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Business & Economy

Delivering stability, or making the wrong call?

“The Chancellor deserves credit for delivering stability… staying the course on research and development spending will give a major boost to the North East.”

“The Government is showing an ever-weakening grip. Northern Powerhouse Rail in skeleton form, and ‘levelling-up’ funding eroded by high inflation, won’t cut it.”

“The Government’s business rate proposals support the hospitality and retail sector, and local councils – this is a good first step.”

“It surprises me the Government is choosing to disincentivise investment in small business innovation at a time when we most need growth to pay down the debt and provide well-funded public services.”

Different Chancellor, same mixed reaction.

As is the case when the Government unfurls any fiscal blueprint, its many commitments and financial priorities attract much interest – and opinion.

Framed by a cost of living crisis and official figures showing the country is in a recession, this one created much response.

Here, North East Times Magazine hears from industry leaders on selected elements of Chancellor Jeremy Hunt’s 63-page Autumn Statement, from the suggestion of a new devolution deal for the region to a refocusing of the investment zones programme to create “knowledge-intensive growth clusters”, business rates support, the energy price cap and potential council tax rises.

Sarah Glendinning, CBI North East director, said: “The test for the Autumn Statement was to deliver stability at the same time as unveiling a clear plan for growth.

“The Chancellor deserves credit for delivering stability, as well as protecting the most vulnerable, but businesses will think there’s more to be done on growth.

“Backing the CBI’s call for a freeze in business rates and smoothing the increase for those facing higher bills is very welcome.

“We are also pleased to see a commitment to further devolution in the North East…but businesses will view a freeze in National Insurance contribution thresholds, and further windfall taxes, as sharp stings in the tail.”

Helen Golightly, North East Local Enterprise Partnership chief executive, said: “The changes to tax and spending will impact people in most income bands and reduce money available for public services.

“For businesses and the economy, the continuing commitment to capital and research expenditure is welcome, as is the additional support to people in the labour force, given predictions of a rise in unemployment.

“We await to hear more about our devolution deal and the revised investment zones proposal.”

John McCabe, North East England Chamber of Commerce chief executive, said: “There are some important commitments on public spending, infrastructure and benefits rising in line with inflation, and the Government’s business rates proposals support the hospitality and retail sectors, and local councils – this is a good first step.

“But energy costs continue to be a key concern.

“The renewed commitment to an extended devolution deal is welcome, as it could play a pivotal role in ‘levelling-up’ the North East.

“The right deal will be an important win for our region.

“However, it is vital the Government continues to work with us to stimulate business growth and international trade, ensure we’re meeting future skills demand and building a more open and inclusive economy.”

Zoë Billingham, IPPR North director, said: “This Autumn Statement leans on local government to raise council tax, just as people are suffering from the soaring cost of living, double-digit inflation and stagnant economic growth.

“This is the wrong call.

“Progress on agreeing devolution deals around the country is welcome, as is the decision to effectively scrap investment zones and replace them with university-led clusters.

“The Government is showing an ever-weakening grip on ‘levelling-up’ the country.

“Investing in, and growing, our regions is how we grow the UK economy.

“Northern Powerhouse Rail in skeleton form, and ‘levelling-up’ funding eroded by high inflation, won’t cut it.”

Sara Andrews, Haines Watts tax partner, said: “The budget announcement is a big hit for research and tax credit payments, which will inevitably hit SMEs and start-ups the most.

“With research and development expenditure credit increasing from 13 per cent to 20 per cent, it is big businesses who will feel the rewards of this change.

“And while this might attract larger companies to the UK, helping the economy to grow on the whole, it’s SMEs that need the support the most.

“We’ve seen first-hand the forward-thinking and innovative ideas that have been brought to life across the UK from SMEs, with the support of research and development tax relief, especially throughout the pandemic.

“So this announcement is somewhat disappointing.”

Councillor James Jamieson, Local Government Association chair, said: “We have been clear that council tax has never been the solution to meeting the long-term pressures facing services.

“Financial turbulence is as damaging to local government as it is for our businesses and financial markets, and all councils and vital services, such as social care, planning and waste and recycling collection, and leisure centres, continue to face an uncertain future.

“Councils want to work with the Government to develop a long-term strategy to deliver critical local services and growth more effectively.

“Alongside certainty of funding and greater investment, this needs wider devolution.”

Chris McDonald, Materials Processing Institute chief executive, and Federation of Small Businesses policy chair for innovation and enterprise, said: “I welcome the Government’s focus on energy, infrastructure and innovation, and the growth of the research and development budget.

“However, it surprises me the Government is choosing to disincentivise investment in small business innovation at a time when we most need growth to pay down the debt and provide well-funded public services.”

Nigel Emmerson, partner and head of law firm Womble Bond Dickinson’s Newcastle office, said: “While the Chancellor’s announcement and associated measures will be perceived by many as painful, the tough decisions made leading up to the announcement certainly seem to have long-term financial stability for the UK economy at heart.

“Right now, stability is what the region’s business community needs most, as we all prepare for the challenges that come with a period of recession and economic strain.

“With detail around some key announcements yet to be made available, there was no silver bullet for businesses or individuals in relation to rising costs.

“The focus on energy efficiency, education and the NHS were rays of light, but confirmation the planned investment zones will be pulled may come as a blow for the ‘levelling-up’ agenda, although we wait with anticipation to learn what the Government now considers to be the country’s knowledge-intensive clusters.

“Growth and stability appear to remain at the heart of Government policy, so let’s hope, at the very least, it will fuel further conversation and engagement around wider support for both the region’s and wider UK’s businesses in the weeks and months ahead.”