Business organisations across Bath and the West were generally supportive of the Chancellor's help for small and medium-sized businesses, particularly measures to boost research and development and encourage investment. Gerry Jones, chairman of the Institute of Directors in the South West, said the Chancellor was “absolutely right” to stick with his Plan A fiscal policy as it was difficult to “imagine a worse time to renege on the spending squeeze”.
“The Chancellor stuck to his guns today, and that was the right thing to do,” said Mr Jones. “No-one is pretending that it’s going to be easy or painless, but there’s no credible alternative to the deficit reduction plan. We wanted Plan A with more infrastructure spending, and that’s what we got. I believe business confidence will have been boosted by today’s announcements.”
The IoD welcomed the introduction of credit easing, calling it “an imaginative scheme which should helpfully reduce the cost of capital for companies”.
It also praised the Chancellor’s decision to consider the regionalisation of public sector pay, and said while the Government’s recent announcements on employment law reform were welcome, they were limited and it now needs to drive through radical reforms of the dismissal process.
David Goodall (pictured), head of Team Barclays Corporate Bath, said there were no major surprises in the Autumn Statement and the immediate giveaways such as the scrapping of the planned 3p rise in petrol duty in January and train fares rising by 6.2% in January rather than the 8.2% were previously announced.
“However, while the Office of Budget Responsibility lowered its forecasts for GDP growth this year and next, citing the euro crisis and an external inflation shock as the main factors underlying its growth downgrade, it stopped short of forecasting a technical recession,” he said.
“Overall our economists believe the policy measures in the Chancellor’s Statement are fiscally neutral over the four years to 2015 but imply a significant additional spending squeeze in the two years which follow.”
Tracey Bentham, tax business unit leader at accountants PwC in the West, said business will welcome the Chancellor's announcement that the research and development (R&D) tax credit will be modified to include one which can be recorded as a reduction in cost (i.e. 'above the line').
“A huge number have told us it will have a much greater incentive effect on their investments in R&D in the UK than the existing scheme," she said. "We look forward to seeing further detail to see how businesses will be affected.
“This is a key move towards making the UK a more attractive place for investing in innovation. It is a very welcome step towards securing growth and making the UK more competitive as a location for the new technologies that will be vital to the country’s economic success.”
Under the new scheme, companies that qualify for the R&D credit and are taxpaying will see their corporation tax bills offset by the amount of the credit. However, where the credit cannot be offset against the company’s corporation tax bill, for example due to losses, the new scheme will allow the company to claim a cash payment from the Treasury.
Paul Knight, regional director for EEF, the manufacturers’ organisation, also welcomed the measures aimed at boosting R&D, saying it sent a “powerful signal that government intends to make the UK the number one choice for R&D investment”.
He added: “This reform will strengthen the link between the credit and the R&D function and make it more valuable to R&D decision makers. It will have a positive impact on investment decisions across a range of companies and support rebalancing growth towards high value investment in innovation and jobs.”
Commenting on the thrust of the Statement, he said it was a targeted attack on barriers to growth with some helpful measures. “But these are not normal times. In the coming weeks and months the government must address two key priorities: the urgent need to increase competition in the banking sector and the need to boost business investment by introducing a temporary rise in capital allowances.”
Tax partner for KPMG in the West Julian Cockwell said that local SMEs in particularly would benefit. “This statement was very much geared towards the SME community, with a series of announcements that will help with funding issues and also help to stimulate growth,” he said.
“As part of the strategy for growth, plans to reform and simplify planning laws, and relaxing health and safety and employment rules will be very welcomed by small businesses, who will feel that all of this additional red tape has been a hurdle preventing them from getting on with simply running their businesses.
“Plans to postpone the roll out of auto-enrolment pensions to small businesses will also be welcome news and postpones what could have been a costly exercise for smaller businesses, already under pressure.
“Additional support around encouraging export activity and the commercialisation of new technology is also advanced to the SME sector, and the business rates holiday for small businesses has been extended by six months; these are all very welcome measures.
“Finally, the introduction of the Seed Enterprise Investment Scheme, with its very generous tax incentives, accompanied by the relaxation of the very strict rules governing the main Enterprise Investment Scheme should help SMEs to attract new cash investment to help with their growth agendas as we move into another challenging year," Mr Cockwell said.
