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The Chancellor's Autumn Statement
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- The Chancellor of the Exchequer today outlines his plans for tax and spending in the Autumn Statement.
- Follow the announcements live and see local comment and analysis here and by following @yorkbusiness on Twitter.
- See The Press tomorrow for a breakdown of the announcements and how it will affect York, North and East Yorkshire.
Nigel Clemit, managing partner of York and Selby accountants JWPCreers, said further growth was needed in the economy for the Government's measures to really help businesses.
He said incentives for business to invest were all "fine" but economic growth was needed for them to have an impact.
"The local economic growth forecast has been reduced from the prediction in the budget. And there is little evidence the current economic woes will ease for quite some time.
"Businesses have got to make profits before they can take advantage of these incentives. Look at the way the economy is going. It's very difficult to see some of the businesses that we deal with in York and North Yorkshire doing anything else than struggle, never mind benefitting from a reduction in the corporation tax rate.
"I see quite a lot of businesses struggling to pay their staff just not getting the work in to service the salary bill and cover overhead costs."
He said the Government could help small businesses by doing anything to reduce costs.
"You can't underestimate the pressure that every increase in fuel duty puts on households and businesses in North Yorkshire. The rural environment is hit very hard by duty increases that can't be passed onto customers."
He said the Government ought to find a new way of raising tax and scrap fuel duty altogether.
"The cancellation is welcome but it is still hard to see why Government thinks this kind of tax is fair.
"Most businesses are travelling or using a vehicle to deliver services or goods to their client base.
"There could be a more imaginative way of raising revenue than fuel duty. Scrapping fuel duty and moving to a different form of taxation would help businesses and households," he said.
Road improvements to be made as part of a £5 billion infrastructure fund, include the £314 million project to upgrade the A1 to motorway standard between Leeming and Barton.
The current dual carriageway will be upgraded to a three lane road to create a continuous motorway standard route from Leeds to Newcastle and London to Newcastle.
It is expected to improve journey times between Leeming and Barton by 20 per cent and over 60 years is predicted to save around 100 lives and prevent around 650 serious casualties as well as helping speed up the time it takes to clear up traffic incidents, the Government has said.
During construction it is estimated at its peak to create up to 750 new jobs in the construction industry over the three year construction period.
Work is planned to start in 2013/14 with the scheme open for traffic in 2016/17.
THE increase in the Annual Investment Allowance for plant and machinery is great news for the rural economy in the North, the Country Land and Business Association (CLA) has said.
CLA North regional director, Dorothy Fairburn, said: “This means farmers will be able to claim 100 per cent capital allowances against their earnings on up to a quarter of a million pounds of equipment a year, for the two years from January 2013. This could kick-start investment in farm machinery, renewable energy projects and other diversified rural businesses.”
The allowance was increased ten-fold from £25,000 to £250,000.
But she said she was disappointed the Government continues to fail to recognise that many small rural businesses are not incorporated.
“The Chancellor’s reduction in the corporation tax rate to 21 per cent is of no use to a sole trader or partnership, the favoured business structures in the countryside.
“We welcome the introduction of the simpler system of cash-based accounting although the ceiling of £77,000 turnover means that it will be of little use. However, if the threshold were increased, it could be an excellent scheme and make a real difference to rural businesses.”
Miss Fairburn added while it was good news that newly completed properties would not have to pay empty rates for the first 18 months from October 2013, the Chancellor had done nothing to help the owners of existing empty business premises, despite the CLA and others making him aware of their plight.
She echoed concerns that broadband upgrades and £10 billion house building guarantees for towns and cities could increase the urban-rural divide.
“It is all very well to pour money into cities to give them state-of-the-art broadband but many rural areas still suffer from slow or no broadband.
“The £10billion support provided to the institutional sector to deliver new house building will not assist rural areas because it will focus on big projects not the small-scale developments needed in rural areas,” she said.
The Autumn Statement offered some cheer to farmers and country people but they had hoped for more, said Sean McCann, personal finance specialist at leading rural insurer, NFU Mutual.
He said: “With growth well below forecast figures, and Government borrowing increasing, rural businesses and families are going to come under more pressure as a result of the Chancellor’s new measures.
“While scrapping the planned 3p a litre fuel duty will help, reductions in the amount people can invest in pensions will restrict opportunities for farmers to save for their retirement. However, there is an opportunity before 2014 to make the most of tax efficient savings for retirement.
“There were a few nuggets buried in the statement. A temporary two-year increase in the annual investment allowance will help agribusinesses invert for the future, and the 1 per cent cut in Corporation Tax will benefit farm companies.
"The Inheritance Tax threshold will increase from 2015 – but only by 1 per cent - so the opportunity to pass on assets to the next generation free of tax is still being eroded by inflation.
