Nathan Marsh, Northern Infrastructure Leader at EY, said: “By boosting the Department of Transport’s budget by 50 per cent, the Chancellor has freed up some capital to help address one of his biggest challenges for the ‘Northern Powerhouse’; directly financing its infrastructure, such as HS2 and Northern rail electrification. Many of the key projects in the North will fall under the £13bn earmarked specifically for Northern transport over this parliament, which was first announced in August.
“While clear funding for the Transport for the North body will help to drive plans closer to construction, it remains to be seen how the Government will raise even more capital for Northern infrastructure through alternative, innovative means.
“More sources of finance are likely to be needed to make these plans a reality, given their ambitious scale and timeframes. The Chancellor mentioning the attractiveness of UK infrastructure to overseas investors could be a hint as to what’s to come.
“The Chancellor said ‘we are the builders’. In the case of Northern and wider UK infrastructure, an appropriate question might be where are the builders? Skills shortages and the capacity of the UK construction industry could be challenging issues when it comes to delivering this much needed investment in infrastructure, and may be a question for the new National Infrastructure Commission to address.”
Adam Walsh, business director of The Right Fuelcard Training Company (TRFC) – which became so frustrated with apprenticeship providers that it created its own recruitment arm, The Bayford Foundation, in 2013 – seriously questions whether providers who have secured government contracts to identify, recruit and report apprentices’ progress – are up to the job.
He said: “Since last November, we’ve tried to recruit six apprentices, only to be sorely let down by several providers.
“A major priority for the government is to invest in ensuring a sound support system for host-companies and apprentices themselves. Perhaps far fewer, but far better performing providers would be easier to appoint, manage, assess.
“Employers seeking apprentices would likewise be advised to obtain undertakings to ensure that providers live up to their promises and agree firm schedules of action and achievements by which they will be assessed and paid. They should likewise seek guarantees of an uninterrupted service, should the providers be taken over or fail.
“Ultimately the failures to see through apprenticeships to productive conclusions are bad for the nation, inconvenient and costly for employers and let down the very people they are meant to motivate, support and develop.”
Local business owners were left with small change in the Chancellor’s big spending review today according to a local tax specialist.
Julia Forrester who runs TaxAssist Accountants in Ilkley said: “We wanted more recognition of the hard work and major contribution made by small businesses to the UK economy. You could say it’s a case of no news is good news for local business owners, but I think there has been a huge opportunity missed to reward those enterprises which are the backbone of our economy.
“The combined Autumn Statement and Spending Review said little of real significance to small businesses. They are already facing huge challenges from new rules on pensions, dividends and the living wage, so will be grateful that there were no more bombshells, but there were no early Christmas presents either.
“The Chancellor’s decision to abolish plans to cut tax credits is welcome. These are a vital contribution to household income for low earners and working families. The self employed do not benefit from the national minimum wage and reducing tax credits could have made many people think twice about remaining self employed.
“The £2 billion a year boost for the housebuilding sector, particularly to build affordable homes, announced by the Chancellor is a welcome boost to local economies, with many small businesses such as plumbers, electricians and decorators as well as those in construction reaping the benefits.
“But there was no sweetener on the new tax on dividends payments announced in the summer Budget. The change could cost basic rate owner-managers close to £2,000 a year.
“Extending small business rate relief for another year will also be well received by local business owners, particularly independent retailers who already face the huge challenge of online shopping as well as the competition from major store chains. Devolving control of business rates to some major cities does not answer the need to fundamentally reform this outdated charge which is a huge burden to many local business owners.”
Tim West, Tax Partner at EY in Yorkshire, said: “The Chancellor has delivered on one promise – to make the Autumn Statement more about the economy and less of the mini-Budgets of his predecessors. Today was less of a mini Budget and more of a trailer for what’s yet to come.
“We saw Business Rates reform deferred until the Budget next year (so bad luck for Retailers and Manufacturers who pay 23 per cent and 17 per cent of the burden respectively). Also, those worried about salary sacrifice were given a further reprieve, with the depths of the document noting that the Government was ‘gathering further evidence’.
