Bristol business leaders have called on Chancellor Philip Hammond to go all out to boost confidence ahead of Brexit as he prepares to deliver his first Autumn Statement next Wednesday.
With the economic climate expected to get decidedly chilly next year as the UK works towards leaving the EU, commentators are expecting the Chancellor, pictured, to boost spending on infrastructure and introduce measures to help those who feel left behind – the Jams, or individuals and families who are just about managing.
With this week’s jobs figures showing unemployment continuing to fall – in the South West it inched down by 0.1% to 109,000 or 3.9%, well below the national average – Mr Hammond can point to a robust economy even in the wake of the EU referendum.
But Business West – the region’s largest business group and the organisation behind Bristol Chamber of Commerce and the Bristol Initiative – called on the Chancellor to “concerted action . . . to boost confidence”.
Managing director Phil Smith, pictured below, said: “These latest figures show the jobs market in the South West continued to hold firm over the summer and remains a source of strength for our region.
“While these figures are to be welcomed, now is no time for complacency. The rate of job growth slowed over this period and, as the labour market shows signs of tightening, employers across the West Country may well begin to see issues around skills availability and wage pressures emerging.
“In a period still marked by unprecedented uncertainty, and with economic growth expected to slow in 2017, businesses want to see concerted action from government to boost confidence.
“The Chancellor has the opportunity to deliver just that, and to pull out all the stops to support business confidence. Only then will firms across our region be best placed to repay him with investment, hiring and growth.”
Optimism among the West of England’s SMEs has recovered since the shock of the Brexit vote, according to the latest Enterprise Index from accountants Smith & Williamson.
But it also shows a drop in confidence in the government support for private enterprise – a fall of five percentage points to 54%, the lowest since 2014.
Mike Lea, pictured right, managing partner of Smith & Williamson’s 200-strong Bristol office, said: “As we move into the Autumn Statement, it
would be good to see the Conservative government show strong support for the entrepreneurial community, not least of all because of the fresh wave of uncertainty hitting many businesses following Donald Trump’s election as US President.”
He also said the Chancellor had the opportunity to reverse the ongoing trend of increasing the tax code – and save some paper.
“We think the Chancellor should go for a truly green Autumn Statement – save paper and don’t increase the tax code. Individuals and businesses need a clear picture of where the tax system is going, not another period of jumping back and forth,” he added.
“Much complexity has arisen from governments making ad hoc changes, without adequate consultation, to try and deal with political whims. These changes have then, due to not being properly targeted or failing to receive adequate consultation, had unintended consequences and needed further alterations or have given rise to significant administrative burdens.”
He said much was made of the UK tax code having doubled in size during Gordon Brown’s 10 years as Chancellor. However, the code nearly doubled again during George Osborne’s six years.
Regional accountancy firm Bishop Fleming, which has an office in Bristol, has issued a five-point wish-list for the Autumn Statement.
Managing partner Matthew Lee, pictured left, said it would be a ‘Brexit Budget’ in all but name, allowing the new Chancellor to ‘reset’ economic policy following the referendum.
“I hope to see cuts in tax and red tape to stimulate business growth and boost consumer spending, as well as major new infrastructure spending,” he said.
“It should be the economic starting block for the UK’s future direction of travel in a post-EU world and to signify that the UK continues to be a great place to do business.
The five points are:
- A reduction in the rate of VAT to stimulate consumer demand.
- An increase in the Annual Investment Allowance to encourage companies to invest in new technology, plant and machinery to help boost productivity. The allowance should also be widened to include improvements to business premises.
- Exempt existing loans of residential landlords from the planned phasing out of tax relief on their finance costs; so only new loans will be affected. This would substantially reduce the need for landlords to increase rents or sell properties, helping to avoid a housing crisis. If the Chancellor fails to take action on this, many landlords who have borrowed heavily against their properties face bankruptcy when the increased tax charge can no longer be covered by their net rental income.
- Scrap the planned and complex Inheritance Tax residence nil-rate band, and instead increase the existing £325,000 threshold to cover all assets, simplifying the tax system and making it fairer for all families.
- Revise the planned changes in Vehicle Excise Duty that will otherwise see tax being charged on electric and other zero emission cars. The government encouraged car manufacturers to build low-emission vehicles, but next year’s changes will see owners of the smallest and least polluting cars being taxed more, whilst owners of high emission cars will be taxed less. How does this help our environment or indeed our car industry which has invested so heavily in making cleaner cars?
Coupled with this revision, the Chancellor needs to look at other ways of cleaning up our environment while raising revenue, for example by charging overseas trucks that damage our roads – mirroring what already happens throughout Europe, according to Bishop Fleming.
Mr Lee added: “The new Chancellor can take measures to make a real difference to Britain’s business environment. His predecessor attacked entrepreneurs with assaults on pensions, dividends and employment taxes, which were counterproductive. More than ever, we need entrepreneurs who can drive the economy forward; we need growth, growth, growth.”
Bristol Business News will have full coverage of the Autumn Statement live on its website on Wednesday followed by reaction from regional business figures and experts.
