The CBI responded to the Comprehensive Spending Review and the Autumn Statement, given by the Chancellor of the Exchequer to the House of Commons.
Carolyn Fairbairn, CBI Director-General, said:
“This was a good spending review for longer-term investment in the economy but there’s a sting in the tail in the size and scope of the Apprenticeship Levy.
“Businesses will be pleased to see the Chancellor staying the course on deficit reduction, his commitment to an industrial strategy, and the emphasis on nurturing a vibrant business community.
“Standouts include maintaining spending on infrastructure; ramping up housebuilding; support for energy-intensive sectors and for advanced manufacturing.
“Business recognises there are tough choices to be made in balancing the books, but many are reaching a tipping point, where the cumulative burden of the living wage, apprenticeship levy and business rates risk hurting competitiveness.
“The Apprenticeship Levy, set at 0.5%, is a significant extra payroll tax on business and by widening the net it will now catch more smaller firms. We welcome the creation of a levy board to give business a voice on how the money is spent and will work with the Government to ensure a focus on quality.
“Many firms will be disappointed to have been kept hanging on for a much-needed review of business rates until next year’s Budget.
“Firms will be reassured by the protection of the science budget, but the shift from grants to loans for Innovate UK could dampen bold and game changing innovation, particularly amongst smaller businesses.”
On infrastructure, Carolyn said:
“It’s good that the Government has increased capital spending and remains committed to road and rail investments, including the Trans-Pennine railway. Businesses will want to see promised projects breaking ground as early as possible in this Parliament to maintain momentum.”
On housing, Carolyn said:
“Building more affordable homes is critical to firms being able to recruit and retain talented employees across the country and will provide a shot in the arm to the construction sector.
“Schemes like Starter Homes, extensions to Help to Buy, and releasing more public sector land could bring us closer to building the 240,000 homes a year the UK sorely needs.
“However, a healthy and vibrant housing market requires a mix of tenures such as private rented properties, affordable rent as well as homeownership.”
On compensation for energy intensive industries, Carolyn said:
“Industry will welcome this support to help manage energy costs, enabling firms to compete on a more level playing field with their international peers. The devil will be in the detail of which sectors qualify for this much needed support.”
On industrial strategy and innovation, Carolyn said:
“Firms will be reassured by the protection of the science budget, the catapult network, the Advanced Propulsion Centre and the Aerospace Technology Institute, which underpin important productivity gains in key sectors. But we will need to scrutinise any shift from grants to loans for Innovate UK which could dampen bold and game changing innovation, particularly amongst smaller businesses.”
On the apprenticeship levy, Carolyn said:
“With the levy set at 0.5%, even those businesses most committed to training and development won’t be able to recoup their outlay, and it looks like an additional payroll tax.”
On business rates, Carolyn said:
“It’s disappointing to see the promised response to the Structural Review of Business Rates pushed back to the 2016 Budget. The current system is based on a decades-old model that no longer reflects economic conditions, so alleviating the burden cannot come soon enough.
“While extending the small business rate relief scheme for another year is positive news, business wants to see concrete steps taken to make the system simpler, fairer and more competitive to tackle the cumulative burden upon firms.”
On exports, Carolyn said:
“The UK’s export performance lags significantly behind our international peers, so we need a strong and focussed UKTI coupled with a cross-Government approach to supporting exports.
“Businesses will welcome the focus on protecting the sharp end of overseas support through our embassies, improving UKTI’s digital offering, and ensuring efficiency savings are found in Whitehall.”
On devolution, Carolyn said:
“Businesses will be pleased to see further details on the regional growth agenda, including new enterprise zones and the Local Growth Fund.
“It’s important for Government and local areas to engage with business and move as quickly as possible from planning to delivery.”
On public services reform, Carolyn said:
“Public services underpin productivity and prosperity. With the population ageing and expecting more from public services, extra investment must be matched by transformational reform, such as making more use of digital transactions, to have a sustainable impact.”
On further education, Carolyn said:
“Our colleges play an important role in helping young people and adults get on in life and work, so businesses will be buoyed by the better than expected news that the further education budget will be protected.”