The new Chancellor Sajid Javid is set to outline his autumn spending review today and is widely predicted to announce large increases in public spending.
Following nearly a decade of austerity, any injection of cash into public services, such as schools and hospitals, will be welcomed, which is why in the background Javid is facing criticism, with the review labelled a pre-election stunt to prepare the ground for a general election.
Whatever the Chancellor’s motivations, as the nation deals with continued political uncertainty, it is more important than ever that this spending review reflects what is truly needed for the country to navigate one of the biggest political transitions in our history.
One priority must be the governments support for the backbone of the economy – business owners.
It is no secret that businesses owners are feeling the impact of prolonged instability. Today’s spending review is a chance for the government to alleviate the perceived burden of a looming Brexit. The business community will be looking out for interventions that will drive growth, such as rate relief, alleviating employment costs, tackling late payments and addressing skill shortages.
Business rates remain a major concern for small firms and have historically created a significant barrier to growth. The current Small Business Rate Relief (SBRR) scheme is a starting point but any further measures to alleviate heightened business pressures by creating a tax environment that enables productivity and growth will be greeted warmly by business owners.
SMEs are the engines of job creation. However, as the labour market continues to be plagued by skill shortages, businesses need support in boosting skills, employment and productivity. One key area the Treasury should consider delivering on is the much-debated National Insurance holiday for SMEs. Through this scheme the Johnson government has the real potential to help businesses cope with the rapid increases in employment costs, enable the creation of more jobs and apprenticeships, as well as boosting pay.
Poor payment practice has become an epidemic plaguing the business community over recent years. More needs to be done to tackle the late payment crisis as research from the Federation of Small Businesses outlines that 50,000 business deaths could be avoided each year if payments were made in accordance with their terms. If the Government is truly committed to removing the administrative burden of late payments that puts so many SMEs out of business, it needs to broaden the ‘Duty to Report’ legislation to remove the loophole and force large businesses and their subsidiaries to report their payment habits.
Business owners will be looking to today’s statement for clarity about the government’s intentions. If the spending review is indeed about appealing to a broad pool of the electorate, getting the business community onside would be a smart move.