This week’s policy update looks at Wednesday's Budget announcement, the latest cuts to the growth forecast and the upcoming WLEP Business Plan Workshop.
1. Budget 2016: Full BCC Reaction
Budget 2016: Full BCC Reaction
Growth forecasts cut for next five years
Chambers support over 15,000 young people to explore apprenticeships
Days remaining to register for WLEP's Business Plan Workshop
Business Tax Roadmap, Corporation Tax, and Capital Gains Tax:
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 the BCC will work closely with the government to ensure that they result in real improvements for long-suffering businesses on the ground.
Additional investment in HMRC services:
The Business Tax Roadmap will help 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.
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.
The BCC will press for this investment to be geared towards supporting small and medium-sized businesses and making compliance easier.
Reduction of the OBR’s productivity forecast:
We were expecting an increase in fuel duty, so the freeze is good news for businesses, particularly those at the smaller end of the spectrum. The freeze will help keep transport and distribution costs competitive.
Support for the self-employed:
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 in the UK economy, through an unrelenting focus on business investment, better infrastructure and training.
The 5G strategy:
Abolishing Class 2 NICs is a boost for the large number of people across the country who work for themselves.
Mike Ashton, Chief Executive of Herefordshire & Worcestershire Chamber of Commerce, said:
We have long-called for the UK to lead the world in developing 5G technology, so we are pleased that the National Infrastructure Commission is to publish a 5G strategy next year. 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.
“This is the budget we wanted to hear. Businesses of all sizes in the county will be pleased to see the Chancellor’s latest announcements. Small businesses in particular will be pleased with positive changes to Small Business Tax Relief, while all of our membership – big and small – will be glad to see cuts in Corporation Tax and further moves to deal with big business tax avoidance.
“We are also pleased to see the Chancellor’s commitment to bridging the gap between the business and education community and welcome moves to forge a closer relationship between the two.”
Dr Adam Marshall, BCC Acting Director General, said:
“Businesses wanted a steady, workmanlike Budget, and that’s what we got. The Chancellor listened to our calls to avoid higher business taxes and costs – and indeed moved to lower them in a number of 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.”
2. Growth forecasts cut for next five years
The UK economy will grow more slowly in the next five years than had been expected in November according to the Office for Budget Responsibility (OBR).
The OBR had previously forecast the the economy would grow 2.4% this year, but is now predicting a rate of 2.0%. The Chancellor has said the cuts are due to a reduction in the OBR's forecasts of productivity.
The Chancellor believes they are still on track to meet his target of having a budget surplus by 2019 - 2020, despite higher debt and budget deficit figures.
David Kern, Chief Economist at the BCC, said:
"The worsening headwinds in the global economy are a major cause of the OBR's downgraded forecast, but problems at home have also played apart. Our own economic forecast shows slightly better figures than the OBR but most projections show moderate, steady growth in the British economy at a rate of 2% or slightly higher, which is set to remain higher than in most G7 countries."
3. Chambers support over 15,000 young people to explore apprenticeships
Chambers of Commerce across the country are celebration National Apprenticeship Week with a range of events, having already supported over 15,000 young people so far through Your Future Careers Fairs.
Chambers of Commerce have been involved with delivering Your Future events, across England, which are designed to raise awareness of the career options available to young people, including apprenticeships, and more than 16,500 14-24 year olds have participated nationally so far.
The Scheme works with local businesses to help bridge the gap between the worlds of education and work, to highlight the options available to students, as well as the skills needed to enter the workplace. So far, around 500 national businesses have participated in the scheme through Chambers of Commerce.
Marcus Mason, Head of Business, Education and Skills at the BCC, said:
"The Your Future events taking place this week help raise the profile of apprenticeships, which are of benefit to business, individuals and the whole UK economy. Through Chambers, local firms can link up with schools, highlight career opportunities and dispel the myth that the only route to success is a university degree."
4. Days remaining to register for WLEP’s Business Plan Workshop
Local businesses are being reminded to register for the Worcestershire Local Enterprise Partnership’s (WLEP’s) Business Plan Breakfast Workshop before the 24 March deadline.
The WLEP Business Plan Workshop, on 13 April 2016 at the University of Worcester Arena, will look at future plans to grow the economy and further increase productivity. Businesses are invited to attend the workshop to understand how they can be further involved in future plans for the County’s economy.
Presentations will highlight plans around the four key areas of the WLEP’s Business Plan: Planning, Infrastructure and Development, Employment and Skills, Business Growth and Profiling and Promotion.
In addition, Stuart Allen, founder of #WorcestershireHour, will share his inspiring message of how social media can be a powerful profiling and promotion tool for business.
Registration is from 7am, for a 7:30am start and the event will conclude at 10:15am. Places are limited and businesses are being urged to secure their place at the earliest opportunity.
To register for the WLEP’s Business Plan Workshop
, as well as to download a copy of WLEP 2015 Annual Report, visit the Business Plan Workshop website