Responding to the Budget, Stephen Martin, Director General of the Institute of Directors, said:
“The ‘nothing to see here’ approach adopted by the Chancellor will only fly for so long. Business leaders will applaud the long-term focus on improving technical skills and investment in research and development, but the business community will have hoped for much more support in the immediate term, especially amid such economic and political uncertainty. The Business Rates reliefs, while welcome, look distinctly modest at first glance, and there was very little in the Budget to provide incentives for business to invest today when they are already putting projects on hold.
“In the context of a cumulative storm of higher inflation, the coming Apprenticeship Levy and increases in the Minimum Wage, it is clear that the coming year will be one in which business is expected to grit its teeth and tough it out. The Chancellor’s jokes may have been funnier than anybody expected, but it’ll be business leaders’ resilience that’ll be needed to ensure we’re still smiling in November.”
Additional analysis on the Budget on the economy, tax, skills, tech and infrastructure from policy experts at the Institute of Directors:
On Business Rates & National Insurance, Stephen Herring, Head of Taxation, said:
“We welcome the desire to review the Business Rates system more broadly – it is a 20th century system not fit for a 21st century economy. However, the transitional ‘relief fund’ looks distinctly modest at first glance, and ensuring the system isn’t overly bureaucratic will be crucial. There will still be businesses forced to decide between price increases or closure. The Chancellor may need to do yet more in November and additional work is needed from his colleagues to address the disastrous new appeals system.
“The Chancellor will take a lot of political pain, but he’s right to start down the road of creating a level playing-field for the differing taxation treatments of employees and the self-employed. There will be many contractors, people in traditionally self-employed occupations, and entrepreneurs who will pay more in National Insurance Contributions because of these changes but in a flexible modern economy this is a journey we were always going to have to embark on at some point, and they should not be taken in isolation but alongside the abolition of Class 2 NICs which he has chosen to continue. It is only a shame that the Chancellor has not embarked on a quid pro quo reduction in the NICs paid by employees and their employers.”
On the UK economy, James Sproule, Chief Economist, said:
“IoD members have consistently backed fiscal responsibility, and with debt standing at £1.7 trillion it is disappointing that this Government doesn’t seem to be focussed on balancing the budget. The hike in this year’s economic forecast is welcome, but the medium term is more subdued. If GDP growth is to hit 2% in 2020, private sector investment today will be crucial, so now is not the time to place extra hurdles in their path or further weight on their already burdened shoulders. The Chancellor could have hiked the Annual Investment Allowance to spur that desired investment when projects are already being put on hold.
“The Chancellor seemed to relish that the burden of taxation was falling so heavily on those ‘at the top’ but that so much revenue comes from so few should be alarming. Broadening the tax base should be a priority. Finally, it would have been preferable to have found the necessary monies for elderly care in the already generous support the Government gives to pensioners. Modern Government must learn how to effectively reallocate money between budgets in order for us to make the most of future opportunities and not always take the easier path of increasing taxation."
On investment in education and skills, Seamus Nevin, Head of Employment and Skills Policy, said:
“Businesses will welcome the announcement on T-levels, aimed at boosting technical education, as a sign of commitment from Government to work with them to tackle the skills gap. Last year nearly half a million roles could not be filled because of the shortage of technical skills in the UK so IoD members will see these measures as a positive step towards boosting the supply of ‘home-grown’ talent. Across the UK, there has been a long tail of underachievement in education. As we prepare to leave the European Union – with employers expecting further restrictions on access to foreign workers – improving our education and skills system needs to be front and centre of the Government’s industrial strategy. Retraining and life-long learning will be absolutely crucial to ensuring everybody has the chance, not just survive but to thrive, in a rapidly changing economy and the Government is right to commit the funds to investigating the best way to do this.
“An economy that works for everyone can only be developed if the Government prioritises resolving the skills mismatch. To that end, the focus on grammar and free schools, is an unnecessary distraction of Government's time and resources. Efforts would be better spent reducing class sizes and boosting the number of teachers in shortage subject areas, especially foreign languages, science and maths - subjects that will be key sources of jobs growth in a global trading post-Brexit Britain.”
On technology, Jamie Kerr, Head of Tech and Entrepreneurship Policy:
“UK tech businesses will welcome the announcement of money set aside for more research talent and cutting edge technologies like robotics and AI. They will also be pleased to see a reduction in the administrative burden of R&D tax credits. These measures will help shore up the R&D capacity of UK businesses and universities as we steer our way out of the EU. UK research institutions receive significant funding via EU framework programmes and they will look to the Chancellor to ensure these funding streams are not victims of the upcoming negotiations.
“The tech sector will also welcome a renewed push by the Chancellor to beef up the provision of technical skills, and business leaders will hope that the new qualifications boost the number of young people aiming for high growth sectors over the coming years. However, for many, a question mark still hovers over the skills pipeline in the short-term. Scaling businesses in growing sectors will want reassurances that they can still access the talent they need from abroad as more technical and STEM skills are developed in the UK’s schools and universities.”
On infrastructure, Dan Lewis, Senior Adviser on Infrastructure & Energy Policy, said:
“The Chancellor should be applauded for his moves to combat congestion on our roads, which costs the UK economy £8 billion a year – it may not be the ‘sexiest’ infrastructure, but it’s certainly one of the most important. A competition is the right way to boost innovative solutions and keep costs down. But we must be realistic about the challenge for our roads. The carriage maintenance backlog alone to repair potholes and other work will take many years and cost £12 billion. And the biggest issue about our roads, despite being our greatest infrastructure asset, is how little we know about them.
“Replacing the Levy Control Framework with new controls are long overdue. The National Audit Office reported that it was set to run £1 billion over budget to £8.6 billion by 2021.
“The North Sea Oil and Gas industry have worked hard the last 2 years to reduce production costs to $15 a barrel. Looking again at how to prolong the lifespan of these assets before the very high decommissioning costs start to kick in makes sense when we still have a budget deficit.
“Investing in 5G is premature, we would much rather see some help for cash-strapped mobile telecom companies who are struggling to fund the rollout of 4G. The UK ranks 54th in the world on 4G coverage with large digital deserts, which is no formula for a flourishing digital economy.”