While it’s unlikely that George Osborne will be dressed as cheery St. Nick, that hasn’t stopped businesses and industry groups from sending him their wish-lists in time for the big day.
So, and in no particular order, here are a few things that businesses want to see this Wednesday:
1. Business rates
Unsurprisingly, SME and business organisations – the Confederation of British Industry (CBI) chiefly amongst them – want to see reform in this area to aid SME growth.
Writing to the chancellor, CBI’s director-general John Cridland said business rates should be limited to 2% next year, the same level as the inflation target.
“This would be a one off cost to the government of £140m,” Cridland said, and added that it would be “a small price to pay to take the pressure off business and stimulate investment”.
John Allen, president of the Federation of Small Businesses (FSB) also weighed in on this area, saying that March – with the end of business rate relief – could see 384,000 small businesses having to pay “rates they can ill afford”.
Allen also added that it is “essential” for the doubling of rates to continue, and called for improvements to the system for valuation, and a fundamental reform of the business rates system.
A key priority for the Chancellor should be to invest in improving our road infrastructure, and address bottlenecks in regional road networks
Either way, their luck could be in as Big Four firm EY predicts that the government will shift focus onto SME’s. The firms Item Club reckons that “radical reforms” such as completely exempting SMEs are unlikely, but said more frequent revaluations and increased use of reliefs were plausible options.
2. Highway to help
Roads and infrastructure were thrust into the limelight over the weekend, as plans for £15bn of investment in roads was revealed.
Roads, it seems, are a major bone of contention for a number of businesses, with KPMG’s UK chairman Simon Collins calling for a more “can do” approach when it comes to tackling congestion problems.
“Our clients tell us consistently that infrastructure is a major business concern, impeding access to markets and their ability to attract talent,” Collins said, before adding that the government needed to be rapid with infrastructure planning.
John Longworth, director general of the British Chamber of Commerce (BCC), said that infrastructure has too long “suffered due to piecemeal investment and constant changes to government policy”.
Longworth also added that it would be crucial for “all parties support the schemes identified in this plan, and commit to delivering them as soon as possible”. This is rightly an issue of concern, given the proximity – and uncertainty – surrounding the looming general election.
The FSB also jumped on the infrastructure bandwagon, telling the chancellor that further developments were crucial to maintain the UK’s competitive edge.
“A key priority for the chancellor should be to invest in improving our road infrastructure, and address bottlenecks in regional road networks, 82% of small firms rely on the road network to run their businesses.” the FSB said, while Allan added that regional connectivity was a major issue for northern cities with improvements needed to ensure “the region is to reach its full potential and challenge the economic prowess of London”.
3. Taxes and HMRC
Along with the “long-term economic plan” the other regular utterance from the coalition government has concerned raising income tax thresholds.
We should firstly ensure that both income tax and national insurance stay aligned rather than the huge divergence which has currently opened up
Bill Dodwell, head of tax policy at Deloitte UK, has previously pointed out that the rise in personal allowance by £500 – from £10,000 to £10,500 – will save an estimated £100 a year for lower rate tax payers, and £184 for higher rates.
There have been, however, incidents of one-upmanship between the coalition partners, with both the Conservatives and Liberal Democrats pledging a personal allowance increase to £12,500 should either be victorious in May.
EY’s Item club, asserts that there is “a degree of expectation about further announcements on personal taxation”. It warned that there would be little justification for this policy to continue, though, due largely to its ineffectiveness in assisting the low paid.
“We think that the chancellor will opt against making any significant changes in this area,” the club said, adding that Osborne would be more likely to hope that a combination of low inflation and recent stimulated pay “will be enough to push the ‘cost of living crisis’ down the list of voter worries”.
Tax simplication is again high on many businesses' agenda. The Association of Chartered Certified Accountants has called on the government to “stop tinkering” with the tax system, saying that stability is needed to increase confidence.
The organisation’s chief, Chas Roy-Chowdhury, bemoaned the UK’s “extremely complicated tax system” and said that “further tinkering” will add to the problem.
“We should firstly ensure that both income tax and national insurance stay aligned rather than the huge divergence which has currently opened up,” Roy-Chowdhury said.
Meanwhile, ICAEW has called for an end to HMRC budget cuts as its funding cannot go any lower without having a "major effect" on service standards. Recent mistakes, such as its recent blunder over millions of tax bills, have highlighted just how “fragile HMRC services are and we believe these should be urgently strengthened”.
Part two tomorrow