Trade underwhelmed by Autumn Statement

Trade underwhelmed by Autumn Statement

Retailers are disappointed that business rates were not addressed in the Autumn Statement yesterday (23rd November), while others in the trade were underwhelmed by the content of the statement.  

Giving his first Autumn Statement in the House of Commons, chancellor Philip Hammond said that corporation tax would be cut to 17% by 2020, the lowest in the G20, the National Living Wage (for over 25s) would be increased from £7.20 to £7.50 next April, a "pay rise worth over £500 a year to a full-time worker," and a £23bn National Productivity Investment Fund to boost productivity in Northern cities.

At the same time the income tax threshold will be raised to £11,500 in April, from £11,000 now and spending on adult education is going to be devolved to local authorities.

Hammond also said that the government would stick to the business tax plans set out in the March budget, which has angered retail membership bodies.

Giles Clifton, head of corporate affairs at the Booksellers Association, said: “We are disappointed that the chancellor has not taken this opportunity to address the very clear need to bring much needed reform to the arena of business rates. We have been clear in our view that the present system is not fit for purpose. Gross disparities…undermine confidence in the business rates system. It is in need of further significant reform…This would be of much greater importance to our members than a reduction to 17% in the rate of Corporation Tax.”

The British Retail Consortium’s c.e.o Helen Dickinson, c.e.o agreed it was a "missed opportunity" to help boost growth and investment via further measures to reform the business rates system.

"Business rates have risen disproportionately in comparison to other taxes such as corporation tax, with a lasting impact on high streets and town centres," she said.

The Bookseller recently reported that Waterstones was facing a £2 million increase in business rates as a result of a re-evaluation of the business rates system.

Dickinson added that for an industry with around 5% of its expenditure on transport services, the freeze in fuel duty will ease some pressure for retailers. “However, compared to the coming increases in business rates and the National Living Wage, its impact will be virtually unnoticeable,” she said.

She also said that the next few years would be “challenging” for the industry.

“Whilst the outlook is not as bad as some predicted it could have been in the wake of the EU referendum, the next few years will be challenging for the industry," Dickinson said. "Whilst shoppers’ spending power is falling, retailers will almost certainly have to absorb some of the underlying cost increases into their margins, rather than fully pass them on. As a result, retailers are likely to see slower volume growth at lower margins next year."

However, Clifton’s outlook was much more positive for the sector. “The BA is pleased that the economic forecast is nothing like as bad as some were predicting in the aftermath of the Brexit vote,” he said. “This is good news for booksellers and the BA shares their hope that the retail environment will remain upbeat.”

Independent publishers in the trade were underwhelmed by the chancellor’s statement.

Di Page, Critical Publishing and a member rod the Independent Publishers Guild, said: “There’s very little in the Autumn Statement that will significantly impact on our business beyond corporation tax falling to 17% by 2020 and the forecast that growth will be slower than expected. The announcement that spending on adult education is to be devolved to local authorities could have an impact on some of our FE publishing, and the creation of the Oxford to Cambridge Expressway could perhaps be a good thing for publishing in a very general way.”

Jim Smith, Globe Law & Business and an IPG patron, said: “Plenty of tinkering, but very little to keep publishers awake at night—or, indeed, to allow us to sleep more easily. The promised infrastructure investment in broadband and transport is to be welcomed, as is the reduction of corporation tax to 17%, although this will make little difference to most IPG members. Also pleasing is the increase in the income tax threshold to £11,500, in an industry with its fair share of part-time workers. The scrapping of the Autumn Statement in favour of a single annual Budget will be welcomed by pretty much everyone, except perhaps tax advisers and, of course, tax publishers.”

Nick Poole, the c.e.o of libraries membership body CILIP, said the Autumn Statement was a “missed opportunity” for innovation and growth in the libraries network. Earlier in the week he had urged the chancellor to end “toxic” cuts and provide emergency relief for libraries after hundreds have closed since 2010.

“To deliver the chancellor’s aim of increasing the UK’s long-term global competitiveness addressing the country’s literacy and skills crisis is essential,” he said. “…We will continue to campaign and advocate for quality library and information services and the value they provide to communities, businesses, in education and across the economy.”

John Kampfner, chief executive of the Creative Industries Federation, was also unhappy with a lack of offers in the Autumn Statement to boost the arts sector. “The creative industries are the fastest-growing sector of the UK economy,” he said. “But the government risks failing to capitalise on the potential of the wider creative industries - which range from architecture and design to video games -  by appearing to focus support for innovation and R&D narrowly on science and tech. We can deliver so much more if we are made a priority sector in the government’s thinking.”

However he said he saw “huge potential” for the sector in the £1.8bn funding awarded to local authorities and local enterprise partnerships (LEPs).

“Investment in the creative industries has been key to the Northern Powerhouse development and other forward-thinking LEPs have identified this as an area for growth,” he said. “We look forward to seeing how these new funds will develop further opportunities."

Hammond also said that this Autumn Statement would be his "last" as he plans to abolish it altogether. He announced that next year's budget will be final one in Spring, and it will then move to Autumn to be announced before the new financial year starts. He said that there will be Spring statement that will respond to forecasts from the Office for Budget Responsibility but it will not be a “major fiscal event”.

Hammond said: "No other major economy makes hundreds of tax changes twice a year and neither should we. [The change] will allow for greater parliamentary scrutiny of budget measures ahead of their implementation. This is a long overdue reform to our tax policy making process and brings the UK into line with the best practice recommended by the IMP, IFS, Institute for Government and many others."