“However, the sky blue document also heralded in almost £21bn in tax rises over the six year period, of which the Apprenticeship Levy is meant to raise over half. The rest will come from tax avoidance, evasion, and planning as well as those who seem to be portrayed as the new villains of the day, those who have buy-to-let or second properties.”
The Institute of Directors welcomed the Chancellor’s recommitment to achieving a budget surplus by the end of the Parliament, but warned that he could be blown of course if the economy does not continue as strongly as expected.
Simon Walker, Director General of the IoD, said: “Businesses see strong public finances as the basis for sustainable economic growth, and will welcome Osborne’s confirmation today that he aims to run a budget surplus by the end of the Parliament. The Chancellor was dealt a remarkably strong hand by the Office of Budget Responsibility, which is predicting stronger growth, lower than expected borrowing costs and significantly higher tax receipts.
“He’s chosen to play this hand with more spending than expected. Although departmental budgets outside the ringfence are seeing significant reductions in expenditure, overall the Chancellor will continue to preside over a rising real terms budget this Parliament.
“There will be plenty of complaints about individual cuts, but it’s important to remember that total debt will still be colossal, over £1.715 trillion (70% of GDP), by the end of the spending review period. The Chancellor will know that if the economy chills and tax receipts disappoint, his plans will suddenly become much harder to achieve. With over a dozen tax consultations launched since the election, there is a real worry for businesses that next year’s Budget will see further tax increases.
“The major business tax announcement of this Autumn Statement was the Apprenticeship Levy, which can only be described as a new payroll tax. At 0.5% of payroll it will be a big new cost for many companies, including medium-sized ones.
“We are very concerned by the Government’s assumption that a quarter of the money collected will be spent on just administering the levy. Firms have been promised they will get back more than they put in, but it’s not clear how this will happen if so much is being lost in bureaucracy.
“The IoD supports the aim of deficit reduction, and recognises that this means cuts to business support. UK trade and investment, one of the most effective schemes, has taken a hit. The focus now must be getting the biggest bang for the taxpayer’s buck by concentrating on the export support that delivers the biggest growth in trade.”
“With limited detail announced today, we have to wait two weeks to Legislation Day on 9 December when we see the draft Finance Bill.”
Carolyn Fairbairn, CBI director-General, said: “This was a good spending review for longer-term investment in the economy but there’s a sting in the tail in the size and scope of the Apprenticeship Levy.
“Businesses will be pleased to see the Chancellor staying the course on deficit reduction, his commitment to an industrial strategy, and the emphasis on nurturing a vibrant business community.
“Standouts include maintaining spending on infrastructure; ramping up housebuilding; support for energy-intensive sectors and for advanced manufacturing.
“Business recognises there are tough choices to be made in balancing the books, but many are reaching a tipping point, where the cumulative burden of the living wage, apprenticeship levy and business rates risk hurting competitiveness.
“The Apprenticeship Levy, set at 0.5 per cent, is a significant extra payroll tax on business and by widening the net it will now catch more smaller firms. We welcome the creation of a levy board to give business a voice on how the money is spent and will work with the Government to ensure a focus on quality.
“Many firms will be disappointed to have been kept hanging on for a much-needed review of business rates until next year’s Budget.
“Firms will be reassured by the protection of the science budget, but the shift from grants to loans for Innovate UK could dampen bold and game changing innovation, particularly amongst smaller businesses.”
Martin Robinson, director of Sales at Hunters Property Group, said: “We welcome the Chancellor’s decision to double the housing budget and to build 400,000 new homes across England, this can only mean good things for the UK’s housing market and the economy as a whole.
“Home ownership is a key aspiration for the British public and making this ambition more achievable for more people boosts morale which undeniably drives the housing market and will create churn.”
“However, the question of who will build these homes has to be asked. We are consistently hearing that developers do not have the materials, time or skills needed to build homes at the rate the government is demanding. What’s more, will there be a plan in place to subsidise these builders who will undoubtedly be building these homes without the usual margin.”
“We are obviously delighted to see a further injection of cash into the Northern Powerhouse. Having first opened our doors 23 years ago in York this is a topic Hunters feels very passionate about. We have experienced a 30-40 per cent increase in buyers looking to put their money in the north in the last six months and this is partly due to the new transport links and infrastructure planned.
