CBI director general Carolyn Fairbairn has responded in detail to the Chancellor’s Comprehensive Spending Review and Autumn Statement announced yesterday (25 November) to the House of Commons.
She said: “This was a good spending review for longer-term investment in the economy but there’s a sting in the tail in the size and scope of the Apprenticeship Levy. Businesses will be pleased to see the Chancellor staying the course on deficit reduction, his commitment to an industrial strategy, and the emphasis on nurturing a vibrant business community.
“Standouts include maintaining spending on infrastructure; ramping up housebuilding; support for energy-intensive sectors and for advanced manufacturing,” she added.
Ms Fairbairn continued: “Business recognises there are tough choices to be made in balancing the books, but many are reaching a tipping point, where the cumulative burden of the living wage, apprenticeship levy and business rates risk hurting competitiveness.
“The Apprenticeship Levy, set at 0.5%, is a significant extra payroll tax on business and by widening the net it will now catch more smaller firms. We welcome the creation of a levy board to give business a voice on how the money is spent and will work with the Government to ensure a focus on quality.
“Many firms will be disappointed to have been kept hanging on for a much-needed review of business rates until next year’s Budget.”
On housing, she said:“Building more affordable homes is critical to firms being able to recruit and retain talented employees across the country and will provide a shot in the arm to the construction sector.
“Schemes like Starter Homes, extensions to Help to Buy, and releasing more public sector land could bring us closer to building the 240,000 homes a year the UK sorely needs. However, a healthy and vibrant housing market requires a mix of tenures such as private rented properties, affordable rent as well as homeownership.”
On the apprenticeship levy, she said: “With the levy set at 0.5%, even those businesses most committed to training and development won't be able to recoup their outlay, and it looks like an additional payroll tax.”
Regarding business rates, Ms Fairbairn continued:“It’s disappointing to see the promised response to the Structural Review of Business Rates pushed back to the 2016 Budget. The current system is based on a decades-old model that no longer reflects economic conditions, so alleviating the burden cannot come soon enough.
“While extending the small business rate relief scheme for another year is positive news, business wants to see concrete steps taken to make the system simpler, fairer and more competitive to tackle the cumulative burden upon firms.”
BSRIA chief executive Julia Evans (pictured right) has also commented on the Chancellor’s statement. On the subject of housing she said: “It is heartening that the Chancellor is ranking housebuilding high on a national scale, even if some of this is imprecise and difficult to quantify. The key issue is the execution of such schemes.”
She continued: “BSRIA is encouraged that Ministers are to change planning rules to release land specifically for developing starter homes. And developers are to be offered cash from the government to construct starter homes and regenerate ‘brownfield’ land.”
Ms Evans added: “BSRIA welcomes the announcement by Treasury officials that the package represents ‘the largest programme of affordable housebuilding by a government since at least 1979 and the biggest ever programme of government building of homes for sale. Now all he has to do is deliver it.
“Today’s announcement could lead to thousands of new jobs and apprenticeships being created in the sector but we must, therefore, ensure that industry can indeed find the much-needed qualified and experienced construction employees to meet this demand. We must not let a labour shortage in this field impede progress.”
On the apprenticeship levy, she said: “A new apprentice levy of 0.5 per cent will be introduced for employers by 2020 which will raise £3bn a year to fund three million apprenticeships. However, for construction and building services, the priority must be delivering high quality apprenticeships, viewed positively by employers. And although we finally have clarity over the threshold of the apprenticeship levy, it will trouble corporate businesses who will have to pay what is, in essence, a payroll tax.
“It is important that the delivery of the levy doesn’t dent other types of vocational training, which could be better suited to some businesses in the industry. Otherwise this is simply another example of ‘robbing Peter to pay Paul’ on behalf of business that will not have the desired result.”
Meanwhile, the Heat Pump Association has welcomed the news that the government remains committed to RHI funding and that this will rise to £1.15bn in 2021. It was stressed, however, that this is not new money and in fact spending on the RHI will be less than originally forecast, so there remain some questions to be answered as to how the UK’s renewable heat 2020 target will be met.
HPA president, Mike Nankivell said: 'We had already learned that the RHI scheme would be reformed to deliver better value for money and we hope this signals that government may take on board some of the suggestions we, and others with interests in renewable heat technologies, have already made for future improvements to the scheme. We look forward to further constructive discussions between government and the renewable heat industry.”