A Good Budget For A Country In Tough Times
The CBI's full response to Chancellor Philip Hammond's Autumn Budget.
Carolyn Fairbairn, CBI Director-General, said:
“Against a sombre economic backdrop, the Chancellor today gripped the steering wheel on the UK economy. This is a budget that balances support for people on squeezed incomes with vital action to help grow the UK out of austerity. But delivery is everything.
“Action on business rates, R&D tax credits, Brexit planning and an extension and increase of the National Productivity Investment Fund will help firms to invest and grow today against an uncertain backdrop.
“It was good to see focused investment in the long-term drivers of growth that underpin sustainable prosperity.
“Building a skills system that supports the 4th industrial revolution is the right ambition, but the approach needs to be joined-up with the National Retraining Partnership and coupled with apprenticeship levy flexibility.
“Additional investment in infrastructure will help tackle regional inequalities. The support for housing supply is critical for people and firms. Metro mayors will also welcome greater options for transport funding, but regions without devolution deals must not be left behind.
“And by making the most of tomorrow’s technologies, including increasing investment in R&D and fuelling innovation the Government will help create a virtuous circle by drawing in private sector funding.
“The challenge now is to turn words into action. For Government and business, this starts next week with the Industrial Strategy.”
On business rates, Carolyn said:
“The announcement on business rates will be a welcome fillip for many firms and is a result of a sustained campaign by the CBI, other business groups and individual firms. This shift in inflation indexation will help boost the competitiveness of businesses with a physical presence – particularly in the retail and manufacturing sectors. However, further reforms are needed to keep this tax in step with the modern economy.”
On innovation, Carolyn said:
“The Chancellor has recognised the valuable role for innovation and technology to tackle the UK's productivity problem, with AI and driverless cars part of his ambition to motor the economy of the future.
“New funding, alongside a boost to the R&D tax credit, will ensure the UK is a great place for businesses to innovate and ensure progress towards the target of spending 2.4% of GDP on R&D by 2027. Businesses will now look to the industrial strategy for detail, with priorities including funding for Innovate UK and creating new support for the uptake of technology.”
On digital taxation, Carolyn said:
“Reforming international tax rules for digitalisation is a hugely complex task.
“Unilateral changes hamper coordinated international action to reform the global tax system and can damage countries’ competitiveness.
“Businesses will be keen to work with the Government to ensure any new rules don’t hinder the contribution that digital businesses make to economic growth.”
On housing, Carolyn said:
“The housing crisis is one of the greatest challenges the country faces, so it’s right to focus on supply rather than just demand. The ambition to build 300,000 homes a year is essential and stretching - it must swiftly translate into delivery.
“Measures to enhance the planning system, support SME housebuilders and increase the Housing Infrastructure Fund mark important steps towards unlocking housing supply.”
On skills and education, Carolyn said:
“The key challenge for Government on skills is making the apprenticeship levy is fit-for-purpose, supporting the Chancellor’s commitment to increasing productivity and opportunity. Today’s commitment to keep levy flexibility under review is helpful but does not go far enough. To really deliver more growth and higher pay, the levy needs to fund more of the training that businesses need as soon as possible.
“Improving teaching and take-up of Maths is vital, so expanding the effective Maths Mastery programme should have a real impact. However, with schools’ finances stretched, firms would have welcomed a greater commitment to protecting per pupil funding overall as great education is the best long-term growth strategy we have.”
On energy and climate change, Carolyn said:
“Following the Clean Growth Strategy, firms want to see a long-term, stable and pro-market energy policy framework. This will drive low-carbon transition, maintain security of supply and keep energy costs manageable for consumers.
“Continued investment in low-carbon power will also be crucial as we transform our energy system, and business will need to consider the implications of the new control for low-carbon levies. Greater clarity on the trajectory for the UK carbon price will be welcomed by investors, but it is important that this is matched with the provision of sufficient support to energy-intensive industries, including manufacturing.
“Further support for ultra-low emission vehicles is very welcome, and provides an opportunity for the UK to be at the forefront of decarbonising transport.”
On infrastructure, Carolyn said:
“Infrastructure investment is critical to unlocking the UK’s long-term prosperity. Boosting transport through an expanded National Productivity Investment Fund is positive, as are further details on the allocation of the Transforming Cities Fund. Making sure that all regions can access the funding they need will be essential, especially where a devolution deal has not yet been agreed.
“While there is good news on infrastructure priorities like the Tyne and Wear Metro and the Oxford-Cambridge corridor, more detailed plans are needed for major projects such as Crossrail 2 and Northern Powerhouse Rail.
“The freeze of both short-haul and long-haul rates in Air Passenger Duty for economy passengers are positive steps – but we need to drive exports as part of building a Global Britain, so a long-term focus on competitive air transport links is vital.”
On Brexit planning, Carolyn said:
“Businesses will welcome the government’s commitment to provide additional resources to manage Brexit. However, securing a transition deal at the next EU Council meeting remains firms’ number one priority.”
On the Patient Capital Review, Carolyn said:
“The Chancellor was right to recognise the value of high growth, high potential firms in the Patient Capital Review.
“Businesses will welcome increased funding for the British Business Bank, changes to the qualifying rules of Entrepreneurs’ Relief and the commitment to protecting the European Investment Fund in the Brexit negotiations.
“But growth doesn’t just come from knowledge-intensive companies, and the incentives must reflect the role all sectors play in delivering prosperity across the UK.”
On the National Living Wage, Carolyn said:
“Businesses support a sustainably rising minimum wage, though raising the National Living Wage faster than inflation is an increasing challenge for affected firms as each year passes.
“This is a reminder of the essential role of the independent Low Pay Commission in recommending rate rises throughout this period, and it is right that Government acts on its advice.”
A Good Budget For A Country In Tough Times, 23rd November 2017, 8:00 AM