The Chancellor produced a balanced Autumn Statement that addressed business concerns around rates reform and finance, according to Bristol business leaders.
James Durie, executive director of Bristol Chamber of Commerce at Business West, described it as a “crowd-pleasing” set of proposals for business, particularly its pledge for a major review into the “iniquitous and vindictive tax” that is business rates.
“By focusing on key barriers to growth, such as Britain’s broken business rates system and the difficulty of accessing finance for growth, he has shown a commitment to solving problems that hinder the growth aspirations of many firms,” he said.
“Prior to today, businesses asked for help to deal with business rates, infrastructure and apprentices, all of which were addressed in a positive Autumn Statement to close out a year which saw the country finally emerge from a damaging recession.
“This Autumn Statement included many actions to boost small businesses. Over 99% of the 37,000 plus registered businesses in the West of England are SMEs and further packages of support, such as the expansion of financial support for first-time exporters, increased rate relief and access to finance under the British Business Bank give these firms cause for celebration.”
He said access to credit still remained stubbornly difficult for many small firms, despite several interventions announced since the credit crunch. “So it is too early to say whether the latest steps to encourage further bank lending will succeed,” he added.
“A major coup for business is that the Chancellor has committed the Government to a fundamental review of business rates and doubled small business rates relief for a further year,” said Mr Durie.
“This iniquitous tax is sapping good companies’ strength year after year, long before they make a single penny in profits. In the last week we have seen this evident in the extremes of Black Friday and Cyber Monday, illustrating the competition we see between the high street and online retailers.
“The business rates system has meant that this hasn’t been a fair fight, with one arm of high street retailers held back by this vindictive tax. Today is a step in the right direction and this review must deliver fundamental change and not get bogged down by short term political thinking.”
However, he said there were still fundamental barriers to growth that need to be addressed ahead of next May’s General Election. “With a very difficult fiscal position for UK plc over the next five years, all parties will need to remain focused on making sure economic growth is central to their New Year manifestos,” he said.
Malcolm Emery, partner at Bristol law firm Thrings and a dual-qualified chartered tax adviser and solicitor, said with 3% growth suggesting the UK economy was continuing to perform solidly, the Chancellor could have taken the opportunity to improve the UK’s export capability by reducing the standard rate of VAT.
He also questioned the targeting of non-UK domiciled individuals – or non-doms – resident in the UK.
“While the current tax system offers such individuals benign tax status, the introduction of new tax charges needs to be carefully balanced,” he said.
“People with non-domiciled status in the UK contribute significantly to our nation’s economy, and there is a risk that punitive tax charges could prompt an exodus of talented and wealthy individuals and business owners from the UK.”
Proposals that corporate tax dodgers would now have to pay tax on the UK profits they would otherwise move offshore is likely to be welcomed by large sections of the local business community, he said.
“Mr Osborne has sought to generate more revenue for the treasury deficit, a timely move as the Government commences its preparations for next year’s General Election,” he said.
Mike Lea, managing partner at the Bristol office of accountancy firm Smith & Williamson, said the Autumn Statement had been “an attractive bag of sweeteners to appeal to the vast majority of people, of which Santa would be proud”.
“The Chancellor grasped opportunities for populist giveaways through, for example, changes to Stamp Duty and changes on the inheritance of ISAs and pensions, backed up by an ever-sharper focus on eliminating perceived tax avoidance and non-compliance,” he said.
He welcomed the extension of entrepreneurs’ relief to gains deferred into Enterprise Investment Schemes or social investment tax relief investments. “These developments will encourage longer term strategies rather than the short term cashing in of investments to ‘bank’ entrepreneurs relief and therefore will encourage the development of our enterprise economy,” he said.
EEF, the manufacturers’ organisation, said the Chancellor had been right to place his emphasis on boosting productivity and the long-term resilience of the economy.
EEF South West director Phil Brownsord said: “He rightly said manufacturing is leading growth and firms will welcome positive step in making the UK a centre for innovation, with measures including the strengthening of the R&D tax credits and cutting tax on young apprentices.
“The investment in science and the boost for infrastructure are also helpful measures on the road towards rebalancing the economy.
“However, ultimately manufacturers would have liked to have seen greater levels of funding and longer-term commitments to spending on innovation.”
