Trade Association Update: November 2021

As the dust settles on Budget week and everyone from families to pensioners muses on what it means for them, it’s fair to say that the glass is definitely half full for business – although the wait goes on for the comprehensive business rates reform we have long been thirsting for.

First and foremost, the Chancellor’s statement delivered plenty of reasons to be optimistic. GDP growth predictions have again been revised upward, with consumer and Government spending now expected to push growth to 6.5% this year. The feared post-COVID unemployment spike has been revised downwards, while public borrowing and debt are lower than expected too. In economic terms, scarring from the pandemic is no longer expected to be as bad as initial predictions had warned.

And in unveiling his Budget, the Chancellor gave a clear signal that Government is willing to listen to business – something I know will be welcomed by firms across the UK.

Businesses have long seen rates reform as a key enabler of both an accelerated recovery and longer-term growth. And firms got a taste of what they wanted, as the Chancellor made real strides towards making the system more palatable, for the shorter-term at least.

The change from five-yearly to three-yearly revaluations, and freezing the business rates multiplier from increases with inflation, will both be welcomed. Extended support for firms in the beleaguered retail, hospitality and leisure sectors and new measures to help businesses advance their decarbonisation ambitions are significant positives too.

But while these are all steps in the right direction, the truth is they don’t shift the needle far enough.

The need remains for a more wholesale reform which further reduces the burden for businesses. This will be crucial to encourage and reward the levels of private sector investment which the UK needs to drive the economy forward.

The Chancellor also made valuable pledges on innovation and skills which can unlock new opportunities in the UK economy.

On innovation, the commitment to reach £22billion in public investment – albeit with the timescales pushed to the right – is good news for business, as is a modernisation of R&D tax credits in line with CBI calls to include data and cloud computing costs.

And on skills, businesses will welcome the pledge to quadruple places on Skills Bootcamps as a faster, more agile method of training, particularly in areas of shortage. Further funding for the expansion of T-levels can provide new pathways from education to work and help iron out wrinkles in the UK’s skills landscape.

These commitments show that the government has listened and is willing to act in the interests of UK business.

Yet for all of the positives, there remains a sense of missed opportunity. A view that bolder policies to stimulate investment – both domestic and overseas – could have accelerated our recovery and set a stronger trajectory for growth. Instead, businesses remain locked in a high tax, low productivity economy with concerns about inflation.

The fight for business rates reform is not over. Progress has been made, but a wholesale rethink is still needed to free enterprise from the financial shackles which so often stymy companies’ investment ambitions.

We will continue calls for an extension of the super-deduction beyond 2023. To finish the job of turbocharging investment, the government should commit to full expensing for capital expenditure, building confidence to invest for those with longer-investment cycles.   

And while strategy announcements around decarbonisation, delivered ahead of the Budget, outlined the pathway to net zero, the overall scale of public investment falls short of international competitors. We must not let the UK fall behind on this crucial issue.   

Joint Budget and CSR 2021

It was the second Budget of 2021 and the first multi-year Spending Review since 2015. Set in a post-Brexit environment and against stronger economic recovery than expected, this joint Budget and CSR was planned to be forward looking and optimistic. One of the first real opportunities for the government to start delivering on its manifesto commitments and its Plan for Growth. But the reality, was somewhat mixed for business.

While there were some definite wins, there was also significant missed opportunity.

When looking at the Budget, it’s hard to pinpoint many policies that will really stimulate the needed investment revolution both domestically and for FDI. As noted by the CBI’s Director-General, Tony Danker “This Budget alone won’t seize the moment and transform the UK economy for a post-Brexit post-COVID world. Businesses remain in a high tax, low productivity economy with concerns about inflation.”

So while the Budget and spending allocations for governmental departments can be seen as taking things in the right direction, they are not the final destination in creating a long-term high growth, high productivity and investment-driven UK.

To read the CBI’s full budget breakdown click here and read our full joint Budget and CSR 2021 submission here.

Read the CBI's influence on the Budget and key policy announcements within each theme:

• Decarbonisation
• International trade
• Regional growth
• Innovation and digital
• Tax
• Business Rates Review
• People and skills
• Health

Latest Policy Briefings

Policy briefing: Brexit and EU negotiations

Brussels update: November

Useful resources

Both these hubs are accessible on our public site, so do feel free to signpost them to your members:

• The CBI's Coronavirus Hub has all the information regarding COVID-19, including advice, guidance, and what your business can do to help.
• The CBI's UK Transition Hub has the most up to date developments regarding the UK-EU Trade and Cooperation Agreement (TCA) and provides guidance on specific issues.