Autumn Budget: Trick or treat?
CBI's Senior Policy Adviser Fiona Geskes outlines what we can expect from the Autumn Budget
Despite narrowly avoiding Halloween, I suspect we won’t be able to avoid the spooky headlines, and while not top of the list of priorities, it must be a consideration for the teams working on the Budget within Treasury.
But what is undeniable, is that the Chancellor is in a tricky spot. The Prime Minister used her party conference speech to proclaim the ‘end of austerity’. But, with earlier commitments to increase NHS funding (a £10bn birthday present), a freeze to fuel duty, an increase in council house building and continuing pressure on public sector pay the Chancellor may find this hard to deliver in practice. Government borrowing is now at its lowest level since before the financial crisis, but overall debt levels remain stubbornly high. And then there is the matter of his fiscal mandate. The Chancellor has made it clear time and time again that he is committed to that mandate.
Away from the fiscal position, the political one does not offer much more relief. With Brexit around the corner, the Chancellor is said to be keen to hold back for a potential emergency stimulus next year.
So, what can we expect?
Well, we already know that there will be changes to the Apprenticeship Levy, with recommendations from the CBI’s Autumn Budget submission announced at the Conservative party conference. A clear policy win for business and welcome acknowledgement that the system will need some reform to make sure it succeeds in its goal to increase the number of apprentices in the UK. The 40% drop in apprenticeship stats alone is evidence that this reform is long overdue. Companies spend £45bn every year on skills training, more than the entire English secondary budget. A second early win for business was the financial commitment to the National Retraining Partnership with the CBI and the TUC.
Come Monday, business might also see some movement on Business Rates, with measures expected to alleviate some of the pressures faced by certain industries in areas of the country where property prices have been sluggish to recover. Given that business rates generated around £27bn worth of revenue for the Treasury in 2016-2017, these measures may well be moderate. The bigger prize for business an overhaul of the system before 2020.
We may also see some changes to the capital allowance regime in a drive to increase business investment. The CBI Autumn Budget submission focused on increasing the Annual Investment Allowance (AIA) from £200,000 to £500,000 for 2 years. If the Chancellor is looking for a ‘quick fix’ to kickstart investment decisions delayed by Brexit uncertainty, this might be what he is looking for…
And now to the spooky stuff, digital services tax, pension tax relief, changes to employment taxes, there might be a number of things to scare business in this Budget. But with Brexit around the corner, and business investment still laggard, might this be the time for the Chancellor to deliver treats rather than tricks?
You can read the full CBI Autumn Budget submission here.