The Institute of Directors has urged the Chancellor to issue Brexit planning vouchers for businesses in the upcoming Budget, as a new survey reveals directors’ confidence in the economy has fallen steadily over the past six months, with the UK’s uncertain trading status with the EU becoming the leading concern for the first time in 2018. Help to prepare for leaving the EU was the top ask from directors, with a majority calling on Philip Hammond to make it the priority in his Budget statement at the end of November.
Under the IoD’s proposed scheme, small and medium-sized businesses could submit online applications for immediately redeemable vouchers to purchase legal and professional advice in order to be as prepared as possible for Brexit, whatever the outcome of negotiations. The scheme would be in place for the duration of any transition or adjustment period.
Over half of IoD members say they would be likely to take advantage of financial support to help with their preparations, and voucher systems have precedent in the Netherlands and Ireland. A grant of between £2000 and £3000 based on the InterTrade Ireland and Enterprise Ireland rebates could be spent on Brexit-related advisory services from approved suppliers.
With the survey also showing business leaders’ investment outlook at its lowest point in over a year, the IoD also used its Budget submission to call for the Chancellor to drive productivity growth through investment incentives and skills initiatives, alongside broader support for business costs.
Stephen Martin, Director General of the Institute of Directors, said:
“A Brexit voucher system would help smooth over the inevitably difficult adjustment period firms will face over the coming months and years. More government guidance and advice would be welcome, but for smaller firms in particular, the need is for help to work out their individual exposure to changes that come with Brexit, and the specific measures they can take to adjust.
“The Budget must also pull out the stops to get investment, which has been stubbornly weak over the past two years, up and running again. While business confidence undoubtedly takes a cue from the negotiations, we could still make a tangible difference by revamping capital allowances.
“But with so much of the political gaze focused on Brussels, the Chancellor must find the far-sightedness to look beyond Brexit. The UK’s poor productivity growth is not helped by Brexit uncertainty, but it began well before the referendum. Skills provision, business support, and infrastructure all require thorough reform, and we must not wait to grasp these nettles.”
Further IoD Budget submission proposals:
- Create a new Enhanced Capital Allowance for ‘best practice’ technologies such as data analytics and cloud computing to support productivity growth in SMEs
- Extend and simply existing Capital Allowances to drive business investment
- Develop a more formalised national business support framework to provide better support to SMEs
- Reform and widen the Apprenticeship Levy to help develop a world class training system
- Remove the Immigration Skills Charge to reduce barriers to skilled migration from the rest of the world
- Accelerate digital and physical infrastructure projects to drive connectivity and international competitiveness
- Provide additional business rates relief to reduce the burden on SMEs
- Commit to building a competitive, efficient and fair corporate tax system.
Full survey results:
748 respondents, conducted between 5-21 September 2018
If the Government were to provide any financial support to help organisations prepare for Brexit (e.g. vouchers to obtain professional advice or making this tax deductible), how likely would you or your organisation be to take advantage of this?
Not very likely
Not likely at all
N/A - I don't expect Brexit to impact my organisation at all
Which of the following policy areas should the Chancellor prioritise in the Autumn 2018 Budget?
Preparing businesses for Brexit
Skills & training
Business investment incentives
Lower business taxes
Business rates relief
Other (please specify)
Which of the following factors, if any, are having a negative impact on your organisation?
Uncertain trading status with the EU
UK economic conditions
Skills shortages/employee skills gaps
Compliance with Government regulation
Global economic conditions
Difficulty or delays obtaining payment from customers
Cost of energy
Access to, or cost of, finance
Other (please specify)
None of the above
Don’t know/Not applicable