We have now heard what is potentially the last of the Autumn Statements in the way we have known them. Here are the key messages for businesses and employers.
Hammond delivered what may be considered a fairly lively Autumn Statement, displaying humour and banter with back-benchers, even fitting in a reference to Ed Balls’ (outstanding) Strictly performances; noting how complicated some fiscal announcements are. His performance certainly made it entertaining viewing and perhaps will stand well as his audition for a future reality show himself. But amongst the humour, wry smiles and strategic pauses, there were some significant announcements.
The strong message is that Britain is “open for business”. Indeed Hammond closed with the statement “We are a great nation, bold in our vision, confident in our strengths and determined in our ambition to build a country that works for everyone”. On face-value this is reflected in his statement, although the more cynical or cautious among us may question why the reference to slow growth in the next two years was somewhat glossed over.
Fantastic news with investment in local transport networks in England, with specific reference to pinch points on strategic roads, the Oxford / Cambridge growth corridor and the railway system. A heavy focus on technology and innovation including digital signalling on railways to improve capacity and reliability.
Infrastructure improvements will also be focused on areas of high demand of affordable housing, to support the build of 40,000 new affordable homes resulting in a more mobile workforce.
Hammond started with a statement that fiscal discipline will remain whilst recognising the need for investment through transition with leaving the EU. There were no changes to the fiscal policy as stated in March 2016, including personal allowances and corporate tax.
There is a significant focus on innovation, research and development to allow Britain to compete internationally and improve productivity. A new National Productivity Fund promising an extra £2 billion a year by 2020/21 was announced to “invest today for the economy of the future”.
Hammond stated we will become a world leader in 5G with 100% business rate relief on new fibre infrastructure.
He discussed productivity and investment and noted that if we are to compete in a global market we frankly need to up our game, and he will give the investment needed to support businesses do so.
The productivity gap between London and the regional cities was acknowledged, despite the greatest employment growth being seen in the North East. Investment is being made for road and rail infrastructure to help reduce the gap and promote growth. The devolution agenda will continue with the intention that every city in Scotland will have a City Deal.
Predicted figures show that there will be a dip in growth in 2017 and 2018 before returning to the growth levels of this year of 2.1%, which should then be held at a steady position. This message was somewhat lost in the announcements and needs careful consideration for business plans.
National Living Wage
There will be a further increase in the National Living Wage to £7.50 in April 2017 to continue the focus on the so-called “JAM” of the population. This means a pay rise of £500 p.a. for each full-time employee. There are also increases in the National Minimum Wage, with investment being spent to help SMEs understand the rules and, indeed, crackdown on employers who are breaking the law by not paying the correct amount.
To bring a fairer approach to paying tax, from April 2017 salary sacrifice schemes can no longer be seen as a “tax break” for both employer and employee. There are exemptions such as pensions, childcare, Cycle to Work and ultra-low emission cars and some protection in place for other schemes, for a further twelve months.
Insurance Premium Tax
An increase from 10% to 12% will be introduced next June to raise revenue.
For the 7th consecutive year the fuel duty will remain frozen, saving car drivers on average £130 a year and van drivers £300 a year.
The intention is that from 2017 we will receive a clear statement in the Autumn to allow forward planning of the changes which will be introduced the following Spring, and that in Spring there will be a statement responding only to the forecast from the OBR but with no major fiscal changes at that time. Sounds great in theory, until Hammond noted that he reserves the right to indeed make further fiscal announcements or changes should they be deemed necessary. The intention is that the new system will allow for greater planning and improve scrutiny. Whether the decision to remove the Autumn Statement and replace it with a mid-year statement results in enabling better financial planning is to be seen.
As always a mixed bag for business owners and reflective of the message that investment is needed to ensure that we achieve the title of the “Number one destination for business”. Already there are questions over the validity of figures, the impact of Brexit and what the future will really bring.
We will be posting useful and relevant updates so stay tuned. If you have any concerns about how any of this may affect you please do feel free to contact us either by phone on 01473 360160 or one of our team can come and meet you for a free consultation.