"We had hoped there would be more to help rural businesses – but sadly extra investment for super fast Broadband and flood defences is being directed solely at urban areas."
Julian Sturdy, MP for York Outer, said: “The ultra-fast broadband announcement for York is great news for our city which will provide a real boost for inward investment as well as helping small and medium sized businesses to grow.
Alongside the expansion of super-fast broadband across North Yorkshire and York, this shows that the Government is providing real investment for our area on infrastructure that will make a real difference to people’s quality of life.
"I am also delighted this Government has taken further measures to help with the everyday cost of living by scrapping the January fuel duty increase altogether and further increasing the personal tax allowance next April.”
Mr Sturdy said he was also pleased that the Chancellor recognised his work on empty property rates in the Statement and the impact they have on businesses.
Speaking in the House of Commons to the Chancellor, Mr Sturdy said: “I congratulate my Right Honourable Friend on his statement today and thank him for the consideration he has given to our report on empty property rates.
"The move to give new build commercial properties and exemption from empty property rates will be a very welcome boost to the economy and will be much welcomed within the industry, but could I also ask the Chancellor keeps the wider issue of empty property rates on existing buildings under review.”
Culture Secretary, Maria Miller, said of York's bid for funding under the Super-Connected City Programme: “Fast broadband is essential for growth and the creation of jobs. We have made significant progress with our broadband programme over the last few months, cutting through EU red tape and that continues.
"York has produced ambitious and comprehensive plans, which will turn the city into a digital leader, and give the local economy a real boost. The new investment will help put the city at the centre of the digital stage, competing for jobs and investment and supporting Britain in the global race.”
Susie Cawood, head of York & North Yorkshire Chamber of Commerce, said: “The Chancellor has taken a number of very positive steps, despite being constrained by politics, budgets, and Whitehall inertia. Members will cheer his announcement of major new capital allowances to encourage investment by small and medium enterprises (SMEs), as well as his move to shift money from current spending towards the infrastructure needed for growth."
She said that she hoped businesses would see the increase in the annual investment allowance from £25,000 to £250,000 for the next two years, as a stronger incentive to dust off their investment plans and get moving.
"If they have the confidence to move ahead with investment, their productivity will improve, their suppliers will benefit which can only benefit the regional economic performance," she said.
She welcomed the announcement of a 25 per cent increase in funding for export agency UKTI and a new £1.5 billion export finance facility as well as talk of more local control over economic growth.
"The question is whether this proposed shift from central to local control will actually happen in practice, or whether it will be scuppered by Whitehall," she said.
"We look forward to seeing the details and will continue to work closely with local authorities, Local Enterprise Partnerships and others to build stronger places, stronger business support, and stronger exporters."
York’s Super-Connected City proposals include:
- A grant scheme that would provide 50 per cent of the cost of the provision of connection to the premises for businesses in outer York
- City centre wi-fi
- Public transport wi-fi
- Business park wi-fi coverage to York's ten major Business Parks, which currently accommodate 742 existing businesses.
- Connectivity to 80 care and foster homes, access to learning opportunities in schools via remote teaching and learning technologies; capability for closer working practices between York’s educational institutions; and an e-book service to local rural communities and primary schools which do not currently have access to a library.
- Telecare and Telehealth in an initial trial area of 300 households, York District Hospital and ten GP surgeries/medical centres; and access to super and ultrafast broadband for York’s 37 nursing and care homes.
- Free wi-fi through a neighbourhood hub in a pilot area to enable fast broadband access, which is affordable, and to provide dedicated training in computer skills.
The council’s bid was supported by York Economic Partnership, Leeds City Region LEP, York, North Yorkshire and East Riding LEP, York Clinical Commissioning Group, Visit York, Joseph Rowntree Foundation, Aviva and TransDev (Yorkshire Coastliner).
Today's announcement that York is to be awarded a share of £50 million from the Super-Connected Cities Programme fund will help accelerate York’s programme of work to become the most digitally connected city in Europe by 2015.
Coun James Alexander, leader of City of York Council, said: “This is an endorsement from Government for our broadband and city centre wi-fi infrastructure work and will accelerate York’s aim to become the most digitally connected city in Europe by 2015.
“We have worked hard over the last year to significantly up our game on digital infrastructure and have discussed this at length with ministers, whilst continuing to build relationships with private sector infrastructure providers; encouraging them to invest in York.
“Digital technology as a fast, reliable and secure infrastructure has become as important for businesses, residents and visitors as the traditional infrastructure of road and rail. This investment super-connected city investment will fill the gaps where private sector investment is not possible.
