Autumn Statement: Region sets out its wish list ahead of next week’s announcement
PUBLISHED: 09:00 16 November 2016 | UPDATED: 09:16 16 November 2016
Boosting productivity in Norfolk and Suffolk must be a focus of the chancellor’s upcoming Autumn Statement, business leaders say.
Philip Hammond has been urged to use next Wednesday’s statement as an opportunity to tackle uncertainty triggered by Brexit, the US election and ongoing regional devolution talks, and to reassure businesses with a package of measures to boost growth. Key figures in the East say it is a chance to bolster productivity in the region, which sits below the UK average and lags far behind other major European economies.
But they say funding for road and rail projects, reliable mobile signal and broadband, incentives for firms investing in new technologies and measures to tackle skills shortages are vital to doing so.
Meanwhile, businesses in various sectors have today outlined what they would like to see announced, including a cut in tourism VAT, tax breaks in agriculture and greater clarity for energy firms.
The region’s statement wishlist
East Anglia’s farming leaders have urged the chancellor to provide the sector with more stability through tax and investment incentives – while awaiting clarity on their longer-term concerns about Brexit.
The National Farmers’ Union’s (NFU’s) wishlist for the Autumn Statement includes tax breaks for farm businesses and incentives to stimulate investment in modern buildings, infrastructure and reservoirs – in addition to the Annual Investment Allowance – to improve long-term productivity and competitiveness.
NFU East Anglia regional director Robert Sheasby said: “We would welcome greater allowances around infrastructure investment, but in addition to that I would incorporate more around agricultural buildings. An incentive to make investment decisions in that kind of core infrastructure would show some medium and long-term support for agriculture and horticulture.
“Over recent years the government has been putting in a lot of effort around Corporation Tax, but lots of our members are not incorporated, so they do not see the benefit. This would be a way of supporting the wider rural economy.”
The NFU has also asked for the high cost of employers’ national insurance to be addressed, particularly as this cost has risen after the introduction of the National Living Wage.
• Small businesses
Small business confidence in East Anglia is slipping, with Brexit uncertainty exacerbated by factors such as rising labour costs, pension auto-enrolment and an increasing tax administration burden.
That’s according to Salena Dawson, East Anglia regional chair of the Federation of Small Businesses, who called for the chancellor “to boost confidence, investment and long term growth”.
She said: “It is clear we need an Autumn Statement that recognises and encourages enterprise, and provides an economic environment where smaller businesses can thrive.
Tackling the UK’s ‘exceptionally poor productivity’
Chris Starkie, managing director at the New Anglia Local Enterprise Partnership (LEP), said improved infrastructure, better connectivity and education courses shaped around what businesses need were all key measures.
Rewarding “productive behaviour” was also vital to encouraging businesses to invest in efficiency, he said.
“Giving incentives to businesses investing in more efficient plant or machinery, or robotics in agriculture is important,” he said. “It’s about encouraging businesses to grab on to these opportunities.” The LEP says if the region’s productivity matched the UK average, it would add an extra £3bn to the economy. Reaching the US average would be worth about £13bn.
Andrew Barnes, senior partner at law firm Howes Percival, said the UK had “exceptionally poor productivity”, which had only recently risen above its peak of late 2007.
“My hope and expectation is that to redress this the chancellor will put the improvement of productivity at the centre of his strategy,” he said.
As well as investing in infrastructure and plugging the skills gap, Mr Barnes said to prompt investment the chancellor should “increase the Annual Investment Allowance, taking new plant and machinery investments out of business rate calculations and enhancing research and development tax credits”.
Caroline Williams, Norfolk Chamber of Commerce chief executive, said businesses needed reassurance that the area “is in his sights”, with work to improve mobile phone signal and broadband the priority.
“What the autumn statement needs to do is create some certainty, so businesses can start investing,” she said. “Since Brexit, there’s been a pause. Norfolk businesses want reassurances that it’s not just the north being discussed.”
“The chancellor could achieve this through delaying mandatory quarterly tax reporting, realigning the business tax system to incentivise growth, employment and investment, and include specific tax help for the self-employed.”
Further investment in roads infrastructure was a priority, she said, along with permanently increased business rates relief and clarity on EU-funded projects which support small business growth.
“We understand that all applications not already signed by the point of the Autumn Statement and approved before we leave the EU will be honoured but will be judged against additional criteria. We need to know what that criteria is,” she added.
Richard Tunnicliffe, the CBI’s regional director in the East of England, called for a “pro-enterprise agenda” to close the productivity gap and “get the East of England firing on all cylinders”.
He said: “With interest rates at rock bottom, now is the time for the UK to put serious effort into improving our creaking infrastructure.
“We would like to see £6bn more spent each year on public investment: improving our transport and digital network, building more homes and extending regional funding.”
Cutting tourism VAT and bringing it line with European destinations would “absolutely transform” the industry, business
Ian Russell, Norfolk Tourist Attractions Association committee member and Visit East Anglia director, said: “It would be huge for us. It would transform the fortunes of the tourism industry - many more holidaymakers would choose to holiday in the UK and it would make the UK incredibly attractive to overseas visitors.”
A national campaign has long battled to cut the rate from 20% to 5%, closing the gap with European holiday hotspots.
It is estimated that such a reduction would add an extra £2.6bn to the treasury over 10 years.
Mr Russell, who owns Wroxham Barns, said that changes to encourage more young people into the workplace, such as a reduction in national insurance and tax breaks for new starters, would also be welcomed by the hospitality industry.
“All businesses in the field take on more staff during the summer and those embryonic jobs can become careers,” he said. “Young people want opportunities and hospitality is perfectly placed to offer those.
“If you can get young people into work and make those jobs convert into careers that’s a massive opportunity. In tourism and hospitality, young people can learn crucial life skills.”
Simon Gray, chief executive of the East of England Energy Group (EEEGR), said incentives for exploration would provide a boost to businesses in the East and called for clarity on the government’s future strategy.
He said: “In the oil and gas sector what we are particularly hoping for is fiscal support in any way to help stimulate investment in exploration.
“Given the price of oil and gas there is no exploration happening at all and that is the biggest money spend for the sector.
“Things like tax breaks in investment – that is the key area we would like to see stimulating. There are businesses out there that would like to invest but won’t because the return isn’t good enough.”
He added that with the Brexit vote throwing many industries into uncertainty he would like to see the government clarify its position on renewables and particularly the future of nuclear power, with plans for the Sizewell C plant moving forward, so that companies could prepare for large infrastructure projects if necessary.