Last week, the Chancellor delivered his Budget statement to the House of Commons, with the first fiscal event to take place on a Monday since 1962. In his address, Philip Hammond delivered a pro-enterprise speech both in tone and substance.
Responding, CBI Director-General, Carolyn Fairbairn, described the Budget as “rock-solid”, bringing more treats than tricks for business. Looking at the Budget in more detail, businesses will be pleased to see the increase of the Annual Investment Allowance, which was called for in the CBI’s Budget Submission, as this has the potential to kickstart business investment. Also announced was the introduction of a new Structural Building Allowance which sends a strong signal that the Chancellor understands the importance of increasing business investment, this was something that featured in CBI’s Catching the peloton report. The Structural Building Allowance will be particularly welcome, given the UK was the only country in the G7 that did not have an allowance for industrial buildings.
The delay to the introduction of IR35, which refers to off-payroll working through an intermediary, for the private sector until 2020 was also welcomed by firms. In the coming months, the CBI will work with the Treasury and HMRC to ensure the design and implementation of IR35 works for business. Further to this announcement, the Chancellor set out his intention for further reforms to the Apprenticeship Levy and reduced the cap for SMEs from 10% to 5%, meaning all three of the CBI’s reforms the CBI called for in its Budget submission were acted upon.
Despite these positives, there were also announcements made which were less pleasing for business, not least on digital taxation. Companies have been clear that a multilateral solution at the OECD level is needed to avoid damaging the UK’s competitiveness. The policy announced last week by the Chancellor risk undermining these efforts. In addition, the announcements on Business Rates, while welcome news for small business and the retail sector, did not go far enough, and will do little to stimulate greater business investment for larger firms. These are two areas the CBI will continue to engage with the Treasury on ahead of the Spending Review in 2019.