Policy Update and Budget Response 30th October 2024
Welcome to this week’s policy update. ?
As ever please do get in touch with me, [email protected], if you’d like to discuss the following, or other, business issues, put forward your views and/or provide real life examples that we can use in advocacy activity. ?
As usual we’ve listened to and begun to analyse the 2024 Budget live, as the Chancellor made her speech. We look forward to reading the detail, which can include important further information and clarification.
While we understand that money has to be found at this challenging time, with a need to invest in public services and address the cost of living challenges which lower and average earners in particular continue to experience, too much of the onus has been placed on businesses.
The increase in Employers’ National Insurance by 1.2 percentage points to 15% from April is a real concern and presents a number of challenges for businesses as well as for individuals. The effects of these are more far reaching than is immediately obvious.
Each employer will need to decide how they deal with that, depending on their own circumstances and affordability constraints. ?Many are working on tight margins already – and a move on Employers’ NI takes no account of an employers’ ability to pay.
While a rise won’t affect employee’s pay packets directly in the short term, there are indirect and longer term effects:
-?? ?Employers will, understandably, take the cost into account when considering any potential future pay awards, and be likely to moderate them downwards (and many will have to).
-?? ?This will also be a consideration in any decisions on whether or not to take on additional staff, whether to replace leavers, and indeed whether to let others go. It will also affect decisions on hours and over time.
-?? ?Employers may well be forced to put up prices, which while it doesn’t affect pay packets directly, does affect how far those packets will stretch.
-?? ?As well as the direct effect of price rises, such rises impact on inflation, which then feeds through to decisions on interest rates, again affecting the real value of pay.
As it that weren’t enough, additional costs to employers will also impact on investment decisions, and so on future growth, productivity and profitability – which affects both the taxes they pay to support public services and the money they have available to pay staff.
It’s good that the Chancellor has taken some steps to reduce the impact by reducing the threshold from ￡9,100 to ￡5,000 and increasing the employment allowance from ￡5k to ￡10,500. Apparently 865,000 businesses won’t pay Employers’ NI and more than 1m will pay the same or less than now. But the effect will still be significant.
The impacts highlighted above are exacerbated by the changes from April to the National Minimum Wage. The standard rate will rise by 6.7% to ￡12.21/hour from April 2025, with an even larger increase for 10-20 year olds of 16.3% to ￡10/hour as part of phased harmonisation.
It was positive to hear of planned investment in Cumbria, with support for a green hydrogen project in Barrow and mention of investment in infrastructure in the county. And it does appear that other areas will benefit significantly more.?
In terms of alcohol duty, the 1p reduction in price of a pint will be welcomed by the hospitality sector but this should be more than counteracted by other increases and in particular the effects of the National Minimum Wage and Employers’ NI.?
We welcome the announcements of investment in schools and further education, including to SEN students, which are important to businesses for future workforce. Also support getting more people off benefits and into work. If employers have the jobs for them to go to.
The planned investment in sectors such as life sciences and automotive is positive but this excludes many, and we remain concern as to how they’re to be supported.
The promised clarity on the way forward with Corporation Tax, as called for by British Chambers of Commerce and others, is welcome, although not any tax increases that may be included within that. And we do welcome the initial extension of measures such as full expensing.
The protections for agriculture and business property in the Capital Gains Tax announcements, which should, for example, protect many farmers, is initially welcome and we need now to consider this in more detail. Similarly we were relieved to see maintenance of the lifetime limit for business asset disposal relief.
On business rates, we’ll be looking carefully at the apparent protections for retail, hospitality and leisure to support our high streets from 2026/27 and welcome the removal of the cliff edge of the removal of the current 75% discount to business rates, due to expire in April 2025. This will be replaced by a discount of 40% up to a maximum discount of ￡110k. However this still means that many businesses will see their business rates nearly double (rather than quadruple). ?
Companies House has released its proposed timeline for the implementation of the Economic Crime and Corporate Transparency Act 2023. This timeline outlines the phased introduction of additional measures under the Act over the coming years. Note that Companies House will provide ample notice before any required actions must be taken. The timeline is subject to secondary legislation and will be monitored and adjusted as needed. We’ll obviously keep you up to date as we’re made aware but it’s also essential that organisations ensure their registered email addresses with Companies House are up to date (if applicable) and that these are regularly monitored for updates. You can read more here Changes to UK company law - Changes to UK company law. ?
The Employment Rights Bill, and the UK government’s Plan to Make Work Pay (MWP), will have a significant impact on businesses. The Bill was published in October with 28 changes, as well as other changes that will be taken forward outside the Bill under existing powers. The Next Steps to Make Work Pay?document, published alongside the Bill, outlines these and an indicative timetable. Next Steps to Make Work Pay - GOV.UK. ?
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The government has published an impact assessment?and four consultations:
?We’ll be sharing a survey soon to support our, and the wider British Chambers of Commerce (BCC) response so please do watch out for it. In the meantime you may wish to respond directly to the consultations above, and please do also share any views with me, [email protected].??
