The uncertainty that has painted both the political and economic picture over the past few months, means the Chancellor will want to make a pitch for brand Britain, and to demonstrate that the Conservative Party is still the party of business. And with business investment lagging behind the G7 average by about 5%, it is critical that the UK makes a pitch to business, to invest, grow and employ on our shores.
The CBI has focused its Autumn Budget submission on the key areas that our members tell us are holding back investment. Our recommendations aim to remove barriers to investment, such as the business rates regime and the apprenticeship levy, and tackle the weakness of the investment incentive regime, by making changes to capital allowances. The UK capital allowances regime is the least competitive in the G20 and if the UK wants to attract business this needs to be addressed.
Business is however, aware of the state of the public finances and is supportive of the Chancellors’ commitment to fiscal prudence ahead of the UK’s exit of the European Union. Thus, the policies recommended in the CBI’s Autumn Budget submission are structured around short-term, medium-term and long-term reform, suggesting policies for this year’s Autumn Budget that are financially viable for the Government while being clear that some of these challenges will have to be addressed in long-term reviews.
So, what does business want to see at this year’s Autumn Budget? On Business Rates, business is calling on the Government to introduce a business growth accelerator based on Scotland’s pilot and abolish downward transitions. Additionally, reviewing the business rates model in 2019/20 is paramount. On capital allowances, CBI members would like to see the Annual Investment Allowance increased to £500,000 for two year, to accelerate business investment plans.
Business was heartened to see the Chancellor announce that businesses are able to work with each other to provide training through the Apprenticeship Levy by raising the limit on transfer from 10% to 25% during his Party Conference speech. This was a key CBI ask in our Autumn Budget submission. However, business is urgently calling on government to release the bottleneck of the Institute of Apprenticeships by doubling its budget to £28m and longer-term reform to the levy still needs to be delivered.
Next to the short-term measures, business is also looking to the Government to commit to long-term reviews of the capital allowances and business rates regimes to address some of the structural challenges in our economy. This, combined with a sensible Brexit deal, will ensure becomes a fantastic place to invest and grow a business.