By Jo Sellick, managing director, Sellick Partnership
“Chancellor Philip Hammond has delivered his Autumn Budget with the bold headline claim that ‘austerity is coming to an end’. But, despite this being the longest Budget in a decade, there was very little content committing to this pledge. With puns and gaffs aplenty, Hammond managed to talk the talk and threw in some token gestures like raising the personal tax allowance to £12,500, pledging more money to the NHS and mental health funding and a digital service tax for the likes of Google and Amazon. Unfortunately, much like we have seen time and again with Brexit negotiations, the Budget was relatively meaningless and failed to provide the certainty that the UK economy so desperately needs.
Firstly, let’s consider the fact that Hammond allocated yet more money for Brexit preparations after this was increased previously in the Spring Statement. The Chancellor claimed that this proves the government is preparing for ‘all eventualities’, but surely there should be a firmer plan in sight at this point in time? If the Prime Minister had been more successful in her talks with the EU until this point, we might have had a clearer idea of exactly how much money would be required and already on the way to carving a smoother path. Instead, the government is forced to throw more money at an undetermined and seemingly never-ending problem and prepare for every single possible outcome. Furthermore, Hammond’s suggestion that the Spring Statement could be upgraded to a full fiscal affair, depending on the outcome of Brexit, should be cause for concern. If this happens, every measure announced in today’s Budget could be null and void, overwritten by a brand new Budget before the new tax year even starts.
In spite of my overarching concerns, there were some Budget measures that will be welcomed by business owners around the country. Deciding not to scrap entrepreneurs relief was a wise move, although it does come with stricter qualifying rules. Small business owners employing apprentices will also welcome the reduction in the amount they have to contribute, down from 10% to 5% in training fees. And, as requested by the British Chambers of Commerce, the annual investment allowance will rise to £1 million for two years, in a bid to show the world that ‘Britain is open for business’, according to the Chancellor. A grant to facilitate the redevelopment of high streets around the country will be well received by those business owners who operate offline and are competing with the relentless power of their digital counterparts. A cut in business rates for smaller retailers will also bring some positive change, but those who stand to benefit from the Budget are unfortunately hugely outweighed by the number of business owners who are seeing flat performance as the economy struggles to comprehend a positive outcome of Brexit.
The Chancellor failed to mention any plans to help businesses to recruit new talent when huge numbers of the British workforce inevitably move to the EU after Brexit. This trend has already begun, especially among EU workers who have lost confidence that they have a future in the UK. Similarly, British workers are also being drawn to jobs with big businesses who are relocating their headquarters in Europe. The Budget did mention some one-off funding for schools to invest in equipment, but what about investing in building the skills and careers of the future workforce? And where was any mention of university funding? A degree is becoming increasingly inaccessible for students who simply cannot afford rising tuition fees, and this will inevitably leave a gaping hole in skills, especially those in STEM subjects that are so heavily needed to build the economy of the future.
Speaking of recruitment, Hammond’s fleeting reference to rolling out IR35 to the private sector is a huge move and will have massive implications for the recruitment industry. It will put a huge strain on our contract and interim workforce and this may well deter candidates from going down that path, potentially forcing them to favour permanent roles instead and creating worrying implications for the temporary sector. Similarly, Hammond’s brief mention that he is ending Private Finance Initiatives (PFIs) with no explanation of what will replace these schemes could cause huge concerns for the private firms who currently conduct this kind of contract on behalf of the government.
Those of us who were watching the Budget in the hope that it would bring certainty to worryingly tentative times were left disappointed. It seems the only thing that is for certain in today’s political climate is that the government will continue to make empty promises, waste time talking and simply not take enough action actually doing the job they are employed and elected to fulfil.”