Chancellor George Osborne's Autumn Statement: The countdown begins...

It's that time again when businesses throughout the region and further afield wait with baited breath for Chancellor George Osborne's Autumn Statement

Stefan Rousseau/PA Wire Chancellor George Osborne
Chancellor George Osborne

It's that time again when businesses throughout the region and further afield wait with baited breath for Chancellor George Osborne’s Autumn Statement.

Last time round, a good few of his announcements – the cancellation of a planned fuel duty rise and big interventions in the housing market, for example – had such an impact, some commentators spoke of “mini budget” being put in place.

So will today’s news, as some have suggested, represent a bit of a breather for the man in charge of a rapidly changing economy?

As far as business is concerned, the early indications are to the contrary.

For a start, the Chancellor is expected to confirm that rate rises will be limited to 2% instead of being linked to inflation, after strong lobbying from various organisations.

The rates were set to rise by 3.2% next year, based on September’s retail prices inflation rate, so new thinking on the matter has been welcomed by a number of industry bodies – but not without some residual concern.

John Longworth, director general of the British Chambers of Commerce, said: “It is heartening that the Chancellor appears to be listening to business, and is planning to limit the damage caused by relentless business rates increases.

“But a tax rise is still a tax rise. Although a cap on rates would spare businesses some £300 million in tax hikes, and reliefs help many of the smallest firms, companies of all sizes will still be paying hundreds of millions more in rates to the Exchequer next year than the £27 billion they are expected to pay in this year.”

“The business rates system is still iniquitous, still broken, and still in need of fundamental reform.

“Businesses in Britain still pay far more in property taxes than their counterparts in countries like Germany and France – which undercuts the Government’s stated aim of maximum tax competitiveness. A cap on rate rises is better than nothing, but not nearly good enough.”

Steve Radley, director of policy at EEF, the manufacturers’ organisation, said: “Action on business rates, which are a fixed cost regardless of trading conditions, will help ease the pressure on margins.

“But for industry, the top priority must be addressing energy costs that are racing ahead of its competitors abroad.”

On that front, Prime Minister David Cameron has crushed speculation the Government is cooking up plans to ask the Big Six energy suppliers to commit to pay freezes, rather than wait for them to be imposed.

Some commentators have therefore suggested the obvious move is to remove the Energy Company Obligation (ECO), which adds £53 a year to bills.

The EEF, meanwhile, has called for Osborne to extend all the measures in the current Energy Intensive Industry Package to 2020; to freeze and reduce the carbon price floor on a rolling basis; and freeze planned increases in the climate change levy.

As far as tax is concerned, business leaders have been pushing to cut the top rate of income tax from 45% to 40% – an unlikely outcome, although some believe the Chancellor could give into another demand of reducing capital gains tax, currently at 28%, as a way of encouraging entrepreneurs.

More likely is help for small firms, perhaps through further National Insurance reductions and rebates and there have also been calls for a VAT cut on food and accommodation for tourists.

The EEF has also called for a moratorium on new legislation and a commitment not to introduce any more regulation before 2015 outside the Queen’s Speech.

Meanwhile, financial experts have been speculating about the nitty gritty of today’s announcement, with Deloitte, for example, anticipating news on everything from tax simplification to offshore employment intermediaries.

Osborne is also expected to recommit to the Patent Box incentive for innovation, despite EU questions about its impact on tax competition.

Asked this week if he wanted the Autumn Statement to give voters a clear view of what the public finances would be like over the next five years if he remained in Downing Street, the Prime Minister said: “I do want to do that and I will do that and the Chancellor will do that in this Autumn Statement by saying we have a long-term plan.”

He added: “Be very clear: this Autumn Statement is about the next steps in a long-term plan to turn our country round.”

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