Autumn Statement 2023 – Chancellor Paints a Big Picture by Numbers
Chancellor Jeremy Hunt MP was in boisterous mood delivering the Autumn Statement. The jokes were rolling along, references to colleagues on his own benches came aplenty and the messages were for the masses and not the blessed few: National Insurance tax cuts to benefit half the country, the biggest businesses incentivised to invest and millions of self-employed to see simpler and lower taxes, too. Nothing came without a big number to underline the scale.
For entrepreneurs and small businesses, this is no bad thing. After all, what benefits the country and the economy is also positive for them: they are part of the big picture, too.
The Big Picture, Painted in Big Numbers
The Chancellor’s description of that big picture was a list of positive statements on where the UK finds itself today. This is, he assured us, the best place to “start, grow and list a company”; we have the third largest tech sector in the world – double the size of Germany – and the biggest life science sector in Europe. The UK is the eighth largest manufacturer in the world, too.
It’s a list that the Minister for Enterprise and Small Business, Kevin Hollinrake MP, would be proud of as he rattled off something very similar, in a highly competent display, to kick-off Global Entrepreneurship Week at HSBC Innovation Banking offices last week. Clearly, some Whitehall message briefings are sticking in the mind.
Today’s announcements were nearly all focussed at this big picture level. The lowering of the National Insurance main rate will lift take home pay for 27 million workers. Scrapping Class II and lowering Class IV contributions for the self-employed will cut costs and simply life for over two million. These are big numbers that target those who most need the help.
The message to big business was also written in big letters: INVEST. Full expensing, previously introduced with the caveat that it would be a temporary measure, is to be made permanent. For £1m invested, that means £250,000 off tax in the same year. That will cost the Treasury £11bn per year, the Chancellor informed us. That’s not a mean measure and something that both the IFS and the CPS have championed.
Want to build big? There will be a path for accelerated approvals for those that put forward big planning applications and fee rebates for authorities that don’t get to a decision on time. Good.
The Office for Budget Responsibility is betting that all of these measures will add up to a whopping 1% of GDP increase in investment – that’s a big number, even if it doesn’t sound like one!
Two big picture changes will have some small negatives for entrepreneurs and business owners. The rise in the minimum wage will take the UK to one of the highest levels in the developed world and small businesses in struggling areas like hospitality may find that hard to absorb. Similarly, the ability for workers to nominate their pension provider rather than having to use the workplace pension scheme put in place by their employer will mean more pensions having to be managed and that will make more work for those without the benefits of scale in their workforce.
Both schemes are good for the broader well-being of the economy and the workforce, however.
The Beauty of Small Details
Even the list of smaller, more targeted, interventions were rolled up to give a big number: 110 initiatives to “help grow the economy”, aiming to “reward effort and work”.
They include new investment zones in the East Midlands, West Midlands and Manchester, focussed on advanced manufacturing and a complimenting set of new apprenticeships in engineering and a concierge service for overseas companies looking to make significant direct investments in the UK. There was also £500m for new computing power for research, tax incentives for the creative and biotech sectors, two new space initiatives and £900m to help new green-tech industries.
Although not game changing in themselves, these small details do add up to a big positive for areas key to the UK’s near- and future-growth, estimated to bring in some £2bn of additional annual investment in areas where the UK is, or needs to be, world-class.
Perhaps the biggest impact of the smaller initiatives concerns R&D tax reliefs. The current system is going to be simplified with two existing parts being merged. Further changes will also come but this has been the subject of a good deal of debate and if the final form ends up to being anything like the model put forward by our allies at the Startup Coalition, they will be welcome indeed. R&D tax reliefs are a fantastic way of helping smaller companies invest but the system does require too much bureaucracy, partly as a reaction to a perennial concern about abuse of the system. The speech today promised a drop in the threshold for support in loss-making companies from 40% to 30%, which will help 5,000 of our most promising small businesses.
Close behind will be the extensions to business rate relief for many small high street businesses, particularly in the leisure and hospitality sectors.
Other, more specialist announcements targeting high-potential, research-led startups, had already been shared this week. Too complicated and niche to be in featured in the main speech, perhaps, they came in the publication of the Spin Out Review and a briefing on a new £3m support programme for investors in tech.
Both of these are extremely positive for UK entrepreneurs. The CFE put a good deal of effort in to hosting two roundtables to bring together voices that were struggling to be heard in the slightly acrimonious public debate on the issues and the final set of recommendations from the joint DSIT and HM Treasury seems to have excelled in finding a happy spot between both sides, sweetened further by £20m of new funding in the speech, today.
Details on the new Venture Capital Fellowship programme for mid-career tech investors is lighter, but it is explicit modelled on the well-regarded US Kauffman Fellows model and something we think is an excellent objective.
Further good news on investment included the extension of the VCT and EIS schemes until 2035.
More to Come
The Chancellor was keen to underline his knowledge of the UK small business scene, underling how he had run his own for fourteen years. With that experience to draw on this was, on balance, a good day for entrepreneurs even if there were few big new shiny things. But did it seem like enough?
If not, don’t worry. The list of consultations and further reviews published alongside the Statement today is as long as your arm. Many of these will take some time to review and we will share thoughts on any that when we have had time to consider them over a duty-thankfully-frozen pint.