The Autumn Statement – or first Labour Budget for 14 years – has heralded the idea that the economy should grow – a refreshing change from austerity and cuts to services. However, on closer inspection there are cuts – some 2% across Government Departments – and hikes in taxes for businesses.
The main points:
Companies to pay NI at 15% on salaries above £5,000 from April, up from 13.8% on salaries above £9,100, raising an additional £25bn a year – a big hit for all businesses and small firms and SMEs in particular.
Employment allowance – which allows smaller companies to reduce their NI liability – to increase from £5,000 to £10,500 – a help – especially for smaller operations.
Main rate of corporation tax, paid by businesses on taxable profits over £250,000, to stay at 25% until next election – some relief there.
5p cut in fuel duty on petrol and diesel brought in by the Conservatives, due to end in April 2025, kept for another year. Better news as fuel costs have rocketed in recent years.
Commitment to fund tunnelling work to take HS2 high-speed rail line to Euston station in central London. Good news for contractors and the supply chain.
Commitment to deliver upgrade to trans-Pennine rail line between York and Manchester, running via Leeds and Huddersfield. Good news for contractors and the supply chain and a boost for the north.
Vehicle Excise Duty paid by owners of all but the most efficient new petrol cars to double in their first year, to encourage shift to electric vehicles. The logistics’ sector are already on this one and company fleets have moved towards electric vehicles. But the death of petrol and diesel engines has been greatly exaggerated.
Tax on non-draught alcoholic drinks to increase by the higher RPI measure of inflation, but tax on draught drinks cut by 1.7%. Good news for pubs, clubs and bars.
Extra £22.6bn for day-to-day spending on the NHS in England, and a £3.1bn boost to budget for investment. Good news for suppliers.
£6.7bn allocated for education investment next year, with £1.4bn earmarked for rebuilding over 500 schools. Good news for contractors and the supply chain.
Defence spending to rise by £2.9bn next year. The war in Ukraine is terrible news – but wars are sadly good for business for contractors and suppliers to the Ministry of Defence.
Whether Rachel Reeves’ and Kier Starmer’s Labour Government can boost the economy of this country remains to be seen but this autumn more firms are continuing to struggle and many going to the wall. Any rises in taxes will push those in trouble closer to the edge with some shutting up shop and declaring themselves insolvent – and not paying their suppliers.
Harry Mottram
ICSM CREDIT
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