"Superconnected City investment from government coupled with planned private sector investment from a range of partners will boost York’s economic competitiveness, transform the delivery of public services across the city and enhance the quality of life for our residents.”
York regenerative medicine company, Tissue Regenix, has welcomed news that the Government will invest £600 million in Research Council infrastructure, and facilities for applied research and development (R&D).
Antony Odell, managing director of Tissue Regenix, said: “We welcome the Chancellor’s announcement of a further £600 million to support science and innovation.
"As the Chancellor made clear in a speech to the Royal Society last month regenerative medicine is now a priority area for funding and research, which is part of the Government’s wider plan for Life Sciences in attracting the world’s best companies and academics to the UK.
"Tissue Regenix has deep rooted links with the world class academics at the University of Leeds. We would support any initiative that supports their ability to drive forwards their research programme.”
The Prime Minister will launch the Life Sciences Strategy One Year On document later this month that will set out progress so far and the next steps to support the UK life sciences sector.
North Yorkshire County Council has warned that the Chancellor's Autumn Statement could mean a further £2.5 million in cuts.
In a joint statement council leader Coun John Weighell and chief executive Richard Flinton, said: “A four-year programme of savings totalling £69 million was approved by North Yorkshire County Council in 2010, as a result of the Government’s reduction in funding. That figure was amended earlier this year, as a result of further announcements and indications, to provide a further £22 million saving in 2014-15. It now appears from the Chancellor’s Autumn Statement today that the savings in 2014-15 will have to increase by a further £2.5 million.
“We will continue to do everything within our power to implement these savings with the least adverse impact on the people of North Yorkshire, but it is inevitable that the quality of service we offer will suffer.”
But the council welcomed the announcement that the A1 would be upgraded to motorway standard.
“The council has been lobbying for these essential improvements to the major strategic highway through North Yorkshire and the North East. We believe the upgrade is a key to the economic prosperity of North Yorkshire, and the closure of the road during the floods of this year has underlined the importance of major improvements. It is extremely gratifying that the Government has now responded with this announcement,” they said.
The Forum of Private Business has said today's Autumn Statement held many positives for small and medium-sized businesses.
It welcomed the ten-fold increase in the Annual Investment Allowance, a 25 per cent increase in the budget of UKTI to promote exporting, and the outright cancellation of January’s planned fuel duty rise, describing it as a helpful springboard for UK economic growth in 2013 and beyond.
Phil Orford, chief executive of the forum, said: “A 3p rise in January would have been nothing short of economic vandalism in the current climate. In fact it would have been hard to imagine a worse start to 2013 for the UK economy.
“No doubt the Chancellor will have heard the nation’s collective sigh of relief at the news January’s hike has not just been delayed, but abandoned altogether.
“Fuel prices have reached a cliff edge, and the Chancellor has acknowledged this with today’s announcement. He has also clearly heeded the overwhelming objections from small businesses that high fuel prices are hampering their own growth ambitions on a number of levels.
“The increase in the Annual Investment Allowance to £250,000 is welcome but a tacit admission that the decision to cut the same allowance to £25,000 this year was a wrong one. Given that UK businesses are currently sitting on £700 billion of cash reserves, it could be argued that the earlier actions of the Chancellor created a disincentive to invest through 2012, at a time when business needs confidence to create growth.
“Nevertheless, we welcome this increase and urge businesses to take advantage of it. There are big savings to be had here for firms who’ve been waiting for the right time to invest and upgrade equipment, and this kind of spending tends to wash right down the supply chain."
The Confederation of British Industry (CBI) has urged the Government now to deliver on announcements about infrastructure.
Andrew Palmer, CBI director Yorkshire & The Humber, said: “The CBI has been crying out for real action on infrastructure, investment and exports.
“£5 billion on near-term infrastructure, half a billion a year tax relief for small firms, and £1.5 billion extra export support should boost investment and create jobs.
“The Government now has everything to prove by delivering. Businesses need to see the Chancellor’s words translated into building sites on the ground.
“It is no surprise that after a difficult year the economic realities dictate that austerity and debt reduction will take longer.
“The Chancellor has stuck to his guns on deficit reduction - avoiding deeper cuts or more borrowing in order to retain international credibility.”
*Disappointing News* Govt is giving £120m to Leeds, Derby, Exeter, Sheffield and Ipswich for flood defences, but not York! #AutumnStatement— @jmalexander1982 05 December 2012
Leah Swain, chief officer of Rural Action Yorkshire, a charity which works with villages and smaller rural communities throughout North, West and South Yorkshire to help improve the quality of life of the people who live and work there, welcomed the decision to cancel the increase in fuel duty.
She said: “The impact of fuel costs in rural areas is disproportionate to urban and anything that can be done to alleviate this will be of benefit across Yorkshire.”