If you haven’t booked yet, don’t forget the Enterprising Cumbria's countywide Economic Summit on 3rd December at Keswick Pencil Factory, Keswick. A new Economic Strategy is being prepared and this event will provide a platform for our business community to ensure your needs are front and centre of the strategy and Enterprising Cumbria’s future activities. Details of keynote speakers coming soon. You can sign up here Cumbria Economic Summit Tickets, Keswick Pencil Factory, Keswick | TryBooking United Kingdom.?
The Department for Science, Innovation and Technology (DSIT) is currently conducting a survey on technology adoption across businesses. They aim to reach a sample of 10,000 businesses of all sizes and are seeking to distribute the survey as widely as possible. The survey takes less than 10 minutes to complete, and responses will help DSIT better understand how to support innovation in businesses and inform future policy decisions. You can complete the survey here UK innovation diffusion and adoption survey - GOV.UK.?
Strong industry-Government partnerships are key to ensuring the UK's visitor economy continues to thrive, according to a new report by the British Chambers of Commerce (BCC) in partnership with IHG Hotels & Resorts.?The report says that the visitor economy is critical to driving growth and job creation in the UK economy. In 2023, 38 million overseas visitors travelled to the UK, spending ￡31.1bn and that figure is forecast to increase to ￡32.5bn this year.?The Covid pandemic and the UK’s exit from the European Union reduced the pool of available workers especially in seasonal roles that are crucial to the visitor economy. The report says that addressing workforce shortages in the sector are ‘imperative for its recovery and growth’.?The report urges caution around the introduction of visitor levies and tourist taxes, warning that they risk being an ‘economic disincentive for the tourism industry’. It also calls on the government to reconsider the decision to scrap tax-free shopping for overseas visitors in 2020, adding that the consequence of not re-introducing a similar scheme ‘could lead to further damage to our international competitiveness as a global visitor destination.’??
To help grow the tourism, hospitality, events and attractions industries, the report makes a series of recommendations to policymakers. It calls on Government to: ?
? Reform apprenticeship funding in England to support more training opportunities by firms in the visitor economy?
? Reform business rates by reducing the multiplier for both small and standard rates?
? Reconsider the evidence around tax free shopping for visitors and the benefits it could have on local economies?
? Prioritise road connectivity to ports and rail terminals to help boost the visitor economy??
As Cumbria Chamber we’re obviously keen to see support for what is a key sector for Cumbria. The visitor economy sector also has wider benefits to our vibrant food & drink sector and other local products. Beyond this many businesses in the sector provide services valued by us as local residents and are important to attracting the more Cumbrians to stay in the county to work and people from elsewhere to move here to do so.?
You can read more here add link to our press release and the report?
The BCC has published the Chambers’ Quarter 3 2024 Trade Confidence Outlook, finding a dip in export performance with only 22% of firms reporting increased sales. ?You can read the full release here Click here ?
The Department for Business and Trade has launched the new Regulatory Partnership for Growth fund, to assist domestic and international regulators collaborate in removing non-tariff trade barriers. The fund's initial focus will be on reducing trade barriers with Brazil. You can read more here Regulatory Partnership for Growth fund.?
The European Commission has published an updated Q&A document on the Carbon Border Adjustment Mechanism offering additional advice to third country traders on embedded emissions. You can read the new guidance here Click here.?
The next BCC Trade Policy Committee meeting is scheduled for 26th November. Guest speakers from the government’s Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) team will provide an update on the new trade preferences taking effect on 15th December with seven other countries in the Asia-Pacific region. If you have any views or questions you’d like feeding in please let me know, [email protected].?
Invest 2035: the UK’s modern industrial strategy. The UK government’s Industrial Strategy green paper was published last week to tie in with the Investment Summit. You can read it here Invest 2035: the UK’s modern industrial strategy - GOV.UK. Now that the document has been published, the BCC team is seeking views and responses from the Chamber Network. So please let me have any views by Tuesday 12th November so that I can feed in, [email protected].?
The UK government has launched an expert-led Curriculum and Assessment Review for education across Key Stages 1 to 5.?A call for evidence is now open until 22nd November. To help inform Chambers’ response, BCC welcome your views on what is working in the curriculum and qualifications landscape, and what could be improved. The intention is to prioritise literacy, numeracy and digital skills, as well as improved careers guidance from primary schools. To feed into Chambers’ response, please let me have any views by Friday 15th November, [email protected]. You can read the call for evidence here: Curriculum and Assessment Review - Department for Education - Citizen Space.
Cumberland Council have a survey running to support ongoing improvements and decisions on the shape future bus routes. Your feedback on destinations, frequencies, and travel times is essential to help them better serve local communities – and obviously important to you if staff use buses for travel to work. You can complete the survey here Shape the future of Bus Services in Cumberland - Cumberland Council - Citizen Space
Suzanne Caldwell Managing Director