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Jessica Fino 14 Feb 2017 01:05pm

Business groups reveal Spring Budget wishlists

British business groups have urged the chancellor to deliver a “pro-business” Budget next month, focusing on providing stability following the uncertainty caused by the Brexit vote

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Caption: Business groups have outlined their proposals ahead of the chancellor's statement.

With just under a month to go until the last ever Spring Budget, business groups have started to submit their wishlists to the chancellor Philip Hammond.

The Budget, which is taking place on 8 March, will be replaced by a Spring Statement next year. The Autumn Statement will be replaced by an Autumn Budget.

Here, business groups outline their proposals as Hammond prepares his speech next month.

The Federation of Small Businesses

The organisation has called for a “pro-business Budget” with measures aiming to boost jobs and long-term growth.

It said that the chancellor should use the Budget to show he backs British businesses to improve job creation and drive productivity across the nations and regions of the UK.

The average FSB employer will face £2,600 in additional employment costs from government policy in the 2017/2018 tax year, according to the organisation.

“The government’s approach to the self-employed will define just how pro-business it is. A statutory definition for this group is long overdue,” it said.

Mike Cherry, the FSB’s national chairman, said next month’s Budget will be a “critical moment for the government to show it is unashamedly pro-business” and said that the chancellor recognises that small businesses are the engines of job creation.

“Spiralling labour costs are now threatening their growth ambitions and hiring intentions,” he added.

“At Spring Budget 2017, our entrepreneurial culture is on the line. The government’s announcements on self-employment will be the litmus test for how pro-business it is going to be for the rest of this Parliament.”

As a result, the FSB has written to the chancellor with a set of proposals. Cherry said that the organisation seeks a statutory definition of self-employment and for changes to the social security system "so that it better reflects today's economy".

He also called on the government to ensure that Universal Credit is more responsive to income fluctuations, and recommended creating incentives to help the self-employed pay for their retirement.

“In short, we need more people to set themselves up in the business, not less. The risk these local business leaders take should be reflected in the tax system,” he added.

The Confederation of British Industry

The Confederation of British Industry (CBI) said that the government should prioritise stability in the Budget, focusing on education and skills to improve people’s life chances.

It called for action on supporting firms in a more challenging and uncertain economic environment, improving the attractiveness of the UK as a place to do business, and focusing on education and skills to boost regional growth and productivity.

Rain Newton-Smith, the CBI’s chief economist, said, “Prioritising stability will inject further confidence in the economy now, and help boost the country’s productivity and prosperity for the future.

“As uncertainty around the manner of our EU exit dampens investment and higher inflation erodes consumer spending growth, the government must show that it is serious about supporting companies to invest, to help our regions and nations prosper.”

The CBI added that businesses will be interested to see how the National Productivity Investment Fund announced last year will be spent.

They also welcome more information on reform to business rates and the government’s plans to increase educational attainment.

The CBI’s latest economic forecast predicted a softening in economic growth in 2017 and 2018 as business investment slows and rising inflation curbs households’ disposable incomes.

As a result, the business lobby group urged the chancellor to ensure business rates do not weigh on businesses' ability to grow and compete. It also called on Hammond to provide clarity in financial services taxation in an uncertain economic environment, improve the competitiveness of UK capital allowances, provide stability in pensions policy, support exports and investment through Air Passenger Duty and review incentives to improve employee health and wellbeing.

British Chambers of Commerce

The British Chambers of Commerce (BCC) also urged the chancellor to take action on delivering real reform to the business rates system.

It argued that, as it stands, the business rates system creates a number of “perverse incentives” for business location, property improvement, and plant and machinery investment.

The BCC wrote to Hammond urging him to abandon the fiscal neutrality principle in business rates reform, calling it an “unacceptable barrier to fundamental reform”.

It called on the chancellor to bring forward the switch from RPI to CPI to April 2017 instead of 2020, and urged him to remove all plant and machinery from the valuation of property for business rate purposes. The body also suggested that Hammond could drop proposals to restrict the ability of the Valuation Tribunal for England to order changes to business rates liabilities.

Adam Marshall, director general of the BCC, said, “The current rates system is broken, and despite attempts by successive governments to introduce marginal reforms, the fundamental unfairness of business rates remains.

“We’re calling for steps to be introduced which would help alleviate some of the excessive pressure put on businesses by rates. The policy of fiscal neutrality means there are winners and losers across the country from reforms, but limits the government’s scope to bring about fundamental change to the system. Excluding plant and machinery from valuations would remove a perverse incentive for investment, and businesses should be allowed to appeal valuations through a simpler and fairer process.

“Businesses from across the chamber network of all sizes, sectors and locations, lament the burden of this high up-front cost, which they are forced to pay before making even a penny of profit.”

Blick Rothenberg

The accountancy firm said that the Budget is expected to be “fairly uneventful”, in keeping with the last ever Autumn Statement.

The exact course of Britain's departure from the EU is still not clear, the firm said, which means that widespread tax changes are unlikely.

However, Nimesh Shah, partner, said corporate taxes could be reduced to 15% to make Britain more attractive to international businesses.

Blick Rothenberg also recommended re-introducing postponed accounting for import VAT, allowing business to off-set import VAT via their quarterly VAT returns rather than having to pay it at the point of importation and claim it back up to three months later.

According to the firm, this would allow the UK to compete “on an equal footing” with many other EU countries, such as the Netherlands and France, who adopted this treatment last year.


 
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