Chancellor George Osborne delivered his Autumn Statement and spending plans for the next four years in the Spending Review earlier today – some of the main points of which are outlined below:
Welfare and tax credits
- Department of Work and Pensions budget to be cut by 14%
Housing and local government
- New 3% surcharge on stamp duty for buy-to-let properties and second homes from April 2016, raising about £1bn
- Restrictions on shared ownership to be removed and planning system reformed to deliver more homes
- London Help to Buy scheme to offer interest-free loan worth up to 40% of the value of a newly built home
- Plans to hand billions to private developers to build 400,000 new homes in England
- Local government to keep all revenue from business rates by the end of the Parliament
- Councils to receive extra £10m to help homeless people
- Local government spending, in cash terms, to be same in 2020 as 2015
Business and energy
- Business department funding to be cut by 17%
- 26 new enterprise zones to be created
- Uniform business rates to be abolished, with elected mayors allowed to raise rates under certain conditions
- Apprenticeship levy set at 0.5% of employer wage bill, with £15,000 allowance for eligible firms
- Energy Companies Obligation to be replaced in March 2017 and Renewable Heat Incentive cut by £700m
State of the economy and borrowing
- Growth of 2.4% forecast for 2015, unchanged from June
- Growth in subsequent years forecast to be 2.4%, 2.5%, 2.4% and 2.3%
- Borrowing forecast to total £73.5bn this year, falling to £49.9bn, £24.8bn and £4.6bn in subsequent years before hitting surplus in 2019-20
- Debt to be lower in 2015-16 than 2014-15 and to fall every year after that
Ian Cass, MD of the national small employer organisation The Forum of Private Business, has responded to today’s Autumn Statement as such:
“The Forum was pleasantly surprised by the budget. Overall the Forum asked for a focus on Simplicity, Consistency and Productivity. There have been few nasty surprises and a focus on consistency where changes have been made and in the pace of deficit reduction. There has also been a significant focus on productivity through the increased infrastructure spending and focus on improving skills.
"There were a number of positive aspects of the budget, most notably the 50% increase in infrastructure capital spend and the focus on skills. I would have liked the option of multiple platforms for paying HMRC until all business owners have access to high speed broadband. I am however relieved that the hourly level of the living wage has not been accelerated to avoid tax credit reduction. I am however relieved that the hourly level of the living wage has not been accelerated to avoid tax credit reductions.
"However the devil will be in the detail as tax avoidance schemes may lead to increased costs on small businesses and we do not yet know what the 17% of reduction in the budget department of Business Innovation and Skill will mean for Britain's 1.3 million employers.”
On borrowing and growth
“Our members are pleased that the pace of deficit reduction continues and are glad that a budget surplus looks likely in 2019-20.”
On fuel duty
“Our members are relieved that fuel duty is not being increased as stability is important, the last time fuel duty increased 87% of our members reported that this damaged their business.”
Rebalancing the economy
“We are pleased to see the introduction of new Enterprise Zones, particularly in rural areas as these have suffered disproportionately over the last few years. Rolling out high speed broadband to such areas is sorely needed but this is a good indication that the Chancellor understands the needs of the rural economy.
“Support for heavy industry and a significant increase in transport capital spend is also welcome to meet the needs of rebalancing the economy. The news on civic devolution to Birmingham and a Northern Powerhouse Investment fund will help, particularly in the North East, where the level of Entrepreneurship fell between 2013 and 2014.
“The extension of Small Business Rate Relief is very beneficial, particularly to retailers who will struggle to pay the living wage and meet customer demands for low prices.”
“Bolstering the General Anti-Avoidance Regulation (GAAR) is a statement of intent, but we are still concerned about what this will mean to many business owners. There is limited detail in the Treasury documents and the definition of Tax Avoidance and since the Dividend Tax rates were view as an anti-tax avoidance measure we are wary of how this will impact on our members, particularly those who use leasing to develop their organisation.
“The focus on corporates and the cash economy is however something that the Forum has called for and the publication of the tax plans of big business may ensure that the focus has moved away from the “soft targets” of small employers.”
Investment in Skills
“Predictions were that the support for the budget for further education was to be reduced did not come to fruition, particularly as increasing numbers of our members report skills gaps within their business. The increased funding for the courses is also needed as employers were expected to put their hands in their pockets for courses which exceeded the government cap.
“Details of the Apprenticeship levy does indicate it may hit our larger members and we will have to see what else is announced as someone has to fund the ambitious targets of improving the skills base”
“A 17% reduction to the department of Business, Innovation and Skills will be a concern for some of our members but the cuts appear not to hamper delivery of business support including grants, with Innovate UK funding maintained through use of new financial products."