Amongst those interested parties are the UK’s various business groups, who are rarely shy about making their wishes public. In this blog, we examine the groups’ Spring Statement wish lists.
Time to act
The Confederation of British Industry (CBI) was the first of the business groups to come forward with a list of policies that it wants to see from the Chancellor.
The CBI has warned the Chancellor that if he does not act at this Spring Statement he will risk the UK economy drifting backwards to low growth. To prevent this, the business group has set out a range of policies, which it says are aimed at sparking growth via business investment.
Skills and energy
Concerns over labour and skills shortages figure heavily in the CBI’s proposals. The group says the current training model is failing and wants to see the Apprenticeship Levy turned into a Skills Challenge Fund. It claims this would deliver both employer flexibility and high-quality training.
It also wants to see the creation of an independent Council for Future Skills, which it says would combine business action, skills policies and immigration to deliver a workforce fit for the 21st Century.
In addition, the CBI says the government should tackle high energy prices by improving home energy efficiency through new grants for decarbonised heating systems.
Super deduction to stay
It also suggests the Chancellor makes the super deduction permanent to boost investment.
The super deduction allows companies investing in qualifying new plant and machinery to benefit from new first year capital allowances until 31 March 2023.
Under this measure a company can claim:
- a super-deduction providing allowances of 130% on most new plant and machinery investments that ordinarily qualify for 18% main rate writing down allowances
- a first-year allowance of 50% on certain new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances.
This relief is not available for unincorporated businesses.
The CBI says that announcing a permanent successor at Spring Statement could increase annual capital investment by 17% by 2026. That would equate to £40 billion a year boost to the UK economy, it adds.
The CBI has been joined in its call to make the super deduction by manufacturers’ organisation Make UK. The trade body says the super deduction, can be reformed as a longer-term scheme to bolster investment, and subsequently confidence, beyond the immediate future.
Delay the NIC increase
Make UK is also calling for Chancellor Sunak to delay the planned 1.25% rise in national insurance contributions (NICs).
It says the increase planned for April should be pushed back until the UK economy is in a stronger position.
Make UK warned the government that pressing ahead would risk firms slamming the brakes on recruitment and putting the economic recovery from the COVID-19 pandemic at risk.
According to a Make UK survey of almost 300 manufacturing firms, as many as three in five said the tax rise would have a moderate or significant impact on their hiring intentions. Almost three-quarters said they would pass on, or would be very likely to pass on, the rise in their costs to customers in the form of higher prices for their products and services.
Make UK is one of the many voices that have called on the Chancellor to reverse the government’s planned increase in NICs. Yet, the Prime Minister and Chancellor have jointly ruled this out.
Keeping your clients informed
We will find out whether any of these proposals have found favour with Chancellor Sunak on 23 March 2022. Keep your clients up to date with our detailed Spring Summary, available in a range of formats including printed copies, PDFs and flipbooks.