Autumn Statement 2016: A roundup of predictions from Yorkshire businesses

On November 23rd 2016, Theresa May’s government will publish the Autumn Statement.

Philip Hammond, the Chancellor of the Exchequer, will unveil what is planned for Britain’s economy and the financial forecasts based on information from the Office for Budget Responsibility.

This will be the first official Statement published by the government since the shock Brexit vote last June, thus predicting the effect leaving the EU will have on Britain’s growth and public finances.

As the unveiling of the Autumn Statement is only days away, Bdaily has compiled a roundup of predictions from business people throughout Yorkshire, explaining what they hope to hear in the Statement and why.

Rob Durrant-Walker, head of business tax at Yorkshire accountancy firm Garbutt + Elliott

“Predicting government financial policy can be a tricky task, especially when statements can include left-of-field policies such as this year’s cutting of capital gains tax when they had been signposting an increase. Add the fact that we have a new chancellor, whose management style we don’t yet know, and the uncertainty abounds.

Compared to the Budget, the Autumn Statement focusses on the Chancellor’s broad overview of the nation’s finances and the state of the economy, but has increasingly become a mini-budget in recent years. I think there are some specific tax predictions we can make.

We predict that the Government will not cut corporation tax any further than already announced, due to the lack of fiscal room. We also do not expect that the Government will increase tax in the buy to let marketplace, having already hammered it with the additional 3 per cent stamp duty land tax for second homes and buy to let properties in April, and mortgage tax relief reductions from 2017.

Predictions pose a conundrum with the Government’s overarching commitment to raising taxes, especially when combined with its election commitment to freezing the main rates of VAT, national insurance and income tax. With these freezes in place, it is likely the chancellor will seek to raise taxes on the fringes and target niche groups – such as with buy to let owners in the past.

One recent trend that we could see continuing in the long term is bringing forward tax payment dates. HMRC are recognising the benefits of cash flow following the recent introduction of a 30 day payment term for the capital gains tax on non-residents selling UK property - something which will extend to everyone by 2019 - and bringing forward corporation tax payment dates for some large companies from April 2017. HMRC could be looking at other areas.

Broadly speaking we’d like to see a return to a single annual financial statement from the chancellor, and less complexity. This would provide greater clarity and certainty for businesses but only time will tell.“

Richard Wright, executive director of Sheffield Chamber of Commerce

“Our previous President, Jill Thomas of Future Life Wealth Management, pointed out in a recent speech, that Quantitative Easing (QE) has not delivered and resulted in the rich getting richer and the poor getting poorer.

It has also put enormous pressure on businesses’ Final Salary Pension Schemes. Her proposal for the Chancellor is an immediate two-year moratorium on VAT. It’s cheaper than QE and benefits everybody in society immediately.

Locally we would like to see confirmation and acceleration of the move towards decentralisation including devolution and a regional mayor. The Chamber has concerns over the way devolution money is spent – and the potential for the mayor to be a political appointment - but does believe in and continues to support devolved powers.

The Chancellor must focus massively on International Trade support – this is critical but must be done in a completely different way to previous attempts.

Confirmation of HS2 is important, too, with branches from Birmingham to Manchester and Leeds. Putting aside controversy over the final route, ensuring we get a HS2 service in Sheffield City Region is critical.

Reductions in flight fuel duties, a combination of income tax and NI payments to reduce legislation or a review of the business rates system would also be welcomed.

Mr Hammond cancelling the 2020 target for reaching budget parity could be a good thing - but only if we use the money to build a resilient, sustainable and strong economy. Politicians tend to score points from ‘symptoms’ like issues with NHS, education and welfare. People in this country deserve better. They need leaders who can tackle the causes.“

Richard Little, tax partner at KPMG in Yorkshire

“This Autumn Statement marks the first major fiscal event since the UK voted to leave the EU. Yorkshire’s business leaders are waiting for the Chancellor, in his first opportunity post appointment to spell out the direction of the country’s fiscal policy and put in place measures that will help the UK economy to seize the opportunities, and cope with turbulence, that the Brexit negotiation process will bring.

Our expectations are for the economy to grow at a slower pace in the coming years so I’m looking for an indication of willingness from the Government to use fiscal policy to stimulate economic growth and consolidate the UK’s position as an attractive place for global investors to do business.

Our client surveys consistently show that companies look for stability, predictability and certainty, both in economic (including tax) and political terms when it comes to deciding where to do business. The UK was previously one of the most attractive locations but whilst uncertainty over a post-Brexit UK remains, we may find companies more reluctant to invest.

From a tax perspective, the recent commitment by Philip Hammond to continue reducing the headline corporation tax rate to 17% by 2020 is a good start – indicating the UK remains an attractive place to do business and is open to investment. However, we would ask that the Government go further by publishing a clear tax roadmap of likely changes ahead as it is crucial that business sees a firmer commitment from the Government to a clearly defined path of future tax changes ahead in order to effectively and confidently plan their investment strategies’.

In keeping with the Government’s aim to reinforce the UK as a leader in tech innovation and in light of Brexit, we may well see announcements designed to further encourage R&D and incentivise spending in this area.

This could involve further support of education and training, as well as maintaining grant funding to ensure UK based scientists and engineers can continue to participate in global research projects; continued support for the R&D and Patent Box incentives and a commitment to ensuring that these remain competitive against a background of reducing rates of corporation tax; and encouraging investment in innovation and infrastructure by increasing incentives relating to capital investment in R&D and manufacturing.“

Andy Koss, chief executive of Drax Power Ltd

“The Government should maintain the Carbon Price Floor (CPF) to at least 2025 to help meet its legal commitment to reduce carbon emissions and the stated objective to phase out coal-fired power generation by then.

