The first leaves of autumn have only just begun to fall, but already eyes are looking ahead to late November.
Philip Hammond’s first Autumn Statement as Chancellor will be watched with anticipation as the country gets its first glimpse of the Government’s post-Brexit fiscal plans.
With rumours that Hammond is looking to reset economic policy in light of the EU Referendum, the Autumn Statement will give small businesses an important indication as to their place in the new Government’s plans.
What would an ideal Autumn Statement look like from a small business perspective?
Here’s my ‘shopping list’ of policies I’d like to see included in the new Chancellor’s priorities:
Investment in infrastructure
Rumours are already surfacing that Philip Hammond could announce big plans for infrastructure and construction, with promises already made surrounding upgrades to Britain’s roads and railway network. Whilst this could come as good news to small businesses, the Government must take on the responsibility of dividing up the work fairly. Regulation needs to be put in place to ensure that small businesses have just as much access to work in infrastructure projects as large corporates.
As noted by John Allan, chairman of the Federation of Small Businesses (FSB) upon the launch of the Government’s ‘Cutting Red Tape’ review, thirty years ago smaller house builders would deliver around two thirds of houses. Today, that fraction is less than a third.
The Government needs to guarantee that they will ringfence enough construction work for small businesses to ensure that the firms feel the benefit of investment in this area.
Reversal of changes to dividends
The implementation of the changes to dividend tax in April came with protests from thousands of small business owners who stood to be hit by more of the cons than the pros. Added to this, a report by the FSB highlighted that just 31% of small business owners are saving into a private pension, meaning that reliance upon dividends is higher than ever.
With Hammond scrutinising every aspect of George Osborne’s legacy, it would be good to see the Autumn Statement include a reversal, or at least moderation, of these changes and would also demonstrate that Government is understanding of the pressure that small businesses are under.
November presents a good opportunity for Philip Hammond to commit to the needs of small businesses and show that he is firmly on their side.
Flling the financial void
The cornerstone of the Leave campaign during the referendum was that Britain would be able to retain the money that was being spent on EU membership charges. Wherever they choose to invest this new financial reserve, I’d like to see some designated to small businesses in the form of tax relief or grants. Firms that trade internationally are most likely to feel the effect of Brexit and the Chancellor’s Autumn Statement should compensate for this by offering some indemnity towards any negative effects of the new European circumstances. Tax relief – either in the form of income tax or VAT – would help cushion the blow for small businesses.
Similarly, some of the money reclaimed from EU charges could go towards replacing EU subsidies. Philip Hammond has already promised to replace £6 billion in annual agricultural subsidies, and the same principle should apply for the EU grants currently relied upon by small businesses in order to mitigate the effect of our departure from Europe.
It’s safe to say that, as a nation, we’re in a different position than we were for last year’s Autumn Statement. The Chancellor’s speech in November will begin to sculpt the political, economic and social future of the UK and it’s key that Hammond establishes solid roots for small businesses.
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