National business groups have broadly welcomed measures in the Chancellor’s Autumn Statement, but said he could have done more to boost innovation.
The CBI described the major changes on stamp duty and business rates would be as “a shot in the arm for families and growing firms as they look towards 2015”.
Director-general John Cridland said: “The targeted focus on enterprise is right, but business innovators would have liked to see more on research and development (R&D) to boost UK investment.
“International tax rules are in urgent need of updating, but the decision for the UK to go it alone, outside the OECD process, will be a concern for global businesses, and moving the goalposts on offsetting losses risks creating a worrying precedent.
“We welcome the continued commitment to deficit reduction, but real challenges lie ahead to reduce future public spending, and fresh thinking on public services will be essential.
“In the long term, growth is about people, science and infrastructure, and we warmly welcome the financial support for postgraduate science students.”
The Institute of Directors (IoD) praised the Autumn Statement, calling it “a disciplined, long-term and forward-looking statement with welcome reforms for businesses, employers, savers and home-buyers”.
Director general Simon Walker praised the Chancellor for resisting the temptation of politicised giveaways to focus instead on long-term investment in infrastructure, science and efforts to boost the UK’s productivity.
“Deficit reduction remains of primary importance and this statement did not shy away from that reality,” he said.
“The statement demonstrated what can be achieved with limited room for manoeuvre by focussing on considered tax reforms. We’re pleased that that the higher rate tax threshold is heading in the right direction, but more can be done to end the scandal of fiscal drag and we look forward to the details of how the Government will meet its ambition to raise the threshold to £50,000.
“It’s also vital that our economic debate recognises the share of revenue paid by the country’s top earners. The Chancellor acknowledged that the top 20% pay more in tax than the remaining 80%. The greatest burden is indeed being borne by those with the broadest shoulders.
“Continued support for entrepreneurs, exporters, SMEs, apprenticeships and key industries are particularly welcome, as are the radical reforms to Stamp Duty, which have long been called for by the IoD.”
The British Property Federation (BPF) commended the Chancellor for his pledge to hold a ‘structural review’ of business rates but said changes should not be purely to help high street retailers compete with internet outlets but should benefit all ratepayers.
The BPF has been one of a number of bodies urging the Government to commit to a fundamental reform of the system, believing this to be the best way to restore fairness and to create a beneficial environment for investment and growth.
BPF chief executive Liz Peace said: “For the sake of business competiveness and Government efficiency the business rates system needs to change. We need a system that is more responsive, both to changes in the economy and to the relative position different businesses find themselves in.
“Basing a property tax on nine-year-old valuations is simply unfair and inefficient, and other countries have shown that with the use of technology you can design a far more responsive system. The compounding effect of annual RPI increases is also meaning that a higher proportion of taxation each year is coming from business rates, sucking the blood from our high streets and eroding many other businesses’ competitive edge.
"Undertaking a root and branch review of the system is a big decision which many politicians have shied away from, and it makes today's announcement particularly welcome. We hope it is no-holds-barred and will deliver something fit for the 21st century, and one that benefits all sectors of the economy. We look forward to making a positive contribution on that basis.”
However, the Federation of Master Builders (FMB) said the Chancellor again avoided clarifying Government plans for apprenticeship funding reform.
Chief executive Brian Berry said: “Apprenticeship funding still hangs in the balance with no clarity offered by the Chancellor in today’s Autumn Statement. We had hoped Government would publish its response to the May 2014 consultation on funding reforms for apprenticeships but as things stand, we are no closer to understanding if Ministers have taken heed of our advice and decided to review their ill-conceived proposals.
“Like many organisations which represent SMEs, we have warned the Government that if it implements its apprenticeship funding reforms as proposed, they will greatly detract from the ability and desire of small firms to train apprentices.
“As two-thirds of all construction apprentices are trained by micro-businesses – that is the very smallest of firms – this is extremely concerning. Although we welcome the abolition of employers’ National Insurance contributions on earnings up to the upper earnings limit for apprentices aged under 25, what we really need to hear is an alternative way forward for SME apprenticeship funding. Perhaps Government has decided to kick the issue into the long grass in which case I urge ministers to respond as soon as possible – uncertainty around apprenticeship policy is the last thing our industry needs when facing an ever-growing skills gap.
“On a more positive note, the extension of the Funding for Lending Scheme as announced in today’s Autumn Statement is welcome, particularly its renewed focus on SMEs. Acquiring appropriate levels of finance remains the single biggest barrier to construction SMEs which are trying to grow and prosper and government must pull as many levers as possible to address this issue.”
