The Institute of Directors has responded to some of the specific policies contained in today’s Autumn Statement, including:
Our general response to the Autumn Statement, with comments from the IoD Director General, Simon Walker, can be found here.
On the government’s fiscal plans and the extension of Help-to-Buy in London, James Sproule, Chief Economist at the Institute of Directors, said:
“The Chancellor’s fiscal plans rely on a number of assumptions about the strength of tax revenues and a benign outlook for economic growth. While tax receipts can and do rise rapidly in good economic times, any economic stumbling is going to require a rapid recalculation of how much the government can spend, and where further reductions and efficiencies may need to be found.
“The extension of Help-to-Buy in London is not the answer to the capital’s housing crisis. Taxpayer-funded loans that further stimulate demand miss the fundamental issue – not enough houses are being built. While it may be political popular, in the medium-term it will stoke prices and make it harder for people to get on the housing ladder. We need to focus on planning liberalisation across the capital to promote much higher levels of housebuilding.”
On the new details about the Apprenticeship Levy, Seamus Nevin, Head of Employment and Skills Policy said:
“Employers are committed to tackling the skills shortage and apprenticeships will be a big help. Businesses are keen to work with government but the focus needs to be on quality training, not just the race to reach the targeted 3 million apprenticeship starts.
“The Chancellor cannot pretend the apprenticeship levy is anything but a payroll tax – and a considerable one which will raise £12 billion over the parliament. At 0.5% of payroll, it will be a big hit to big employers. With the OBR also saying that employers could pass the cost of the levy onto employees, the government must also be careful of the impact the levy, combined with the incoming national living wage, could have on wage growth and job creation.
“Moreover, businesses still need clarity about how they will get more out of the levy than they put in. It is a worry that the government are working on the assumption that up to one-quarter of the money collected will be spent on administration and bureaucracy, rather than the apprentices themselves.”
On the extension of business rates exemptions, Stephen Herring, Head of Taxation, said:
“Small businesses will cheer another year of business rates relief. While the whole system requires more comprehensive reform, another year of exemptions will provide welcome respite for the smallest firms. Along with the upcoming devolution of business rates, these measures will help local authorities revitalise high streets, small-scale manufacturing and win business investment.”
On changes to UK Trade and Investment, Allie Renison, Head of EU and Trade Policy, said:
“While there is some contradiction between the Government committing to such an extremely ambitious exports target and continuing to chip away at UKTI’s budget, we welcome the focus on reforming and refocusing UKTI to deliver more targeted value-add activity for business.
“Not all of UKTI’s services have always been value-for-money in terms of business take-up, so concentrating on the practical needs of enterprise to expand abroad is vital. Businesses will only consider exporting if they have the right information about new markets. The focus must be to deliver UKTI services digitally wherever possible to cut costs without making it harder for businesses to get the information they need and value. A live database of export opportunities, for instance, is easy for UKTI to run, easy for businesses to access and will help British firms win business overseas.
“While there is a pressing need to better integrate commercial expertise and know-how into trade promotion initiatives, UKTI should take care not to try and compete with the direct support offered by the private sector, but rather collaborate and act as a facilitator for business.
On support for Energy Intensive Industries, the commitment to nuclear energy and investment in road improvements, Dan Lewis, Senior Energy and Infrastructure Adviser, said:
“An exemption for Energy Intensive Industries, including the steel industry, from the Renewables Obligation and the Feed-In Tariffs, puts them on level terms with Germany. However, this may be a few years too late for many businesses. If we want to keep Britain’s heavy industry here, there is still more action required.
“Nuclear energy needs to play a big part in Britain’s future. Small Modular Reactors have tremendous potential and, after being designed, can be built quickly, with faster learning curves than big projects. They can also be built in volume and deployed in inland industrial sites without the need for large volumes of cooling water. They will only be a success, however, with government support and we urge them to make sure that plenty of competitors take part in the design competition.
“The doubling of the annual road investment to nearly £4bn by the end of the parliament is a dramatic vote of confidence in Britain’s road economy, which will create 1,300 miles of additional lanes. Traffic growth has outstripped road building for decades, so it’s high time for catch-up investment. Ring-fencing vehicle exercise duty for a new Roads Fund will create a new line of accountability between road users and make sure government focuses on constant upgrades and improvements.”