“It’s important to note this interest is not just coming from first time buyers looking to buy more for their money, but also investors as they realise this part of the country can offer high yields and fantastic returns. As the Chancellor mentioned, the economy is thriving in the North and these latest plans indicate the government’s continued confidence in the region. ”
Bill Dodwell, head of Tax Policy at Deloitte, said: “This is an Autumn Statement with few tax announcements – although it raises taxation over the life of the parliament by nearly £21 billion. The major burden falls on larger business in the form of the apprenticeship levy. This is expected to raise £2.7 billion from 2017, increasing annually thereafter.
“Small business is effectively exempted from the levy thanks to a £15,000 rebate. The levy increase is substantially more than the cuts in corporation tax announced at the Summer Budget.
“The second major tax increase is an additional 3 per cent stamp duty land tax charge on the acquisition of buy-to-let residential property and second homes. This starts on 1 April 2016 and is thought to bring in £625 million in its first year – nearly £4bn in this Parliament.
“From April 2019 capital gains tax due on residential property sales will be payable 30 days after the sale. This is another example of one of the Treasury’s favourite policies – bringing forward the date when tax must be paid. The Chancellor did however confirm this won’t affect the UK’s best-loved tax relief – the principal private residence exemption.
“There will be consultations on the new digital tax accounts, which are likely to require earlier reporting and payment of tax in years to come by the self-employed and those with investment income.
“Contrary to some press reports, the Chancellor confirmed that the outcome of the Business Rates Review will wait to be announced at Budget 2016. Given that the Chancellor did talk at length about devolving business rates to local councils it seems virtually certain that the main system will remain in place.
“He did confirm that the small business rate relief, which apparently benefits 600,000 small businesses, will be extended for another year, at a cost of £700 million.
“There were few new announcements on anti-avoidance, although there will be a new penalty for those whose tax avoidance schemes are nullified by the general anti-abuse rule. The previously announced new criminal offences for offshore evasion and corporate failure will be introduced in Finance Act 2016.
“After two major Budgets in 2015, the reduced number of new measures in the Autumn Statement is welcome – although large business will count the cost of the new apprenticeship levy.”
Tim Parr, tax partner at RSM in Leeds, said: “There was good news for the local economy with the announcement of a new Enterprise Zone for the M62 corridor, the creation of a £400m Northern Powerhouse investment fund for smaller businesses supported by the Yorkshire and the Humber LEP, and new funding through the Regional Air Connectivity Fund for a new route from Leeds Bradford to Newquay.
“Overall, the biggest surprise of the Autumn Statement has to be the Apprenticeship Levy which the government predicts will generate £3bn annually by 2021. Clearly this move has been designed to sidestep the ‘lock’ on National Insurance, and will come as a real blow to large businesses – and in particular agencies that supply temporary staff – who will see it as a ‘levy on employment’.
“We knew that someone would suffer as a result of the planned cuts to tax credits being scrapped, and in this instance it is buy-to-let landlords. In the Budget last July, the Chancellor announced tax increases from 2017 for landlords, and now they’ve been hit again – this time with a 3 per cent stamp duty surcharge on buy-to-let properties and second homes. There’s a real risk here that rents could increase as landlords pass down the additional cost to their tenants, or that the rental property sector could shrink as landlords sell up. Either way, this could have a seriously detrimental effect on the buy-to-let industry.
“We also heard a great deal about HMRC’s plans to move to an entirely digital service, with the emphasis now on taxpayers paying any outstanding taxes earlier. There’s no doubt that this will generate additional income for the government who will hope that this will also be a more efficient and accurate way for taxpayers to interact with HMRC.
“However, there still remains a huge lack of transparency around deadlines around this issue and I’m disappointed the Chancellor didn’t give more detail here.
“Not surprisingly, we heard there would be a fresh crackdown on tax avoidance which will raise an additional £5bn. At first glance this looks impressive, but in reality, this was always on the cards as a result of the redeploying of resources in HMRC. So you could say that this was just a very good example of ‘window dressing’.”