IoD calls for incentives for investment in skills, capital and net zero in Spring Budget
In its submission to Spring Budget 2023, the Institute of Directors has called on the Chancellor to raise growth and productivity by strengthening investment incentives for firms, in particular to address skills shortages, to increase fixed capital and to speed our net zero transition.
Specifically, the IoD has recommended:
- Tax credits for firms investing in skills shortage areas – this would overcome the market failure of staff being poached by competitors as soon as they are trained, and also encourage an all-economy solution to filling UK-wide skills shortage gaps.
- Permit sole traders to deduct the costs of training in new skills shortage areas – removing the restriction that sole trader training costs can only be deducted if they relate to current business areas, as long as the new training is in the list of national priority areas.
- Make the capital expenditure 130% super-deduction permanent – IoD data shows that, for those firms that rely on fixed capital, the super-deduction has had a measurable positive impact.
- Use corporation tax to incentivise net zero transition – companies who have achieved net zero would pay a lower corporation tax than those that have not, creating the step-change in behaviour that government seeks and, depending on the calibration, could be achieved at no cost to the Exchequer.
In the IoD’s submission to HM Treasury, Director General Jonathan Geldart said:
“It will take time for the memory of market instability following last year’s mini-budget to fade. Recent events have heightened the levels of political risk associated with doing business in the UK. While the relative calm since October is welcome, for our members and the wider business community, stability remains a basic hygiene factor for being able to plan with confidence. For the foreseeable future it will therefore remain important to demonstrate not only that the stock of government debt as a proportion of GDP is on a firm downward path, but also that there is sufficient headroom to deal with any future shocks to the economy without altering this downward trajectory.
“Looking forwards, we would like to see a credible medium-term plan to take us beyond the current macroeconomic difficulties on to a path of sustainable growth. We would also welcome a greater sense of partnership, with government and business understanding each other’s roles and working together to ensure the best possible climate for steady growth and investment.
“We welcome reports that the Chancellor wants to cut business taxes that are paid before a penny of profit has been earned. And, as we move to put the conditions in place for future growth, we suggest that the Budget focus on firm-level investment incentives in skills shortage areas, in fixed capital and in incentivising the net zero transition.”
The Institute of Director’s full submission to Spring Budget 2023 can be viewed here.