Normally around this time of year, we have the Spring Budget, and the various omnishambles and U-turns that have often followed the Chancellor’s speech to the Commons.
Under George Osborne, however, the Autumn Statement became a much bigger deal, pretty much morphing into a full-blown Autumn Budget in all but name. This saw major fiscal policy announcements becoming commonplace not just in the Spring but in the Autumn too.
Last year, the new Chancellor, Philip Hammond, announced he would be switching the two events around and returning to a more straightforward Statement in the Spring.
Today’s Spring Statement – not a Spring Budget – was therefore billed as a summary on the economy rather than a platform for major policy announcements.
With expectations downplayed, you might ask if there was any reason to tune in?
Well, ladies and gentleman, that’s why you have Informi.
Here are the top five things we picked up for small business owners in GIF-form.
In summary, the Chancellor was true to his word and refrained from any big policy announcements.
Striking an upbeat note, even comparing himself to ‘Tigger’, he claimed the UK economy was showing signs of bouncing back from the austerity years – and there was “light at the end of the tunnel”. Marginal improvements in the UK growth and debt forecast were used to bang the drum for the Conservative record in government. In response, the Shadow Chancellor, John McDonnell, accused him of complacency, pointing to the crisis in the public sector.
There was nothing to spark the fury of small businesses, following last year’s badly received NICs proposals, and it was largely controversy-free given the lack of big policy announcements.
We’ve decided to focus on three announcements that generated discussion amongst business owners and industry figures.
Business rates revaluation to be brought forward
In the Autumn Budget, the Chancellor announced that that CPI indexation for business rates would be brought forward to April 2018. He also announced that business rates revaluations will take place every three years, rather than every five years, with the next revaluation due in 2022. Today, he moved the next revaluation forward a year to 2021
The thinking behind this was to help businesses benefit from the three-year revaluation cycle earlier.
There wasn’t a lot of discord with this particular announcement, but there is still continued disenchantment with the business rates system overall. Bosses of major restaurant chains just this week have called for the government to act to avoid “damaging closures and job losses”.
Labour made clear they would reform business rates in government and countered the Chancellor’s claims that his government were “the champions of small businesses and the entrepreneur”.
What we said
“We’ve already seen brands such as Toys R Us and New Look closing down shops across the UK. To prevent seeing more of this we would urge government to keep business rates under review. With brick and mortar businesses competing with and losing to online businesses in many cases, a rethink of business rates is essential to help us keep our diverse and healthy high streets, and we’re disappointed to see that as yet, there’s been no movement.”
Consultation launched on VAT
Government launches VAT consultation! Hardly the most exciting of headlines, and not mentioned in the speech itself, however, the VAT consultation announced today has huge implications for small businesses.
The Treasury has often highlighted the VAT threshold as an area it is looking to reform and the consultation aims to find out “if the design of the VAT threshold can better incentivise growth?”
The call for evidence from small business owners on VAT is a great opportunity for you to have your say and have a real impact on policy.
What we said
“The VAT threshold is important because it gives many smaller businesses with less turnover breathing space without having to worry about it because they fall under the threshold. Although VAT does bring in much-needed revenue for the Treasury, it’s good to see that a consultation on the threshold has been announced. Raising the threshold would give small businesses the chance to become more sustainable and enable growth.”
Action on late payments
Another one that sits more in the consultation camp, the government has duly noted the FSB’s lobbying for more action on late payments and has called for evidence from SMEs
The recent collapse of Carilion exposed the negligent payment practices of many organisations, particularly towards smaller suppliers, and the Chancellor today acknowledged that the government may need to do more to combat this. This consultation was roundly welcomed, particularly in the construction industry.
The Carillion fallout highlights that the current measures to safeguard suppliers from late payments might not be effective. Labour MPs also called on the government to do more.
What we said
“The FSB’s call for a crackdown on late payments is something that all industries should back. Too many businesses are put into difficulties because of bigger companies paying them late. We’re happy to see action taken to ensure that bigger companies are not able to leverage their size over smaller businesses who they owe money to.”
