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Autumn Statement: Reactions from the North East business community

After Philip Hammond delivered his first Autumn Statement as Chancellor yesterday, we bring you multi-sector reaction from across the North East.

Want to join the discussion, why not tell us your thoughts in the comments section below?

If you missed the budget or want to see the key points, click here for Bdaily’s Autumn Statement Summary.

Industrial Strategy

Liz Mayes, North East Region Director at EEF, the manufacturers’ organisation

“Business was looking for reassurance from the Chancellor at a time of considerable uncertainty and he has helped calm nerves with a pre-Brexit tonic pitched at the right level. He is walking a fiscal tightrope, but his pragmatic statement provides enough stimulus in key areas vital to improving productivity while holding back some fiscal firepower if, as the OBR suggests, the economy stutters.

The Chancellor has also provided industry with a down payment on a modern industrial strategy. The boost to science and innovation is vital if we are to be at the forefront of the 4th industrial revolution, while the doubling of support for exports should grease the wheels for business in growing markets abroad. The Chancellor has also signalled a welcome recognition that our digital network and local roads are not fit for purpose and need major upgrade.

From now on this should be the direction of travel for future statements and policy decisions, with Government using the right levers to address productivity, regional growth and housing. A commitment to keep pushing on these priorities, while addressing past under-investment in infrastructure, will send out the right message to businesses here and overseas that post-Brexit Britain really is open for business.“

Northern Powerhouse

Alastair Wilson, Tax Partner at accountancy practice Tait Walker

“In terms of North East specific proposals, these were limited but there was an update on the Northern Powerhouse strategy document which includes measures which will assist the North East such as a potential investment of £15m in the National Institute for Smart Data Innovation in Newcastle, £6m for Tech North to accelerate the northern digital economy and £15m for Northern Powerhouse trade missions to encourage overseas trade.

One final, and mainly unexpected, change was a switch from an annual Autumn Statement and Spring Budget to using the future Autumn Statements as the “budget” instead. This is welcome as it reduces the number of times annually that major policy changes will occur by 50%!

Overall, the Autumn Statement didn’t include many major surprises, but equally didn’t include many new headaches for North East businesses and overall the lack of change and a period of stability should be welcomed.“

Stephen Poole, Senior Tax Consultant, Robson Laidler Accountants and Business Advisors

“Being in Newcastle my ears pricked up when Philip Hammond talked about the North East with the fastest rate of employment growth. However while he has released a 30 page strategy document about the ‘Northern Powerhouse’, many pages are blank and his plans remain vague. What we need is action now in the North East.

There was not really anything for young people so I think a lot of our future leaders will feel disappointed. However, it is good to see a commitment to increasing Research and Development as this is where one of our true strengths lies.

In the North East we have some of the most interesting engineering companies I have seen and I hope some of this will trickle up to them. We also have some of the strongest (and sometime more maverick) software companies and again I see a strong future here, but I am not feeling much more encouraged after reading through the documentation.“

R&D innovation funding

Brian Palmer, Tharsus

“We welcome the government’s investment in R&D, particularly the increase for robotics and AI, as well as £390 million investment in future transport technology such as autonomous vehicles.

“With a much smaller proportion of the UK’s GDP being generated in these critical technology areas compared to Germany or the US, we’re currently lagging behind our international partners. The new research, development and innovation investment rising to an extra £2 billion per year by 2020-21 will help stimulate the growth of this important sector.

“Tharsus is already a leading player in the UK robotics sector, so confirmation that the government will actively nurture the wealth of robotics research expertise here in the UK is something we naturally relish and encourage. We’re already supporting customers in applications from healthcare to warehouse automation.

“We expect the investment announced today will help us, and others like us, to continue bridging the gap between the exciting research coming out of British universities, and the needs of global industry.”

Richard Hogg, Director of Jackson Hogg Recruitment

“The Chancellor’s pledge to invest in research and development, and infrastructure is good news in terms of professional and skilled engineering jobs.

