The Autumn Statement

Business Insight
28/11/2016

Phillip Hammond, the Chancellor of the Exchequer has announced a package of measures to support business and innovation, echoing Theresa May by declaring “Britain is open for business.”

Generally, the business community is pleased with the measures proposed, while recognising that the Chancellor had only limited room for manoeuvre.

The £23 billion National Productivity Investment Fund (NPIF) should provide a substantial boost with major additional spending to encourage productivity, transport, digital communications, research and development (R&D) and housing.

The fund, over the next 5 years, will provide £1.1bn for English local transport networks, £220m for traffic pinch points on strategic roads, £450m for railways and £390m for low emission and connected autonomous vehicle development.

The construction industry, while stressing that the measures don’t go far enough, is pleased with a £2.3bn housing infrastructure fund to deliver infrastructure for up to 100,000 new homes in areas of high demand, and a further £1.4bn for 40,000 additional homes.

£400m will become available, via the British Business Bank, for investment in small businesses with the potential for growth. The chancellor wants to encourage more start-ups to scale rather than making an exit to a large firm. Further support to growing businesses will come from an injection of £13m to help businesses improve their management skills.

Allaying concerns that Brexit would mean a diminution in R&D funding, the government will be investing an additional £2 billion per year in Research and Development by 2020-2021 for innovative research, particularly in such fields as robotics and artificial intelligence (AI).

In good news for the businesses bemoaning poor broadband speeds, the government is investing £1bn to roll-out more full-fibre broadband by 2020-2021 and will also trial 5G mobile communications. Also from April 2017, the government will provide 100% business rates relief for new full-fibre infrastructure for a five year period.

The importance to the UK economy of export has been highlighted with extra help available through UK Export finance (UKEF) to ensure that no viable UK export should fail for lack of finance or insurance from the private sector.

The chancellor has also confirmed that Corporation Tax (which currently sits at 20%) will fall to 17%, as per previous announcements from government and fuel duty will remain frozen for the 7th consecutive year.

Less welcome is the news for some employers is that The National Living Wage will increase to £7.50 an hour from April, as previously announced.

Measures to clamp down on tax avoidance - including those announced in March's Budget will be strengthened, and from April 2017 employers and employees using "salary sacrifice" schemes, with some exceptions such as cycling schemes, will pay the same tax as anyone else.

Also from April 2017 the employee and employer NI thresholds will be aligned at £157 per week, costing employers on average £7.18 per worker.

The move to an autumn budget and a spring statement however, is good news, as it will give Parliament the chance to thoroughly scrutinise new tax legislation before the new tax year in April, when new laws typically takes effect.