The Chancellor has made significant progress in providing certainty to business in recent months and made clear the government is focused on growth. From the Spring Budget to his Mansion House speech, measures including enhancing childcare provision, increased support for occupational health, full capital expensing for three years, and investment zones – all of which the CBI called for – will help to increase the UK’s competitiveness and unlock much-needed private investment.
We sent our submission to the Treasury in early September, ahead of the Autumn Statement in November. It aims to build on this and push the government to go further.
Our submission in brief
The CBI supports the government’s vision for the UK economy: its focus on economic growth, despite the challenging fiscal backdrop, is essential. It’s firmly in line with the CBI’s mission to ensure sustainable growth for the benefit of society, in every UK nation and region, speaking for businesses of all sizes and sectors, across the whole economy.
According to ONS, around 6 in 10 adults (62%) in Great Britain are spending less on non-essentials because of the rising cost of living, so we can’t rely on household spending to drive growth. Business investment will ultimately help to reduce costs, drive sustainable levels of growth, and deliver prosperity for all.
But firms will continue to balance difficult pressures throughout the winter. Although inflationary pressures are beginning to fall, wage costs continue to rise, and interest rate rises have made demand precarious. The higher cost of capital is already taking its toll: the CBI Growth Indicator suggests that firms intend to cut back on capital expenditure over the next 12 months.
The best action we can take is to create an environment that unlocks business investment in service of sustainable growth and set out a vision for the UK on a global stage. To do this, it’s critical we give firms policy certainty and confidence to increase investment and capacity in our economy.
Our members have identified three areas of focus this autumn that can act as catalysts for unlocking business investment: delivering an internationally competitive business environment; mobilising the potential and productivity of the UK’s workforce; and realising the UK’s net zero growth opportunity. All of which address the Chancellor’s “Four E's” to unlock our economy: enterprise, education, employment and everywhere.
Summary of top recommendations
Make full expensing permanent to unlock business investment across the economy
The CBI’s analysis shows permanent full expensing could drive investment by 21% (£52.8bn p.a.) and boost GDP by 2% by 2030/31. When investment decisions can take years for many of the largest firms – beyond the current three-year window for this policy – they need certainty it will continue. Especially when the UK is in competition for that investment.
Freeze the England and Wales business rate multiplier for another year
While inflation remains significantly above target, not doing so would significantly add to the business tax burden and increase consumer prices.
Introduce a globally competitive R&D tax credits scheme
This can be done by bringing capital expenditure and social sciences within scope, like in Ireland and France.
Announce a two-year pilot to turn the Apprenticeship Levy into a ‘Skills Challenge Fund’
A CBI survey shows this could increase investment by levy payers by an additional 30% over the next 12 months.
Expand non-taxable health support for employees
Especially for mental health, kickstarted by making all Employee Assistance Programmes (EAPs) a fully tax-free benefit.
Deliver on commitments to provide a targeted SME subsidy for procuring occupational health services
Incentivising them to act with a suggested 80% relief on the cost of providing these services.
Cut the time it takes to build electricity transmission infrastructure and for obtaining connections to the grid
In our original submission, sent to the Treasury in early September, our solutions included replacing the first-come, first-served model in grid connection queues; publishing a new National Policy Statement for Energy Networks; and establishing a more strategic approach that clearly sets out the grid infrastructure needed across the country.
As these ideas were included in the PM’s net zero announcement, we’re now focusing our campaign on making good on his commitments, and our wider net zero asks.
Set out a response to the US Inflation Reduction Act (IRA), introducing a range of investment incentives
This includes announcing plans to establish a Net Zero Investment Plan; introducing a targeted ‘green’ super-deduction and bringing forward proposals for next steps to mitigate carbon leakage.