Chancellor of the Exchequer George Osborne will deliver his Autumn Statement, previously the pre-Budget report under the Labour government, to the House of Commons at 12.30 GMT.
The Statement will provide opportunity to flag future tax and spending strategies, as well as organise UK finances.
Critics have predicted that the Office for Budget Responsibility figures will reveal failure to meet borrowing forecasts, partly a result of lower-than-expected tax revenues.
Not to mentions that Labour has blasted the chancellor for failing to keep his 2010 general election promise to remove the deficit.
Danny Alexander, Lib Dem Treasury Chief Secretary said yesterday that “several tens of billions” more reserves were needed to remove the deficit by 2017/18.
The probable content of the Statement affecting manufacturing is already in the public domain.
The Treasury also revealed it would guarantee £500m of bank lending to small and medium-sized businesses and guaranteed £400m to extend a funding scheme for SMEs.
Government has already announced funding for more than 1,400 flood defence projects worth £2.3bn to protect 300,000 homes, said to help prevent £30bn of damage in locations most at risk.
This news has been welcomed by the Institution of Mechanical Engineers. Dr Colin Brown, director of engineering said: “This announcement is welcome news, but it’s important to note that this is not new money and that these projects are not a panacea to UK flood problems.
“Extreme weather events are likely to occur more frequently in the future which together with rising sea-levels, means the threat of flooding to UK infrastructure is higher than ever.
“In addition to spending to protect existing infrastructure it is vital that the Government introduce tougher regulation that demands all new and existing critical infrastructure are engineered to standards that can withstand the anticipated extreme weather events and sea level rises.
“Companies, organisations and private land owners cannot solely rely on Government spending tax payers’ money to protect their assets.
“The flood prevention plans announced today do not mean we will not face flood problems again, and it is unlikely that society will be prepared to bear the cost of a fully resilient country.
“There needs to be an honest dialogue with the public that future-proofing our country against heavy rainfall, increased storms, rising sea-levels and higher temperatures, comes with substantial associated up-front costs. In some cases they may wish not to pay this, but instead accept periods of reduced service from infrastructure during periods of weather or sea-level related disruption.”
Additionally, a tunnel is set to be dug to manage congestion of the main road past Stonehenge. The 1.8-mile (2.9km) tunnel is part of a £2bn plan to make the A303 a dual carriageway.
Business rates are not scheduled to be reviewed in time for the Statement, and instead will be reported in the 2016 Budget, despite calls for a reassessment of the 400-year-old taxation system form businesses.
12.36 – George Osbourne: “I can now present Britain as one of the fastest growing of any major advanced economy in the world.”
12:39: “The economy is up more than 8% in this government and warning lights are flashing over the European economy.”
12:41: “We will provide new support to new time exporters, Britain cannot be immune to the risks in the global economy.”
12:42: “Growth in the UK is more balanced, with growth predicted to be 2.4% in the UK in 2014. Manufacturing is growing faster than any other sector in the UK.”
12:48: “Borrowing forecasts – £91.3bn in 2014-15; £75.9bn in 2015-16; £40.9bn in 2016-17…borrowing is falling. By 2019 the UK will have a surplus of £23bn… annual spending and taxation strategy will move out of the red and into surplus of £4 billion by 2018-19.”
12:58: Net payments to the EU are predicted to decrease £1bn this year and next year.
Round up so far
- ” I have not eased up on our determination to deal with our debts.” – Osborne
- Unemployment forecast to fall to 5.4% next year before settling at 5.3%
- Uk’s budget deficit halved since 2010
13:05: Research and development tax credits for business increased.
13:08: Small Business Rate Relief doubled for another year.
13:14: Business rates relief doubled for a further year, and inflation-linked increase in business rates capped at 2%. There will be a full review of the structure of business rates.
14:03: Some comment from manufacturing business leaders on the proposed budget:
John Rowley, director at electronic assembly specialist SMT Developments, commented on the Autumn Statement:
“We welcome the increase in R&D Tax Credits to 230%, which will undoubtedly help cash flow and release money that can be directed into developing new processes and products.
Maintaining lower business rates is also a win for small business and I was really pleased to hear about the £45m support package for export…any additional specialist support that increases our ability to trade overseas is something most manufacturers will like the sound of.
Looking after first time exporters is important, however, there should be a similar focus on companies already trading internationally. Many of us have proved we have products that foreign firms want to buy, but we’ve only just touched the surface. There are lots more potential for us to go after, especially in emerging countries outside of the Eurozone.
