Tax and regulation policy briefing

Autumn is always an incredibly busy period in Westminster. With MPs returning to Parliament and an impending Budget, it usually makes for lots of work. With the pandemic looming large, it’s clear that 2020 will be a fundamentally different year. The fiscal events calendar itself has not been left untouched with news at the end of September that the Budget has been cancelled.

Business welcomes the introduction of a new Job Support Scheme

But there have been some positive developments, mainly in form of the Chancellor’s Winter Economy Plan. The CBI had been using the summer to build a strong evidence base for why additional business support would be needed in the final two quarters of the year, in particular to avoid a cliff edge when the Coronavirus Job Retention Scheme ends at the end of October. The CBI and its members were clear: a wage support scheme is critical in preventing job losses and supporting firms with sluggish demand. So it was a relief to see the Chancellor adopt the CBI’s proposal and create the Job Support Scheme (JSS). And it was not just the JSS that was welcomed, we secured a full list of measures to support business. The Chancellor has been clear that the economic situation the country faces is a challenging one, but it is encouraging to see him work closely with businesses and the unions in identifying solutions.

Fighting for business rates and regulatory reform

Away from the response to the pandemic, there was a regular drumbeat of activity and the Economic Policy team was working behind the scenes to ensure the business voice was heard. This included the publication of the ‘Reimagining regulation’ report, which reflects on whether the framework of UK economic regulators – such as Ofgem and Ofwat - remain fit for purpose, and what the government must do to ensure the regulatory framework helps facilitate net zero and innovation. There was also a lot of activity on the business rates front with the CBI responding to the first tranche of the call for evidence on the business rates regime, which provided recommendations for much-needed reform on business rates reliefs, in light of heightened uncertainty.

Ensuring the business voice is heard in the Comprehensive Spending Review

And finally, there was the Comprehensive Spending Review submission - the Comprehensive Spending Review sets out the government budgets and spending intentions over a number of years. As things stand, it is still set to be a multi-year Spending Review, but given the uncertain economic situation, a one-year spending round cannot be ruled out at this point.

From a tax and regulation perspective, there are a few key asks to highlight: the CBI called for the government to invest in HMRC to ensure the department is sufficiently resourced to provide businesses with greater upfront certainty over their tax affairs and to respond on a timely basis to matters which can have a significant impact on business cash flow. The submission also highlighted the need to increase funding for the Valuations Office Agency to ensure there is resource to shorten the business rates valuation period to 18 months.

What’s next? 

With the Budget cancelled, all eyes are on the result of the Comprehensive Spending Review. But it is equally important to keep an eye on the open tax consultations: business rates, and the R&D tax credit consultation to name a few. A Finance Bill has not been explicitly ruled out so we could still see some developments on this side.

As always, if you want to get involved in our economic policy work or would like to join one of our tax working groups, please get in touch.