Chancellor Philip Hammond has delivered his first Autumn Statement today claiming that our economy needs to be “match fit” for the changes ahead. It’s the earliest opportunity he’s had to outline government spending priorities following the Brexit vote.
So what was included in his speech and how does it affect our country’s small businesses? Here’s a summary…
Productivity boost – funds for local enterprise partnerships
The Chancellor stated that economic growth in the UK “has been too concentrated in London and the south-east”, and added that we must drive up the productivity performance of our regional cities.
He announced funds for local enterprise partnerships (LEPs) between local authorities and businesses in every region of England. This included the allocation of £1.8bn from the Local Growth Fund to the English regions: £556m to Local Enterprise Partnerships in the North of England, £542m to the Midlands and East of England, and £683m to LEPs in the South West, South East and London.
HM Treasury also noted that the government has published a strategy setting out an overall approach to building the Northern Powerhouse through addressing the key barriers to productivity.
National living wage increase
Small businesses owners may feel the pinch of a rise in the national living wage. For workers aged 25 and over wages will rise from £7.20 and hour to £7.50 from April 2017. Apprentice wages will be raised from £3.40 per hour to £3.50. The government says that 4.3 million will be spent on helping small businesses understand the rules and putting stronger systems in place to make sure workers are paid the minimum.
Introduction of a new National Productivity Investment Fund
It’s claimed this will provide £23 billion of additional spending to raise productivity and includes transport, digital communications, research and development (R&D), and housing.
Funding for house building
There was good news for small and medium sized house builders. A £2.3bn housing infrastructure fund was announced as well as a further £1.4bn to deliver 40,000 additional affordable homes and relaxed restrictions on government grants to deliver a wider range of housing types.
Investment in faster broadband and 5G network trials – more than £1bn
Businesses have long been calling for greater investment into the digital economy. Today Philip Hammond announced that the government will back a digital infrastructure fund, which the Treasury expects will be matched by private sector investors. In addition to this the funding will support trials of 5G mobile communications. Hammond said, “My ambition is for the UK to be a world leader in 5G. That means a full-fibre network; a step-change in speed, security and reliability.”
He also announced that from April 2017, the government will also provide a new 100% business rates relief for new full-fibre infrastructure for a 5-year period.
Helping start-ups to grow
The Chancellor set out plans to inject £400 million into venture capital funds to release £1 billion of new funding for startups. The motivation for this is said to be to allow them to grow rather than be bought out by big businesses.
Restriction on tax-free employee benefits
Businesses that provide tax free perks such as gyms, health checks and free parking will be affected as these so-called “salary sacrifice” schemes will be restricted in future. However, a government consultation has already said that pension contributions, childcare and cycle-to-work schemes will not be affected by the changes. Cars could be heavily affected as nearly half of company cars are provided by businesses that offer a cash alternative.
Infrastructure spending to improve road and rail networks
This was announced as part of the National Productivity Investment Fund, this will cover:
- £1.1 billion to reduce congestion and upgrade local roads and public transport
- £220 million to tackle road safety and congestion on Highways England roads
- £27 million to develop an expressway connecting Oxford and Cambridge
There will also be a two-year 100% first year allowance for companies who install electric charge-points, coming in from today. This allows companies to deduct the cost of the charge-point from their pre-tax profits in that year.
Investment in Fintech
Half a million pounds will be provided for fintech specialists by The Department of International Trade and will also produce a “State of UK Fintech” report to guide investor decisions in the industry. Hammond said “I am taking a first step to tackle the longstanding problem of our fastest growing technology firms being snapped up by bigger companies rather than growing to scale.”
Fuel duty will be frozen for the seventh year in a row.