“Industry will also be keen to see the details of the Government’s Industrial Strategy, and what future measure it will take to support the offshore energy sectors.”

Steve Guest, MD Techconsult UK

“The £23bn National Productivity Investment Fund, and in particular the £2bn a year earmarked for research and development, will hopefully be the catalyst for rapid commercialisation of projects that are currently marooned at R&D stage.

I hope that the North East gets a fair share of this money, which has traditionally been diverted to science and tech hubs in the south of the country. We have some great ideas and intelligent minds in our region and this needs to be backed with hard cash; the North East has a major role to play in helping Britain to close the productivity gap.

In addition, the £1bn-plus earmarked for improvements to Britain’s broadband and 5G infrastructure is a step in the right direction, although it won’t be sufficient to put the country on an even footing with China and other advanced economies across the globe. In particular, UK businesses in rural areas still suffer through poor internet connectivity and broadband speeds so it’s important that this is addressed.“

Andrew Hodgson, North East LEP Chair

“The Chancellor of the Exchequer Philip Hammond’s focus on raising national productivity through substantial infrastructure and innovation investment mirrors the approach of the North East’s Strategic Economic Plan. We welcome the Chancellor’s recognition that we are making a stronger contribution to the national economy through the creation of more and better jobs.

The Government has committed to investing £23bn into a National Productivity Investment Fund to boost innovation and infrastructure over the next five years which provides opportunities for our region to exploit.

We welcome the Chancellor’s focus on 5G broadband development through a £1bn fund and trials programme – the region has written to the Chancellor with a proposal to create a trial site for 5G in the North East.

The £220m funding for pinch points on strategic roads gives the North East an opportunity to further develop schemes in relation to the strategic highway network in the region. Investment into the ultra-low emission vehicles sector represents a major opportunity for the North East with its strong automotive sector and highly developed low carbon vehicle programme.“

Jonathan Scott, Tax Partner at Haines Watts North East

“The government’s commitment to research and development in business is a vote of confidence in the UK economy. This extra funding will reinforce the UK as a hub of innovation, making Britain a global go-to place for cutting edge science and technology companies.

At Haines Watts, we are seeing first-hand how tax credits are boosting R&D spend in the region’s businesses, with the current high rate of relief attracting more and more companies to innovate. This further backing from the government will help to drive our region’s competitiveness, with many innovative companies spending more on research and development as a result.

The North East is home to some of the most forward-thinking businesses in the UK and, alongside valuable R&D tax relief, our region will benefit massively from this investment in innovation. The government has said it will allocate £425m by 2017/18, £820m by 2018/19, £1,5bn by 2019/20 and £2bn by 2020/21. This extra commitment of £2bn over the next five years will undoubtedly outline Britain as a world leader in innovation.“

Digital

Jacqueline de Rojas, Managing Director, Sage Northern Europe

“We welcome the £23 billion National Productivity Investment Fund to help close the productivity gap. The additional investment is good news for enabling an agile business economy so that we can better compete at home, and overseas, but it’s essential that spending supports charging the digital heartbeat of our companies to power up the UK economy as that is what will differentiate and drive businesses increasingly in the future.”

Borrowing

John Elliott, Chairman of Ebac

“The Chancellor did nothing to reduce the country’s deficit. The goal of a surplus by 2020 has become pie in the sky economics.

We can’t continue to keep selling assets and borrowing to spend more than we earn. We have the resources to earn more by manufacturing more, but it won’t happen if it’s left to big business. Investing in manufacturing will be much better than spending billions on a high speed train line or on a National Productivity Investment Fund.“

Infrastructure

Penny Marshall, Regional Director of the Institution of Civil Engineer

“The Government’s commitment to invest in infrastructure is a step in the right direction. Only by making sufficient funding available for the development and maintenance of roads, railways, the water network and the power grid can we ensure the country is ready to meet the economic, demographic and environmental challenges of the coming decades.”

Chris McDonald, CEO of the Materials Processing Institute

“It was very encouraging to hear the Chancellor’s passion for infrastructure and innovation, and his commitment to a National Productivity Investment Fund of £23bn.

