Chancellor’s Budget focuses on raising the bar for skills
Carolyn Norfolk said: “A focus on skills, with an injection of £3bn to increase the provision of post-16 education and create opportunities for people wishing to enter high value sectors such as AI, cybersecurity and nuclear, is welcome. However, the focus should also be on raising the bar for other areas of the economy to reduce the widening skills gap.
“The East of England is known for having high-level skills in sectors such as Agri-tech, healthcare innovation and science, yet logistics also plays a major part in the region’s economy. An extension to the Peterborough Gateway was announced earlier this week, which could create an additional 5,500 jobs and generated £119mn for the local economy, subject to planning permission being granted. Jobs being created could include managerial, technical, professional, skilled trades, driving, stock handling and administrative support. Increased accessibility and availability of training is critical if the region is to achieve its economic growth targets.
“In this Budget, the Chancellor has recognised the need to invest in future talent in evolving sectors, in addition to more traditional sectors – due to the genuine concern about a widening skills gap across the UK and it potential impact on its attractiveness to investors and businesses. The focus on creating opportunities for traineeships and apprenticeships in vocational areas is critical, as is ensuring opportunities are feasible to all sizes of businesses, with apprenticeship uptake encouraged, supporting industries across the East of England.
East of England hospitality and leisure sector set to benefit from 50% Business Rate discount
Carolyn Norfolk comments: “The announcement that East of England-based businesses operating in the retail, hospitality and leisure sector could benefit from a 50% Business Rate discount for the next 12 months is a welcome relief to many who continue to struggle post-COVID. The Chancellor’s announcement will benefit up to 90% of businesses operating in this sector.
“Re-evaluation of Business Rates every three years should allow greater flexibility to adapt to future needs and the introduction of investment relief for small businesses and Business Rate Improvement Relief – aimed at encouraging businesses to investment for the future – without the need to pay rates for 12 months, could also support greater investment amongst businesses in the region.”
Budget looks to aid investment in R&D in the UK
Carolyn Norfolk comments: “Pre-Budget, the Chancellor pledged £1.4bn to encourage foreign investment into UK businesses and attract overseas talent. This is welcome news, especially as the region was one of a few who outperformed the rest of the UK where Foreign Direct Investment is concerned in 2020, according to EY’s UK Attractiveness Survey published in June.
“The number of FDI projects in the region rose from 40 in 2019 to 54 in 2020, according to the report, representing the second strongest year for FDI projects in the East of England in a decade. Digital, agri-food and transport and logistics were key sectors for the region – all recording project increases.
“Today’s announcement of an expansion of tax reliefs for domestic R&D investment until April 2023 could help incentivise East of England-based businesses in areas such as manufacturing, digital technology, health science and emerging technologies to invest more widely in R&D.
“It’s imperative that international investors see the UK and it’s regions as a place to do business, with a supportive enterprise culture and the draw of skilled people. The government also needs to work on breaking down actual and perceived barriers. Last year 58% of venture capital and private equity deals in the UK were in science and technology related industries, many involving global investors, yet 59% of these were in London. More work is needed on ensuring R&D and growth capital is more evenly distributed around the UK. The government should consider the tools at its disposal to incentivise investment outside the capital, whether this is locally based innovation funds, or exemptions for businesses located in the UK’s Enterprise Zones, such as Cambridge Compass, Greater Yarmouth and Lowestoft Enterprise Zone and New Anglia.”
Keeping the yo-yo going – a further temporary increase in the Annual Investment Allowance
Carolyn Norfolk comments on the Annual Investment Allowance (AIA): “In a Budget that was light on tax incentives for capital investment, there was some welcome news in the form of a further temporary increase in the limit of the annual investment allowance (AIA) from £200,000 to £1,000,000 for qualifying expenditure on plant and machinery incurred during the period from 1 January 2022 to 31 March 2023. The AIA, a 100% capital allowance for qualifying expenditure on plant and machinery up to a specified annual limit, has been a feature of the UK legislation since 2016. Its predecessors were nicknamed the yo-yo tax relief, as Chancellors were renowned for increasing and decreasing it to stimulate investment.
“Today the Chancellor has extended the period of the “temporary” relief through to the start of the new 25% rate of corporation tax. Given that much of the expenditure in this period may also be covered by the “super-deduction” announced in the Spring, the cost of the extension is far less than in normal times. Nevertheless, it will be valuable to those purchasing second hand equipment, something excluded from the Chancellor’s incentive in the Spring.”