Member Article

Cut employment costs and VAT - the NW Autumn Statement wish list

The North West’s medium-sized businesses are calling for the Chancellor to cut employment costs and VAT to stimulate growth and boost jobs in the Autumn Statement.

A survey of mid-sized firms around the UK [1] conducted by financial and business advisory firm Grant Thornton UK LLP, has identified the top issues MSBs want to see tackled by George Osborne next week.

43% said cuts in National Insurance (NI) and other employment costs should be the number one priority for the Chancellor.

Other highlights include:

· 33% said the priority should be a reduction in VAT rates

· 13% wanted to see action to reduce energy costs above all else

· 8% said the most important issue to them is the corporate tax rate

Asked what the key drivers of business growth had been over the last 12 months:

· 39% said access to finance and capital markets

Karen Campbell, Grant Thornton’s North West head of tax, said:“The businesses we work with in Manchester, Liverpool and around the region want the Chancellor to focus on National Insurance and other employment costs. Decreasing these burdens would help job creation.

“The UK’s 34,100 mid-sized businesses are the engine room of the UK economy, employing 4.2 million people and they are set to contribute £305 billion to UK GDP in 2013. The middle market has shown resilience during the downturn and the business leaders within that sector want something to be done about employment costs.

“Reducing VAT would boost business confidence, spending and investment. It would also further reduce inflation, although this would take a little time to filter through into the headline measures. However, the recently touted reduction to 15%, without imposing VAT on other goods currently exempt, would create a £25 billion hole. Realistically, this is unaffordable in the current economic environment.”

The government estimates that a 1% cut to employer’s NI rates will cost the Exchequer £4.2 billion. Grant Thornton’s analysis shows that if employers take on new employees, as a result of a cut to employer’s NI rates, the cost to the Exchequer could be reduced by 27%, because of the additional PAYE and NI contributions paid.

Graham Lackey, MD of Brit European, a Cheshire based mid-sized business with £25 million turnover, said: “Decreasing VAT would boost general confidence. This would increase demand for our services and allow us invest more as a result.”

This was posted in Bdaily's Members' News section by Simon Malia .