Rates reform is a significant step in the right directionMar 21, 2016
BUSINESS wanted a steady, workmanlike Budget and that is what we got. The Chancellor listened to our calls to avoid higher business taxes and costs and has moved to lower them in several areas.
He has finally taken real action to lessen the crushing burden of business rates, and sharpened incentives for entrepreneurship and investment.
While his commitments to key business infrastructure projects are positive, the Chancellor must ensure that they move from the drawing board to speedy construction on the ground.
In a softening economy, the combination of sustained infrastructure investment and lower business taxes is important to maintaining the confidence of firms across the country.
We are relieved that the Chancellor has listened to the calls of local businesses and resisted the temptation to raise fuel duty. In our pre-budget press release a firm operating in the logistics sector estimated that even a 1p rise in fuel duty would hit them to the tune of £500,000 over the financial year.
While businesses continue to express serious reservations about the quality of service provided by HMRC, the additional investment to make it quicker and easier for business people to deal with the Revenue is welcome.
We will press for this investment to be geared to supporting small and medium-sized businesses and making compliance easier.
Businesses will cheer measures to cut the burden of business rates, which hundreds of thousands of firms have to pay before they even turn over a single pound.
More frequent revaluations will be welcomed, too, but only if a simpler system with fewer valuation errors can be delivered.
We would also have liked to see plant and machinery investments excluded from business rates calculations, so we will be pressing for further action on this and other aspects of the system that discourage investment.
All in all, the rates reforms are a significant step in the right direction, and we will work closely with the government to ensure that they result in real improvements for long-suffering businesses on the ground.
The Business Tax Roadmap will help to provide a greater degree of certainty as businesses look to plan for the future. Ultimately, the acid test for the roadmap will be whether it makes it easier for businesses to navigate the UK’s complex tax system.
Cuts to corporation tax and capital gains tax show that the UK is very much open for business. The reduction in capital gains tax in particular will help to encourage entrepreneurial risk-taking in some of our most dynamic young firms.
Businesses and other interested bodies will welcome the Chancellor’s commitment to the Midlands Engine. This is evidenced by a £250 million fund to be used primarily to invest in small businesses across the region.
This is further emphasised by the Chancellor when he says: "This budget pushes forward the government’s vision of the Midlands Engine for growth”.
In addition, Midlands Connect, an initiative to improve the region’s infrastructure has also been given a boost with further improvements in the M1 – a major artery for commuters and businesses throughout the region – given the green light.
We are pleased that the National Infrastructure Commission is to publish a 5G strategy next year to improve digital infrastructure.
Unless we set the bar high, and ensure UK companies have access to world class digital infrastructure, our dynamic firms will be at a disadvantage.
It is critical that the government continue to address the ‘not-spots’ that plague businesses. All too frequently businesses report that lack of adequate connectivity plagues their ability to do business effectively, stifling growth and undermining their competitiveness.
It is concerning that the OBR has revised down its productivity growth forecasts. The causes of our productivity problems are both global and home-grown.
Domestically, we need to urgently tackle deep-rooted productivity problems through business investment, better infrastructure and training.