“The CPF supports the investment case for a mix of lower carbon generation technologies, including renewables, which can reliably replace ageing coal capacity and maintain security of supply for UK homes and businesses.

“Since its implementation in 2011, it has made an important contribution to delivering significant carbon reductions. Keeping the CPF at least at its present level will ensure the cost-effective decarbonisation of the UK and maintain investor confidence in the UK’s energy market.”

Matthew Midwinter, partner Leeds-based property consultancy Sanderson Weatherall

“One of the key policy changes already confirmed by Mr Hammond is that, unlike his predecessor, he will not pledge to balance the books by the end of this Parliament. This means that we can expect to see more government borrowing, most likely to fund investments in large infrastructure projects including both road and rail improvements.

Several of these projects will require the purchase of larges areas of land before any work can be undertaken, so both homeowners and businesses can expect to see more compulsory purchase activity from acquiring authorities such as The Highway Agency, HS2 and TfL.

Many also expect the Autumn Statement to announce a £3 billion housing fund to incentivise small housebuilders in particular, and therefore address the housing shortage in selected areas of the country. Mr Hammond may also introduce changes to stamp duty and could scrap the surcharge currently affecting the purchase of second homes, buy to let investments and holiday homes.

Finally, in the commercial property sector, we already know that the revaluation of commercial property for business rates comes into force from April next year. This will see large increases in liabilities in some sectors and locations with falls in business rates in other areas, but we still do not have details of the system which will be in place after April 2017.

This lack of clarity is causing uncertainty In the market as businesses cannot confidently predict their occupational costs, so I sincerely hope that the Chancellor will use the Autumn Statement to confirm the new business rates system and provide UK businesses with the details they require to plan ahead.“

Scott Cooper, director of Leeds-based car auction and asset management G3 Remarketing

“This is the Chancellor’s first autumn statement since taking the reins from George Osborne and I’m sure he’ll want to make his mark. So, it will be interesting to see if he’ll stand in support of SMEs, at a time when Brexit poses uncertainty for many small firms.

We would like to see a reduction in company taxes and rates – something that Mr Osborne promised, and went some way to deliver, when he announced that the small business rate relief threshold would be doubled earlier this year. But, the new rateable values, which were published at the end of September, will increase tariffs for many businesses, when they come into effect in April.

That, along with rising fuel prices, could have a detrimental impact on the motor industry. So, any stimulus that offsets the cost to motorists would be welcomed, including cuts in fuel duty and motor insurance – two large fees that are likely to be considered by the consumer when purchasing a new or used vehicle.

Transportation is also an integral part of our business, so further investment in our roads and infrastructure would be well received – although, we’re not sure if spending c£50bn on HS2 is money well spent. We’d rather see the Government devote funds to road and rail infrastructure, in between our region’s cities and towns.

However, if all else fails, he could always knock a few pence off a pint of beer!“

Simon Gray, a partner at accountancy and advisory firm Hentons

“The new chancellor has a balancing act to strike in the forthcoming budget. Our clients are calling for stability to support current trading and investment in future growth.

Equally, as the economy faces pressure a result of Brexit, there are some steps that can be taken to alleviate pressure on businesses.

“An extension of the NIC ‘holiday’ for payroll taxes would be welcome, along with a hold on any increases in dividend tax, property taxes and any further tinkering with pension tax changes.

We also wait to see if the Northern Powerhouse will survive the departure of George Osborne.“

Adam Walsh, business director of The Right Fuelcard Company

“Cutting fuel duty would be a welcome decision for motorists and businesses alike – with momentum for cuts increasing as a result of a campaign by Tory MPs including six government ministers.

At present the tax duty of 57.95p on fuel, equates to almost 50% of the cost of a litre. A combination of Brexit and the weak pound has driven an increase in fuel costs, as oil is traded in dollars, and so this is adding an extra burden to businesses which can be relieved by a cut in this area.

“As a company which is committed to recruiting and developing young talent, I’d also welcome additional funding for apprenticeships to encourage more companies to take them on. Just one competent apprentice can make a big difference - and add value to - a small business.

“Regarding the bigger picture, I’m seeking consistency in decision making from the government to instil confidence in businesses and provide reassurance in what is undoubtedly a turbulent and uncertain time with Brexit looming.

Organisations of all sizes and all sectors need to hear the chancellor announce measures to boost investment and productivity - and prevent a slump in output.“

Chris France (pictured right), one of the founders of Beer Hawk - the online UK beer retailer

Our business thrives on providing our customers with a choice not found elsewhere. We find it’s usually the independent artisan brewers making the most exciting beers.

That creativity usually involves an increase in the beer’s alcohol level; the duty payable on beer is priced per % of alcohol. It is a rising scale yet over 7% it suddenly becomes disproportionate and we believe this is an unfair levy on craft beers.

We recognise that in part of course, it’s designed to protect people’s health. At the same time, this type of beer is not designed either to be drank in big quantities; rather they are beers intended to be to be sipped and savoured, rather than ‘downed’.

We’d like to see this hike in duty abolished and see one duty for all beer producers in order to have a fair playing field. The big breweries produce lower alcohol beer than the independents, who have been responsible for a resurgence in the interest in premium craft beer.

The exchange rate since the referendum has hit us quite hard as 60% of the beer we sell comes from overseas.

Sterling fell immediately and we were paying an extra 5% on certain beers; now some are as high as 15% extra compared to pre-Brexit. Up to now Beer Hawk has absorbed all these costs and haven’t increased our prices to pass it on to our customers.

We’d like to see Philip Hammond lay out clear strategies that will support the strengthening of the pound towards pre-Brexit levels.

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