News

This statement by Jayne-Anne Gadhia from Virgin Money seems to sum up the majority view of this month’s Autumn Statement. But of course, although it was a steady statement there are still aspects which will impact on businesses going forward.

The biggest headline seems to have gone to infrastructure. A new National Productivity Investment Fund is to provide £23 billion of additional spending on infrastructure which is to include transport, housing, R&D and digital communications. This will obviously be a help to businesses in those sectors – I have to confess that I am unsure how exactly, let’s see what unravels. And it is particularly gratifying to see more being spent on digital communications – £1 billion in full-fibre broadband and 5G trials. Businesses are not all located in large cities with access to high speed internet, improving the internet access to everyone will certainly be a boost to productivity. We have advised on four completed acquisitions or sales in the IT arena this year and are working on three others – as a sector, it is a fantastic contributor to the UK economy, full of bright entrepreneurs and as every in-house IT manager knows, functioning IT is the lifeblood of business, so this investment is welcome and not too soon.

The Government continually mentions the Northern Power House and it is to be hoped that the additional infrastructure spending will extend to roads and rails outside the M25. Again productivity can be boosted if transport bottlenecks around the major cities in the North can be sorted out. According to Fleet News earlier this year, in 2015 the drivers in the Greater Manchester area wasted 51 hours in traffic jams with the M60 contributing 23 hours alone (I can vouch for that!). And all across the North the times are hardly any better – 30 hours wasted in the Leeds Bradford area (and that!).

With regard to smaller businesses and start-ups, the Chancellor has pledged an extra £400 million to venture capital firms via the British Business Bank to stop fast-growing home-grown technology companies from being snapped up by foreign companies. Too often companies start up and then due to an inability to secure funding, they sell on rather than realising their potential. (This may well have been a reaction to ARM Holdings the Uk tech company being taken over by the Japanese firm Softbank.). Again, I like the idea, but will be interested to see what this means in practice. The Government is awarding £1.8 billion to Local Enterprise Partnerships across the UK. These are voluntary partnerships between businesses and local authorities to help local economic growth and job creation. And the Government is providing additional support through UK Export Finance to ensure ‘no viable UK export should fail for lack of finance or insurance from the private sector’. The hope is that this will make it easier for Britain to export – all the more important in the light of Brexit looming.

Other impacts on business will be the eventual reduction of corporation tax from 20% to 17% by 2020, the National Living Wage increasing to £7.50 an hour and the equalisation of National Insurance contributions to £157 for both employee and employer. And companies with net interest expense above the £2m million de Minimis threshold will now have to implement rules limiting corporate tax deductions for net interest expense to 30% of a group’s UK EBITDA. The government hopes this policy alone will raise £5 billion.

Finally, the Chancellor announced that this would be the last Autumn Statement – instead the budget will be delivered in the Autumn as it used to be. And the spring event will just be a statement responding to the latest forecasts of the Office for Budget Responsibility – so it’s not all bad news then.