CEO’s Column – Louise Punter, Surrey Chambers
2nd November 2017
We stand at critical moment for the UK economy, as we begin to prepare for when the country formally leaves the European Union. That makes this autumn’s Budget more vital than most – as this is the moment when Government must set the foundations of our economy post-Brexit. We hope for bold action by the Chancellor – and additional borrowing if needed to deliver infrastructure, but we don’t want to see short-term giveaways to curry favour. The danger of obsessing over what we may or may not get out of the Brexit negotiations is that we lose focus on what needs to be strengthened at home to underpin everything else.
Our Budget Submission
Created by our network of Chambers, British Chambers of Commerce published our Budget submission, which outlines what we believe will help businesses and the economy to be better prepared for a changing relationship with the EU – by providing a much-needed boost to investment and productivity. The first step should be tackling the ever-higher up-front cost of doing business in the UK. Costs such as the National Living Wage, Apprenticeship Levy, Insurance Premium Tax and pensions auto-enrolment – to name but a few – are putting increasing pressure on firms and, taken together, dampen their ability to invest and recruit. The government has long banged the drum that lowering Corporation Tax is the solution to boosting business investment. The reality is that the burden of upfront costs and taxes that hit firms before they begin to make a profit hinders business growth and investment far more than the level of tax they’re asked to contribute once they’ve made a profit. We’re calling on the Chancellor to pause the Corporation Tax roadmap until after Brexit, and for the resulting resources to be ring-fenced to help ease the burden of upfront costs and taxes on growing businesses.
For example, the UK has the highest business property taxes in the developed world, and I am often urged by Surrey businesses to call for real reform to the archaic business rates system but our combined calls continue to go unanswered by government. The system penalises firms for investing in plant and machinery, and at this critical juncture, business investment should be encouraged by all means possible. One of our star local businesses, which contributes hugely to Surreys export figures has improved their facilities only to find that it just increases their business rates. What incentive is there to businesses to expand and grow?
Invest in infrastructure
To get the UK Brexit-ready we must also fix the fundamentals of the domestic business environment. The business community I represent constantly laments the shortcoming of the local infrastructure, which doesn’t deliver the quantity and quality of transport connections or housing needed in the right places. Too often infrastructure projects get kicked into the long grass, leaving our existing networks under pressure and at over capacity. The Chancellor must use this Budget to commit to seeing through the delivery of projects vital to our economic success. The green light for big rail plans, and bringing forward investment in the road network, will go a long way to increasing connectivity to markets, spurring job creation and boosting business confidence. More direct investment in house-building, too, would have a similar effect. So this budget cannot simply be an extension of the status quo. The government must be brave and rise above short-term electoral calculation to put our long-term success first. Locally we have hundreds of great companies, which would all do better given certainly and incentives to invest.