Spring Statement marks steady progress on key business issues

The Spring Statement may have been sandwiched between Prime Minister’s Questions and a vote on no deal Brexit on Wednesday 13 March and while much of the media attention was understandably on Brexit, there were nonetheless some good announcements for business to be aware of. Despite the nature of this low-key fiscal event – no new tax announcements, no new spending announcement, no formal submission - there were still a few wins for the CBI, and some positive news for business.

On enabling a low carbon future

We saw some real action on the move to a low carbon economy with the future proofing of all new homes with low carbon heating by 2025, something the CBI has long called for, following member interest.

In the Stepping up the future report in 2017, the CBI, after extensive consultation with members outlined how a refreshed plan coupled with the right mind-set can maximise the opportunity of the low-carbon transition. And there were further announcements, a consultation on how to help small businesses reduce their energy bills and carbon emissions and a commitment by the government to consult on the appropriate mechanism to increase the proportion of green gas in the grid to accelerate the decarbonisation of out gas supplies.

On a fair and competitive digital economy

Next to the carbon announcements, the other ‘big ticket’ item we saw were the recommendations of the Furman review, set to examine competition in the digital economy. The review, led by President Obama’s Economic Adviser looked at ways for promoting competition and innovation – being able to move data profiles between tech platform providers, giving users control over their content.

It raises important questions for both business and government. The UK tech sector is the envy of the world, and so it is positive to see the UK leading the way in supporting consumers and encouraging innovation. But we must ensure that any new rules and regulations keep up with the fast pace of change of this industry and continues to encourage investment from this vital sector.

Wider wins

Other announcements that businesses should be aware of included:

• There was the clarity on when the reduction of SME contribution for the Apprenticeship Levy would come into force, a CBI win from the Autumn Budget.
• A consultation on the future of infrastructure finance, again something the CBI had called for after the Autumn Budget, giving business clarity on the future of private finance investment in infrastructure projects.
• A call for evidence on where improvements can be made to ensure that Insurance Premium Tax operates fairly and efficiently, something the CBI has long called for.
• Further information on the structures and building allowance from the Autumn Budget (a CBI ‘win’ at the time) giving members the opportunity to provide feedback on the tax legislation prior to implementation of the policy, so it can create greater certainty when claiming the relief.

All in all - and in particular considering the low-key nature of this fiscal event - it was a positive Spring Statement for business.

The CBI response

Responding to the Spring Statement, Rain Newton-Smith, CBI Chief Economist, said:

“Against a hugely uncertain political backdrop the Chancellor has made an admirable attempt to set out a long-term vision for the UK economy, yet remains shackled by Brexit.

“This year’s forecast downgrade brings the danger of no deal to the UK economy sharply into view. It must be avoided.

“Meanwhile, space must be found for the UK’s domestic agenda. Standing still while the world continues to turn is not an option.

“The Chancellor’s rightly identified the need to go further and faster in combating climate change. His ambition for all new homes to be heated sustainably will ensure we make better progress towards a zero-carbon economy.

“Prompt payment practices are good for businesses throughout the supply chain, so if reporting encourages better behaviour from firms that should be welcomed.

“However, going it alone on a digital services tax is high risk, especially at a time when the UK already looks increasingly isolated. The EU has dropped their plans and got behind the OECD’s efforts - the UK should follow suit. The government needs to be doing all it can to encourage investment in the UK and adoption of new technologies, not putting up barriers.”