Local reaction to the Autumn Statement

By Nick Batten on 23 November, 2023

Yesterday (22nd November) the Chancellor of the Exchequer, Jeremy Hunt, presented his 2023 Autumn Statement, saying that while the government has taken difficult decisions to put the economy back on track and halve inflation, his “work is not done.”

The Chancellor’s priorities are to avoid big government spending and high tax, and instead cut taxes and “reward hard work.”

He announced policies on:

  • National Insurance – including cutting the rate of Class 1 NICs paid by employees from 12% to 10% from 6 January 2024 and cutting the main rate of Class 4 NICs, paid by the self-employed, from 9% to 8% from 6 April 2024.
  • “Full expensing” Capital Allowance made permanent – Having been introduced temporarily in the 2023 Spring Budget, this policy allows companies to deduct spending on new machinery and equipment from profits.
  • The National Living Wage will increase by more than one pound to £11.44 (from £10.42) per hour from 1 April 2024.
  • State pension is confirmed to rise by 8.5% from April 2024, worth almost an extra £900 a year.
  • The Investment Zones programme and freeport tax reliefs will be extended from Five years to 10 years, and a new £150 million Investment Opportunity Fund will support Investment Zones and Freeports to secure specific business investment opportunities.
  • Three new advanced manufacturing Investment Zones will be established in Greater Manchester, East Midlands, and West Midlands – together generating £3.4 billion of private investment and creating 65,000 high-quality jobs within the next decade.

Here’s a round-up of opinion from local and national experts:

Matt Griffith, Director of Policy at Business West

“We are naturally disappointed that our region was not more visible in the budget. We have not been chosen as one of the government’s investment zones – the second time we have lost out on this flagship government economic policy.

“Our region is struggling to be recognised at a national level despite the excellent credentials we have in life sciences, clean energy, aerospace and automotive. The risk is that low visibility and level of political ambition starts to undermine our key economic assets and investor sentiment.

“There is a pressing need for our region to start raising its profile and making the case for investment support to help transform the South West.”

Martin Gurney, Tax Partner at Haines Watts, Swindon  

“I always struggle when I am asked for Budget predictions.  This year I plumped for “it will be beige” – I wasn’t disappointed!

“From a common sense perspective, given that the backdrop to the Autumn Statement was high inflation, wage inflation, economic challenges and a looming General Election, in my view any significant tax cuts were more of an aspiration rather than an expectation.

“All of the changes announced really just serve to maintain the status quo.  Business rate relief was retained, and the 100% capital allowance claim for qualifying plant and machinery has been retained. I like this last relief – it stimulates activity (purchasing new equipment) and accelerates the allowances on this.  But let’s be clear – it is an acceleration of relief, not an additional relief.

“The self employed were also given a small helping hand (very small) with the abolition of Class 2 National Insurance – a saving of £3.45 a week.

“Employees were, perhaps, the greatest beneficiaries with a 2% cut in the main Class 1 National Insurance rate, which will go some way to easing inflationary and interest rate pressures.

“But, overall, I think it is fair to say that Mr Hunt has perhaps kept his political powder dry.  We have a Spring Budget which might, if one is sceptical, be a better bet for the announcement of more generous tax policies.  Did someone say there is a general election coming?”  

Michael Blaken, Accounts Director at accountancy and law firm Optimum Professional Services

“The Chancellor talked about growth measures to back British business and rewarding work, but there wasn’t a huge amount of substance behind it.

“Reducing employee National Insurance and raising the National Living Wage are good news for low income earners, but this will impact employers of those low earners, such as shops and pubs, who have to fund the wage increase.

“It is good news that the small business rates relief scheme remains in place, and businesses will welcome full expensing for investment being made permanent. However, there is not a great deal in the Autumn Statement for a business of our size.”

Jon White, Founder of RWB Auctions in Royal Wootton Bassett  

“It’s well known that businesses grow and contribute more to the economy when taxation is lower, so today’s announcements are welcome. 

“However, it’s a shame nothing has been mentioned in relation to the much-needed overhaul of business rates. High Streets across the UK continue to decline, due to the disparity between High Street and out-of-town business rates and the competitive advantage that online retailers have.

“If this thorny issue isn’t tackled soon, large retailers will continue to desert High Streets, which form the heart of many communities.” 

Dave Southby, a Financial Adviser based in North Wiltshire who is a partner with St James’ Place

“The overall economic outlook from the Office of Budget Responsibility (OBR) seems to be more conversative compared to the Spring statement. This to no doubt to reflect the Bank of England’s economic forecast of higher interest rates for longer.

“I welcome the change to N.I with the abolishment of Class 2 and the reduction in Class 1 and Class 4. This will simplify the tax system and give millions of people a tax cut.

“The Chancellor made comments around having ‘one pension pot for life’ and although this sounds like a good idea in theory, I fear in reality this is going to be hard to facilitate. This is going to make it very complicated for employers to administer on a monthly basis as they may have several different providers to pay. This also emphasises the importance of advice so employees understand the pros and cons of doing this.

“The triple-lock remains! This is a welcome announcement to many pensioners receiving their money but also to the millions who are set to receive State Pension in the near future.

“Universal Credit and minimum wage are to increase which will help relieve the financial pressures of inflation felt over the past 18 months.”

Rashik Parmar MBE, Chief Executive of BCS, The Chartered Institute for IT

“The government has said it is committed to staying at the forefront of new technology and is building on the £2.5 billion ten-year National Quantum Strategy announced earlier this year by publishing an ambitious set of quantum missions, including a mission to have accessible, UK-based quantum computers capable of running 1 trillion operations by 2035. Other missions focus on quantum networks, medical applications, navigation, and sensors for infrastructure.

“Creating the UK’s own quantum computing infrastructure is key to our future on the world stage. To get those productivity gains, quantum computing needs to be embedded across businesses and driven forward by many more highly skilled computing graduates and apprentices. 

“We need to teach quantum principles in schools and we need a new undergraduate degree for people who want to specialise in quantum computing. We also need quantum apprenticeships and retraining routes that focus on its application and implementation without the need for post-graduate degrees in mathematics and physics. 

“Just like with AI, it’s critical the UK doesn’t get left behind in this revolution in computing power. Otherwise our national security, research reputation and global competitiveness will all suffer. 

“Policy makers should see quantum computing as an essential part of the computing profession and expect its specialists to follow clear standards of ethics, inclusivity and accountability – that way we can bring the public with us on the journey.”

Ben Rhodes, CBI (Confederation of British Industry), South West Director

“With tough decisions to be made, the Chancellor was right to prioritise ‘game-changing’ interventions that will fire the economy.

“While the move on National Insurance will give hard-pressed households some much needed breathing room, making full capital expensing a permanent feature of the tax system can be transformational for accelerating growth and improving living standards in the long-term.

“Helping firms to unleash pent-up investment is critical to getting momentum into the economy. Making full expensing permanent will give firms the stability they need to press on with decisions on investment whilst keeping the UK at the top table internationally for investment incentives.”

Andy Chamberlain, Director of Policy at IPSE

“We’re pleased the Chancellor has recognised the vital contribution of the self-employed sector to the UK economy, backing this with a cut to Class 4 National Insurance.

“The abolition of Class 2 NI is a welcome simplification and will particularly benefit the self-employed on low incomes.

“Whilst it’s a welcome relief to feel there is some support on offer from government, the self-employed sector is still reeling from gaping gaps in support during the pandemic and the implementation of the off-payroll working rules, which have had a devastating impact on hundreds of thousands.”