Autumn Statement – Chamber Reaction & Overview

A summary of the main points raised in the Autumn Statement are listed below our official response.

Andrew Lindsay, Chairman of West & North Yorkshire Chamber of Commerce, said:

“The announcement to review business rates is long overdue – welcome, but still overdue. And if our calls for this had been answered a few years ago, we wouldn’t have had to wait until 2016 for potential changes. To be effective, the review needs to be far-reaching and not simply a tinkering at the edges.  We also welcome the ‘roads revolution’ investment, which will hopefully tackle some of the congestion hotspots that are clogging up the major highways of West and North Yorkshire. Indeed, both rail and road infrastructure investments are vital for the North of England

“Access to finance is still cited as a key issue for many firms and so the plans to pump more money into lending are a good thing – we just need to ensure that it gets through to those that need it as quickly as possible and not get stuck in the system.

“The government’s failure to reduce government borrowing, must count as something of a black mark against the Chancellor, though. And, what happened to the planned statements about devolution?  The sovereign wealth fund for the north, whilst encouraging to hear, feels as though it might be a few years from producing any tangible results. We will be watching progress with interest.

All in all, however, the Autumn Statement was a decent stab at backing business and growth, given the fiscal constraints. But, the Government now needs to turn these words into action.”

Summary of 2014 Autumn Statement (including Chancellor’s claims or observers’ comments)

–         Osborne takes credit for falling inflation, despite several factors are beyond his control like falling food and fuel prices

–         Business rate reforms – help increased to £1,500 for small firms next year, up from £1,000 – but no confirmation of wider reform; Business rates relief doubled for further year, and inflation-linked increase in business rates capped at 2%.  Structural review next year of business rates, and increase in discount to help shops, pubs and cafes by 50% to £1,500

–         Businesses employing apprenticeships under 25 will pay no tax on earnings

–         Tax-free personal allowance will rise to £10,600 not £10,500. 3.5m of the lowest paid will be taken out of paying income tax

–         ‘Slab system’ of stamp duty ditched:  new rates at different band levels will only apply to the part of the property price that falls within that band, so no more big jumps in stamp duty, for instance, on a property costing £500,001.

–         New stamp duty rates:

–         0 on homes up to £125k

–         2% up to £250k

–         5% up to £925k

–         10% up to £1.5m

–         12% above £1.5m

–         98% of homes will see lower stamp duties

–         Half a million new jobs created in past year

–         Numbers claiming unemployment benefit fallen 23%;  number of young people claiming halved in past year

–         1,000 new jobs created every day since government came to power (85% F/T)

–         For those in full-time work, earnings grew 4% in past year. It will grow above inflation for next 5 years

–         Growth forecast is 3% – 3 x faster than eurozone

–         OBR revised down forecasts for global growth, particularly in main export markets, like eurozone

–         OBR inflation forecasts: 1.5% in 2014, 1.2% in 2015 and 1.7% in 2016

–         Deficit forecasts:

–         2014-15: £91.3bn
2015-16: £75.9bn
2016-17: £40.9bn
2017-18: £14.5bn
2018-19: -£4bn (i.e. a surplus)

–         Debt forecast to peak at 81.1% of GDP in 2015

–         Further £10bn of spending cuts in 2015

–         “Lower inflation” credited with reducing pension and benefit bill by £4bn – but government switched the benchmark for calculating increases from RPI to the (usually lower) CPI in 2011

–         IPPR (policy think tank) says UK’s export-led recovery is just a mirage

–         25% tax on companies that make money in UK then shift it overseas (known as the ‘Google Tax’ but referred to as the diverted profits tax)

–         Banks using losses from financial crisis to offset taxes on profits “totally unacceptable” – plan to introduce limits meaning banks contribute £4bn MORE in tax over next 5 years

–         fuel duty frozen despite falling oil prices

–         Air passenger duty on flights for u-12s abolished from May. From 2016 extended to u-16s.

–         Risen from 14th to 2nd in global innovation index. Support for post-grads to be “revolutionised”. Government-backed student loans of up to £10,000 to be available to all post-grads

–         sovereign wealth fund for north so shale gas extracted there will be used there (little else on devolution plans for now).

Written on 4th December 2014Lillie Geistdorfer. Published in Current Issues, Economy, News