“In order to safeguard economic growth and business development, it is vital that the UK, and especially the North East, sees investment to keep the manufacturing sector at the cutting edge of international expertise, developing innovative, efficient process, which safeguard the future of British industry.”

Jeremy Middleton, North East investor and philanthropist

“The increase in the living wage is good news for thousands of families across the North East and can be good news for business too. A better paid, more secure worker is more productive than one just scraping by.

The Government’s announcement on infrastructure could be good news for our region as better connectivity would help to grow the economy, so we need assurances that the North East will get its fair share of investment.“

Stephen Sumner, MD at Explore Wealth Management

“The outcome of the EU Referendum earlier this year was an absolute game-changer for the UK government, so I am really glad to see that Philip Hammond has placed the stimulation of the economy post-Brexit as a top priority in today’s Autumn Statement.

I am encouraged by the government’s abandonment of the austerity measures put in place by its predecessors. In these uncertain times, it will be great to see public spending increased again on key infrastructure projects such as schools, hospitals, transport and affordable housing developments.

Although I am slightly disappointed that the government’s new 2.2% fixed rate national savings product has been capped at £3000 per person, as this feels like quite a low limit. I am also slightly concerned at the suggested increase in insurance premium tax, however, I’m hoping that money-saving exercises elsewhere might help offset these costs.“

Housing and Letting

Ajay Jagota, KIS Group

“The Prime Minister has spoken quite rightly about the need to help families who are ‘just about managing’ – but as attractive as it might sound, a ban on letting agent fees could actually make their lives more difficult.

Loss of revenue for agents will inevitably be made up by passing those on to landlords in fees, making rent rises inevitable in turn. That certainly seems to have been the case in Scotland where some rents rose by more than 6% when a similar ban came in.

Think of it as being like buying from a monthly payment store – you pay less up front but pay far more over time than you otherwise would have.

The devil will be in the detail of course - and ‘as soon as possible’ could mean anything’ - but my instinct is to agree with Housing Minister Gavin Barwell, who just weeks ago described a letting agent fee ban as a ‘bad idea’. I’m not convinced the best way to help people who are just managing is to raise their rents.“

Natalie Frank, Managing Director of property lettings and management specialist, Home Management Group

“The Chancellor’s decision to crackdown on unregulated letting fees is a fantastic step towards a private rented sector, which works for everyone.

Currently, unscrupulous letting agents are able to claim huge fees from both tenants and landlords, before contracts have even changed hands. The new regulations will offer a fairer deal to prospective renters, who are often left out in the cold by unethical agents.“

Joe Sarling, Associate Director, at NLP

“The commitment to invest in housing is crucial. With the acute shortage of homes in locations increasingly vital to UK economic success, decisions on how and where the Government’s investment is made will be crucial to its effectiveness.

However we await the Housing White Paper which will address some of the key barriers to housing supply: slow Local Plan progress; problems with supressed housing need; and the difficulties of cross-boundary working, to name but a few.“

Fuel and Transport

Mohammed Bashir, founder of Boro Taxis

“The Chancellor made the right decision to freeze fuel duty until 2018. There will be a sigh of relief from businesses in the transport sector, many of whom may have been forced to pass on any price increase to their customers.”

Jonathan Walker, head of policy, North East England Chamber of Commerce

“Overall the Autumn Statement has some welcome news but we need to see more detail on many of the Chancellor’s announcements.

The increases in housing, innovation and transport spending are positive. We are also delighted our campaign for improvements to the A66 and A69 has been successful. This investment must now be made a reality to enable a more connected North East.

The A66 is a vital route for Teesport and the wider Tees Valley. The business community will want to see work start as soon as possible in order to increase their access to market. Tyne Valley companies and employees who use the A69 will welcome the proposed improvements which ought to bring benefits in journey times and reliability.

