Under the catch cry of: 'We are the builders', Chancellor George Osborne's combined Spending Review and Autumn Statement today saw the announcement of a host of measures covering the economy, tax, the NHS, infrastructure, business, science, education and the devolution of power.
The key elements of the Spending Review relevant for manufacturers are as follows:
- According to the Office for Budget Responsibility, since 2010, no economy in the G7 has grown faster than Britain.
- Britain has grown three times faster than Japan, twice as fast as France, faster than Germany, and at the same rate as the US.
- Business investment has grown almost twice as fast as consumption.
- Exports have grown faster than imports.
- The North of the UK has grown faster than the South. The Midlands is creating jobs three times faster than London.
- The highest employment rate in the country is in the South West of England.
- Economy is predicted to grow by 2.4% this year and next and 2.5% in 2017.
- Tax credits cuts announced in July, which were to be phased in, are now going to be avoided altogether.
- Tax credit taper rate and threshold will remain unchanged.
- Energy generation will be excluded from the Venture Capital Scheme.
- HMRC are making efficiencies of 18% in its own budget.
- £800m to be invested in countering tax evasion, an investment with a return of almost 10 times in terms of additional tax collected.
- Plan to build one of the most digitally advanced tax administrations during this parliament so that every individual and every small business will have their own digital tax account by the end of the decade in order to be able to manage tax online.
- In 2010, government spending took up 45% of national income. Today the state accounts for just under 40% of national income and it is forecast to reach 36.5% by the end of the Spending Eeview (2019/20).
- As mention in the budget, corporation tax to be reduced to 18%.
- Small business rate relief scheme to be extended for another year.
- To ensure large businesses share the cost of training the workforce, an apprenticeship levy has been created and it is set at 0.5% of an employers wage bill. Every employer will receive a £15,000 allowance to offset against the levy. The levy will raise £3bn a year and fund 3 million apprenticeships.
- £22bn in efficiency savings to be achieved across the service.
- The NHS budget will rise of $101bn today to £120bn by 2020/21.
- £5bn of health research.
- Three new hospitals funded including in Cambridge and Brighton.
- London will receive an $11bn investment in transport infrastructure.
- New £250m investment in Kent roads.
- £300m commitment to cycling.
- £5bn on roads maintenance and the creation of a permanent pothole fund.
- Increase support for climate finance by 50% over the next five years.
- Reform of the renewable heat incentive to save £700m.
- Permanently exempt energy intensive industries such as steel and chemicals from the cost of environmental tariffs.
Business and Science
- Commitment to the same level of support for aerospace and automotive industries for the next 10 years.
- Spending on the new catapult centres will increase.
- Cash support given through Innovate UK will be protected but it will instead be offered as £165m of new loans to businesses rather than grants as “France has successfully done for many years.”
- Resource budget for science rises to £4.7bn.
- Funding the new Royce Institute in Manchester and new Agritech centres in Shropshire, York, Bedfordshire and Edinburgh.
- £75m committed to a transformation of the famous Cavendish Research Laboratories in Cambridge.
Devolution of power to enterprise zones
- Uniform business rate to be abolished.
- By the end of the parliament, local government will keep all of the revenue from business rates.
- Councils will have the power to cut rates and make their area more attractive for business.
- Elected mayors will be able to raise rates so long as they are used to fund specific infrastructure projects supported by the local business community.
- From 2017 the government will fund 30 hours of free childcare for working families with three and four year olds. This will only be available to parents working more than 16 hours per week and earning less than £100,000.
- Will open 500 new free schools and university technical colleges.
- Five years ago, 200 schools were academies, today 5,000 schools are academies and the government wants to help every secondary school become an academy.
- The apprenticeship levy has been confirmed and set at 0.5% of an employers wage bill.