Julia Unwin, chief executive of anti-poverty think tank, the Joseph Rowntree Foundation (JRF), said the Government was giving with one hand, but taking away with the other.
She said: “Investment in infrastructure is welcome and increases in the income tax threshold and scrapping fuel duty rises will make life a little cheaper.
“But snipping at the safety net and reducing the value of benefits at the same time will increase poverty and hardship for the most vulnerable. We’re at risk of consigning the poorest to a decade of destitution.
“The government knows the distinction between ‘striver’ and ‘shirker’ is entirely false. People move on and off benefits: in the last two years, one in six economically active people have claimed jobseekers’ allowance (JSA). So reducing welfare hits people who are doing the right thing and working hard.
“We are aware the government needs to save money, but there is no such thing as a soft target in welfare,” she said.
We welcome the extra £600m for scientific research infrastructure to support UKs world class academic research #AutumnStatement— @Tissue_Regenix 05 December 2012
The British Property Federation (BPF) has welcomed the empty rates relief for new buildings.
All newly built commercial property completed between October 1, 2013 and September 30, 2016 will be free from empty property rates for the first 18 months, up to the state aids limit.
Liz Peace, chief executive of the BPF, said: “This is a welcome first step towards mitigating the damage being wrought by empty property rates and we commend the Chancellor for taking heed of the powerful body of evidence that we and other industry groups submitted to MPs and to Treasury over the Summer.
“The Government is rightly desperate to get Britain building again. Introducing a grace period for empty property rates for new development will remove a millstone from around neck of the property industry, and let it get on with what it does best – investing in our towns and cities, regenerating communities and building the offices, factories and shops in which we work.
“However, we urge ministers to look further at how this tax on business failure continues to act as a drag on economic growth.”
RT @hilarybennmp: More cuts for local government just announced when councils already face the biggest reductions in the public sector— @PressSteveH 05 December 2012
What did you think of the Autumn Statement? How will it affect you?
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Proposed 3p rise in fuel duty cancelled #autumnstatement— @PressSteveH 05 December 2012
Proposed 3p rise in fuel duty cancelled #autumnstatement— @yorkbusiness 05 December 2012
Autumn statement: sensible move to allocate more money for LEPs to bid for to construct housing and other local infrastructure— @WillmottDixon 05 December 2012
Good news about investment in UK roads infrastructure - particularly A1 - improving links between London and the North #autumnstatement— @AccelerisMC 05 December 2012
York has won their bid for funding from the Super Connected Cities 2 Fund #AS2012 #digitalinclusion— @bristoljames 05 December 2012
Osborne announces digital connectivity funds to York in Autumn Statement. The hard work paid off! Well done all involved! @CityofYork— @jmalexander1982 05 December 2012
Superfast broadband announced for York #autumnstatement— @yorkbusiness 05 December 2012
£5bn capital investment for infrastructure announced, with £1bn in roads, incl A1 between London and Newcastle #autumnstatement— @yorkbusiness 05 December 2012
Chancellor Confronts Country’s Economic Problems - as this blog http://t.co/OpOx3pZg explains. http://t.co/8yBP69rl— @JWPCreers_LLP 05 December 2012
*Twitter Exclusive* Just been tipped off about Chancellor's Autumn Statement - expecting good news for York from lobbying. Will update later— @jmalexander1982 05 December 2012
Will there be fair fuel pricing for rural areas in #autumnstatement? MP Anne McIntosh wants to see it: http://t.co/edfc3Z4i @yorkbusiness— @RuralYorkshire 05 December 2012
Find out how #York could benefit from @GOsborne_MP, Chancellor of the Exchequer’s Autumn Statement by following @yorkbusiness from 12.30— @CityofYork 05 December 2012
What will the Chancellor do for York and Yorkshire in his Autumn statement? Live coverage RK http://t.co/ulmZPRsg and at @yorkbusiness— @PressSteveH 05 December 2012
Fantastic view from Park Inn Hotel in York. Here to chat to TUC ahead of tmrw's Autumn Statement. http://t.co/gnp77CQU— @YorkPolRep 04 December 2012
Anne McIntosh, MP for Thirsk, Malton and Filey, has said in advance of today's Autumn Statement that she would continue to campaign for a fuel duty rebate for parts of her constituency.
"I shall be relaunching with renewed vigour, my campaign for a pilot fuel duty rebate for specific parts of Ryedale and Hambleton, which have the highest fuel prices in the country, particularly for diesel. The fact that it now costs over £70 to refuel a vehicle, with the need for 4x4 vehicles in the extreme conditions of North Yorkshire, emphasises how disadvantaged the private motorist is in rural constituencies like Thirsk, Malton and Filey," she said.