On Thursday George Osborne, the Chancellor of the Exchequer, will be giving his Autumn Statement. As is generally traditional these days, the headline elements of that speech are already being shared around to raise interest and political capital. On Monday we had confirmation of the relaxation of some of the tariffs levied on energy companies were being passed on to customers – although given the large energy bill increases just announced, this merely makes the price rises a punch to the gut rather than a punch to the crotch for most households and certainly doesn’t cost the energy companies anything in terms of lowering bills.
For small businesses, there’s a small treat in store in the extension of a scheme that grants rate relief, and this is coupled to the announcement of a cap on the rise of business rates next year. In England and Wales, this will now be limited to 2%, rather than being directly linked to inflation as it currently is. This inflation-linked rise would have put the rates up by 3.2% based on September’s figures.
The cost of this capping to the government is estimated to be around £300 million – worth bearing in mind alongside the noise and controversy over tiny tax payments by large multinational companies this year. In Scotland, business rate relief arrangements have been put in the control of local councils so that a more granular and responsive
The Chancellor was being urged to announce a full review of the business rates system by a number of industry groups and by Vince Cable, the Business Secretary. Many retailers and small businesses see business rates as an overwhelming burden on finances, especially at a time when High Streets are feeling under huge pressure.
One of the recurring criticisms of the way the existing rates system is structured is that it deters new investment. For any business, but especially for manufacturers, this is a chilling effect on growth that compounds with fears about the predatory behaviour of banks towards businesses that may already be struggling with loan and administration fees.
In general, the reactions to what has so far been leaked about the Autumn Statement are that we are unlikely to see anything particularly radical being introduced on top of what was already brought in during the Budget in March. For the most part, the Autumn Statement will be reflecting a wide number of consultations and policy announcements that were made during the Party Conference season.
Policies such as the proposal to allow married couples to transfer some of their personal allowance to each other will need to be voted on in the Commons before they can come into force – and a lot will hang on the detail in the paperwork. Other consultations have included the tax rules for partnerships, tax relief for employees who have ownership of the firms they work for, and an examination of inheritance tax for charitable trusts.