy policy - any signposts here will be gratefully received.“

James Bryce, Partner and head of the corporate and commercial teams at Square One Law

“The Autumn Statement is an opportunity for the Government to reaffirm its commitment to the Northern Powerhouse, at the very least as an economic initiative even if full devolution seems to be a more difficult political objective to achieve.

As part of this, with Mr Hammond taking the brakes off government borrowing and relaxing Mr Osborne’s austerity agenda, he is expected to provide some focus on infrastructure spending. It would be good to see the North enjoy a commitment to projects such as HS3 and highways improvement.

More particularly, the North East needs to make its voice heard and ensure that it is not the forgotten part of the Northern Powerhouse. As a region, with a positive net balance of exports, I think it is reasonable to expect an equal standing with the North West and Yorkshire.“

Infrastructure

Sean Bullick, CEO of NE1 Limited, Newcastle’s Business Improvement District Company

“With the right public and private investment we can unlock huge opportunities for Newcastle and the North East, which would allow us to reach our full economic potential. Investment in our airport, rail connections, roads and ports are particularly important to our region’s economy. Opening up the possibility of Property Owner BIDS to the regions will start to rebalance the economy, making them a really valuable additional tool in delivering the Northern Powerhouse.”

Penny Marshall, Regional Director of the Institution of Civil Engineers

“Real and sustained economic growth can only come from a long-term strategic approach to infrastructure provision. For our region this means we need increased investment to improve transport within our towns and cities, and improve connectivity between the major cities of the Northern Powerhouse, within the region itself, and with London, I would also like to see further support for education and training to bridge the skills gap currently affecting all engineering sectors.”

Matthew Spry, Senior Director at NLP

“Large-scale new developments have lots of advantages, but the speed at which these sites can realistically deliver new homes needs to be given serious consideration if housing needs are to be met.

The Government, local authorities and industry should really focus efforts on ensuring a good mix of both small and large-scale developments alongside one another to ensure a consistent rate of housing delivery to meet national housebuilding targets.“

Tax

Lee Muter, Employment Taxes Partner at UNW LLP

“Keeping in mind the uncertainty surrounding Brexit and our strategy for exiting the EU, Philip Hammond could well use his first Autumn Statement as Chancellor to move away from the work of his predecessor George Osborne.

He has already stated he will not be following through with the plan to cut rates of VAT to 15%, but I do expect to see significant changes to certain tax advantages.

The rising number of hybrid and plug-in hybrid cars means tax revenues have been down for some time, and I expect the government to combat this by announcing an increase in the rates of company car tax and Benefit in Kind (BIK) charges.

In addition, HMRC is keen to tackle what they see as an abuse of salary sacrifice schemes, and those that would be hit hardest by the restrictions would be employees who currently receive benefits from their employer using “unapproved” schemes.

The statement could also see major changes to how employment status is determined, which would see individuals pay the same rate of tax and NIC, regardless of whether they were self-employed or the employee of a company.

HMRC are looking to plug the £10bn gap in the National Insurance Fund, and this development marks a significant change in their approach towards the issue. These changes will initially, from April 2017, be unique to the public sector, but it is entirely plausible that the private sector will feel the impact at some point in the future.“

Alastair Wilson, Tax Partner at accountancy practice Tait Walker

“For the North East it would be great to see an extension of Business Premises Renovation Allowances which are due to cease in March 2017 but provide real value for the region. Alongside this, reinstatement of Industrial Buildings Allowances for SMEs, business exemptions for factories investing in energy efficiency and tax relief for trading companies who invest in other trading companies would be a positive step in the right direction.

I would also like to see clarity over Making Tax Digital (if and when HMRC are going to implement it) and a halt to measures which add to administrative burden with no benefit, e.g. the Apprenticeship Levy.

What I would really love to see, however, is a more cohesive economic strategy for the North East and some initial clarity on what Brexit might look like in practice – but I’m not holding my breath…“

The Skills Gap

Rob Charlton, CEO of architecture and technology business Space Group

“With so much uncertainty around as a result of Brexit, a new US president and European elections, providing economic stimulus will be important to give confidence to businesses. There have been suggestions that there may be policies to help with social housing. This was overlooked by the previous PM so it coming back on the agenda will be a welcome topic.

From a very specific point of view, it has been proposed there will be support for offsite manufactured homes and small housing developers, and from a selfish perspective this helps with the development of our Spacehus product – a sustainable model of homes which comply with ‘zero carbon’ standards.

Lastly, something critical that I continually look to the Budget and Autumn Statement announcements for is support to bridge the skills gap. We always have concerns around skills and I would be keen to see investment in our young people.“

Kate Culverhouse, Chief Executive of Groundwork North East & Cumbria

“In the Autumn Statement it is important that the Government quells the unease of many within the third sector and business world by following through on its commitment to ring fence EU-funded schemes in the North East.

Social investment is crucial to the long-term future of the region. Employment in the North East has been steadily increasing, but we still have the highest number of unemployed people in the UK.

There is much more work to be done in terms of up-skilling older people and ensuring young people have the opportunity to gain the skills and experience they need to secure long-term employment.

Without this commitment from the Chancellor, many organisations are unable to properly plan for the future, which means that they are holding back on investment in jobs and infrastructure. A guarantee in the Autumn Statement would give our region a very welcome kick start.“

Richard Hogg, Managing Director of Jackson Hogg Recruitment

“Given the need to boost global exports in the wake of the Brexit vote and the likelihood that any financial stimulus will come in the form of infrastructure spending, it is vital the Chancellor takes account of the skills needed to deliver our future prosperity.

Investment in skills now, or tax breaks for companies investing in them can pay dividends in decades to come, while under investment could waste a great deal of human and economic potential.“

Got an opinion? Why not comment below? As ever, we thank all contributors in supporting business discussion and engagement across the region. Look out for reactions to the Chancellor’s Budget later this week. Submissions to Jamie at jamie.hardesty@bdaily.co.uk.