We are dismayed that the Government has chosen to delay action the issue of Air Passenger Duty, which has the potential to harm the region’s competitiveness following devolution to Scotland. If the Chancellor is serious about spreading prosperity to all parts of the country this is the sort of issue he must address immediately.“

Phil Pallister, managing director of 0800 Repair Gas

“Customers of small businesses are directly affected by costs such as fuel, so it is welcome news that the Chancellor has announced the freezing of fuel duty until April 2018. This decision will help ease the burden of firms that operate fleets of vehicles, and, as a result, we should expect firms to pass on the savings to the customer, without further increases in service prices.”

Tax

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

“The government’s unwavering determination to bring in all the tax revenues that it believes are owed to HMRC is only going to be reinforced by the intense financial pressures that the Treasury will be under in the years leading up to and following the UK’s exit from the EU.

A raft of measures announced in the Autumn Statement, such as changes to salary sacrifice and employee shareholder schemes, unfair use of the Flat Rate VAT scheme and the ramifications of using tax planning schemes that are later judged to be illegal are clear demonstrations of the practical ways that will be used to deliver on this strategy.

Both business owners and the employees that work for them need to fully understand how these measures will impact on how they are remunerated and taxed, and with their implementation date only a few months away, it needs to be treated as a priority so that all parties ensure they remain unquestionably on the right side of the taxman and aren’t left open to receiving any costly surprises in the future.“

Robert Phillips, Corporate Partner at Bond Dickinson

“From a corporate perspective, there are no surprises and, in fact, what we are hearing is a chancellor talking about stability and committing to a medium and longer term plan. A targeted continued reduction in corporate tax rates is good news.

The business tax road map might sound uninteresting – but in an environment where there is uncertainty around what happens after we finally exit the EU, an element of certainty around taxation affairs and reducing corporation tax rate is of some comfort to British corporates (and potentially overseas business sitting on investment decisions in the UK).“

John Savage, managing director of Flame Heating Spares

“While there still remains a large gap between the rate of Corporation Tax that SMEs pay compared to many large multinationals, which are often reported to have paid very little, the cut in Corporation Tax is a small gain for SME owners. The cut to 17% offers relief and presents the opportunity to invest in growth and expansion, which will help boost the economy and create jobs.”

George Hardey, Director of Tax at Tees Valley Chartered Accountants and Business Advisers Waltons Clark Whitehill

“The Government’s reiteration of its commitment to lower Corporation Tax to 17% is a welcome move in the wake of the Brexit vote. It will help to make us a competitive and attractive destination for foreign direct investment, without the risk of being labelled a tax haven.”

Graham Robb, Chairman of the Institute of Directors in the North East

“The Government’s commitment to press forward with reducing Corporation Tax will be greeted positively by North East businesses, as will the extra infrastructure investment. The new borrowing powers for mayoral development corporations are particularly welcome in the Tees Valley.

Changes to tax benefits for employees and the self-employed may be unpopular in some circles, but in general this is a very pro-enterprise Autumn Statement. It shows the Chancellor is serious about the North East being part of a post-Brexit UK economic powerhouse.“

Jonathan Willett, Director of Stockton-based Henderson Insurance Brokers

“The continued rise in Insurance Premium Tax (IPT) to 12% next summer could cause a host of negative ramifications for families and businesses up and down the country. For those who take out multiple insurance cover options, this could have a major cost implication and is another subtle cost increase applied by Government which will affect all. While the Government’s intervention on whiplash compensation rules is a small boost to vehicle owners, the IPT rise outweighs this slight gain.”

Scaleups

Nigel Mills, Chairman of the Entrepreneurs’ Forum

“The doubling of export finance capital, and the increase in capital available to scale-ups through the British Business Bank is welcome news for growing businesses, as is the news that the Government will go ahead with its plan to further reduce corporation tax.

The Chancellor is right to take measures to tackle the productivity gap. Improvements to infrastructure, both in terms of transport and mobile connectivity, will help businesses to scale up and create more jobs by removing barriers to them doing so, especially in regions like the North East.“

As ever, we thank all contributors in supporting business discussion and engagement across the region. Got an opinion? Why not comment below and join in the discussion with Bdaily?