Autumn Statement provides welcome action on late payments – business industry reaction

23rd November 2023

Chancellor Jeremy Hunt has announced his Autumn Statement. The Chancellor began his speech by saying he had more than 100 measures to incentivise and support businesses in what he described as the ‘biggest business tax cut in modern British history.

Responding to the Autumn Statement, Tina McKenzie, Policy Chair at the Federation of Small Businesses (FSB), said “Jeremy Hunt has today taken very welcome action on late payments, small businesses’ rates, and self-employed taxation. Small businesses – and the 16 million people who work for them – are the route to future growth that will raise living standards across the whole country.

“The Chancellor and his Treasury team deserve credit for driving pro-small business change and for listening to and working closely with FSB and its small business members to address the real concerns of businesses, and acting to help build future prosperity.

“The Chancellor is right to have condemned from the despatch box the scourge of late payment practices. Driving out the worst payers from Government contracts and increasing the reputational risk faced by those large corporates who use their small suppliers as a form of free credit is not only the right thing to do to lessen the absolute stress and strain so many business owners face – it is also the way to increase the amount of working capital small businesses can put to good use building up their businesses and investing in the future.”

“This is re:al leadership on this issue and we look forward to continuing to work with the Government, including the Business Secretary, to drive out bad payment practices.” 

“Business rates are one of the absolute worst taxes faced by small firms. Size matters when it comes to rates, and the Chancellor is absolutely right to have concentrated his firepower on helping the smallest firms at the heart of so many communities.”

“Thousands of pubs, cafés and small shops in high streets across England will be pleased today with the bold, measured and targeted support from the Chancellor to help them through troubled times and build towards growth.”

“FSB’s teams in the other UK nations will now be pressing their relevant devolved governments and decision-makers to use any consequential funding to extend similar support to these hard-pressed sectors in their own economies.”

“Meanwhile, by acting to help small businesses with premises through freezing the small business multiplier, the Government has prevented an inflation-linked hike for many of those in the supply chain and other sectors too.”

“This will also help to make the rise in the National Living Wage more affordable. FSB will work with the Chancellor and the Treasury to take stock of what firms need before the rise comes in.”

Flora Barnes, Corporation Tax Director at RSM said “Businesses want and need stability, and with the uncertainty of a general election just 10 months away, the prospect of committing themselves to any one of the 110, what he terms as, growth incentives, might be the last thing businesses want to explore before knowing what the policy landscape will look like beyond the general election. Most of the 110 proposals appear either too niche or too small to stimulate a change in approach. The headline policy of making permanent the fixed asset “full expensing” will benefit those businesses that have a long-term investment cycle – but there is a question mark over whether those businesses will feel confident investing with a general election on the horizon.”

“Whilst the 10% increase to the national living wage is good news for employees, it is less good for employers at a time when the burden on business is significant. While the cut to employee national insurance rate benefits workers, there was no corresponding cut to employer national insurance. The cost of the pandemic, energy cost hikes and the continuing inflationary and interest rate pressures being felt, have the potential to hamper business growth.”

Jonathan Andrew, CEO of Bibby Financial Services said “We welcome the permanent adoption of 100 per cent full expensing on qualifying capital spending. Particularly given the current turbulent market conditions, this will give small and medium sized enterprises (SMEs) a massive confidence boost and underpin their resilience. It presents an opportunity for SMEs to do something different to stay ahead of the competition, whether by investing in cutting edge equipment that improves productivity or by pivoting their business offering. ”

“In our most recent research among SMEs, 65% of respondents told us they would like to see the next government implement tax incentives to support them. Today’s announcement is a welcome indication that politicians are responding to their needs.” 

Dr. Roger Barker, Director of Policy at the Institute of Directors, said “This Autumn Statement was all about making full expensing permanent. This measure represents a significant reduction in the overall burden of business taxation, and is to be welcomed. According to our members, full expensing is already exerting a positive impact on investment decision making. Of firms with capital budgets above £1m, nearly a quarter have told us that they have altered their investment plans as a direct result of the policy. We had been calling on Government to make this policy permanent and are therefore delighted that the Chancellor has listened.”

“We would like to have seen more substantive measures to address the problem of skills shortages, which continue to be a problem for our members. There was also little aimed at underpinning the business transition to net zero. However, planning and pensions reform, and an improved focus on foreign direct investment, will benefit the longer-term prospects of the UK economy.”

Suren Thiru, Economics Director at ICAEW, responded to the Chancellor’s Autumn Statement said “The Chancellor’s focus on helping to grow the economy is the right move given that the OBR’s latest forecasts paint a bleaker picture of the UK’s near-term growth prospects.”

“The cut in national insurance will only make a small dent in the squeeze on people’s incomes given that many are being dragged into higher tax bands by the freeze on thresholds. Making the full expensing investment incentive permanent will help turbo-charge investment and productivity by giving companies the confidence and longer-term certainty needed to get key projects off the ground.”

“Action on skills, business rates and late payments will also help businesses that continue to face a significant squeeze on their finances and ability to grow.”

“The acid test of these myriad of supply side measures will ultimately be whether they are able to meaningfully increase the UK’s growth potential, otherwise we will remain more exposed to future economic shocks and living standards will remain constrained.”