The Chancellor also outlined the importance of delivering skills and backing apprentices-removing NI contributions when you employ young people will act as a spur for creating employment.
We need 150,000 new engineers in the West Midlands alone so a few extra apprentices here and there isn’t going to be the answer on its own.”
14:28: Phil Orford MBE, chief executive at the Forum of Private Business, said of AS2014:
“The Chancellor was keen to provide a much needed boost for Britain’s small businesses and there were some positive measures in today’s speech which will go a long way to helping reduce costs and improving business confidence. Whether this will be enough as we enter a period of uncertainty at the start of next year remains to be seen.
“On the announcements of further scoping and development of a Northern Powerhouse incorporating several major cities, and increased tax raising powers to Wales, Northern Ireland and Scotland, our members see this as a very positive further step in re-balancing our economy, not only in terms of financial services and manufacturing, but also in a commitment to support major regional and local development plans outside of London and the south-east.
“While we applaud the increase in R&D tax credits – a successful driver for innovation, we would have preferred the relief to have been focused on the formulation of a new Export Tax Credit to incentivise and support new exporters in riskier overseas markets.”
14: 58: David Nicklin, managing director at Birmingham based Nickin Transit Packaging, says:
“Despite the improving economy, many SME manufacturers still struggle to attract finance so the extension of the funding for lending scheme and new funds for the Enterprise Finance Guarantee Scheme is good news. Midlands manufacturing continues to go from strength to strength and further initiatives such as extra support for first time exporters should help further strengthen confidence as we enter the new year.”
Craig Spillard, director at Spillard Safety Systems in Four Ashes, adds:
“Generally, businesses will either be looking to take on apprentices or they won’t. Having a financial incentive from the Government will not encourage or discourage this and rightly so, as the idea of developing a young person – in line with your business objectives – shouldn’t really rely on saving a few thousand pound here or there.
Investment in the apprentice should be seen as a long-term commitment and if done correctly will pay back far more than the NI contributions they are proposing to cut.
“R&D Tax Credits is an interesting one and something we will look into. We are at the forefront of developing new safety products for mobile equipment and this could help us make important decisions on speeding up introductions and increasing the number of new innovations we are currrently looking at.”
15:00: Dr Colin Brown, director of Engineering at the Institution of Mechanical Engineers, thoughts:
“A number of proposals were announced to help smaller businesses access finance and invest in R&D and the investment £5.9 billion into the UK’s research infrastructure over 2016-21 is encouraging.
“But while the UK is leading the way in many areas on R&D, such as the creation and development of advanced materials, the country lags behind countries like South Korea in bringing new products to market and commercialising them. More support is needed from UKTI and the Innovation Catapults to bring in business for these small companies.”
And on apprenticeships:
“Plans to invest £20 million to improve careers advice and support for young people, while positive, fall far short of what is needed. UK careers advice for teenagers is sorely lacking and too many young people have little opportunity to find out about the range of career opportunities on offer. At barely £5 per student, this is unlikely to make much difference. Furthermore, the people who end up providing the careers advice rarely have the personal experience needed to provide first hand advice to students. Good careers advice provided by teachers with an understanding of business and industry is an engine of social mobility. It is also vital for ensuring we get people with the right skills entering industries like engineering, which is so vital for our future economic success.”
15:04: The CBI has given its immediate reaction to the Autumn Statement. A full briefing of its analysis and response will follow later.
John Cridland, CBI director-general, said:
“The targeted focus on enterprise is right, but business innovators would have liked to see more on research and development (R&D) to boost UK investment.
“International tax rules are in urgent need of updating, but the decision for the UK to go it alone, outside the OECD process, will be a concern for global businesses, and moving the goalposts on offsetting losses risks creating a worrying precedent.
“In the long term, growth is about people, science and infrastructure, and we warmly welcome the financial support for postgraduate science students.”
15:11: Ian Brinkley, chief economist at Lancaster University’s Work Foundation, has not held back, unlike the polite, but tepid, general response from most other experts:
“The extra support for apprenticeships is welcome but does not seem to be well targeted. There will be considerable deadweight from subsidising apprenticeships that would be provided anyway. Investing directly in the apprenticeship system, such as the Trailblazers initiative is crucial to producing high quality and longer term improvements.
“The Chancellor rightly focused on productivity tied to measures on infrastructure and support for R&D. However, the increase in the R&D tax credit for SMEs from 225% to 230% is very unlikely to increase R&D spending. Overall, the Autumn Statement provides relatively little additional support for private business investment.”