How did Osborne tackle the big issues facing businesses?
Has George Osborne got anything fresh to offer? It seems not.
The chancellor has delivered his Autumn Statement and spending review, and there are very few things that will excite the UK’s businesses beyond the welcome reiteration that the economic recovery is continuing.
London Loves Business asked British business leaders and owners what they wanted to see Osborne announce. They will be disappointed by today’s performance from the chancellor.
Nothing was said directly about the technology skills gap, fuel duty or tax avoidance by the world’s largest companies.
There were no big changes for UK businesses, and very few measures emerged that we hadn’t heard before.
Nonetheless, there were a few important things to note.
1. Business rates
Osborne repeated the reforms to business rates he set out at the Conservative Party Conference in Manchester in early October.
“I can confirm today that, as we set out last month, we will abolish the uniform business rate,” Osborne said.
“By the end of the parliament local government will keep all of the revenue from business rates.
“We’ll give councils the power to cut rates and make their area more attractive to business.”
But the chancellor did also announce a one-year extension to the business rate relief scheme that is currently in place.
2. Corporation tax
“Businesses need competitive taxes,” Osborne said.
“I’ve already announced a reduction in our corporation tax rate to 18%.” That right George, you did already announce it, at the last budget in July.
One of the more exciting parts of Osborne’s address concerned the energy sector.
“Investing in the long term economic infrastructure of our country is a goal of this Spending Review, and there is no more important infrastructure than energy”, Osborne began.
“So we’re doubling our spending on energy research with a major commitment to small modular nuclear reactors.
“We’re also supporting the creation of the shale gas industry by ensuring that communities benefit from a Shale Wealth Fund, which could be worth up to £1bn.
“Support for low-carbon electricity and renewables will more than double.”
Osborne went on to recognise the recent job losses in the steel industry, saying: “We’re going to permanently exempt our energy intensive industries like steel and chemicals from the cost of environmental tariffs, so we keep their bills down, keep them competitive and keep them here.” This move will not be popular with the green lobby.
4. Infrastructure spending
Osborne promised to spend £11bn on infrastructure projects in London.
“Transport capital spending will increase by 50% to a total of £61bn – the biggest increase in a generation. That funds the largest road investment programme since the 1970s. For we are the builders,” Osborne said.
5. Business budget
Osborne said that the Department for Business Innovation and Skills budget would be cut by 17%, though added that the government would “protect the cash support we give through Innovate UK – something we can afford to do by offering £165m of new loans to companies instead of grants”.
This is the system used in France, Osborne added.
“By 2020 we want to see 3 million apprentices”, Osborne said.
He also announced increased funding for each apprenticeship place, and said the government would now be spending twice as much on apprenticeships as when they came to office.
But to pay for it, he is introducing an Apprenticeship Levy, which will kick-in in April 2017.
This will be set at 0.5% of an employer’s paybill.
He said: “Every employer will receive a £15,000 allowance to offset against the levy – which means over 98% of all employers – and all businesses with paybills of less than £3m – will pay no levy at all.”