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The Budget – All Of The Facts
The did she? didn’t she? game commenced straight after Rachel Reeves first budget – some arguing ‘working people’ didn’t get...
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Businesses Plan To Cut Staff Following Disaster Budget
On Monday 25 November, the CEO of the Confederation of British Industry revealed data that shows its members plan to reduce headcount following the tax rises announced in the budget.
At the CBI’s annual conference, Rain Newton-Smith said: “Margins are being squeezed and profits are being hit and when you hit profits, you hit competitiveness, you hit investment, you hit growth.”
Newton-Smith did commend the government for ‘drawing the curtain on a near decade of instability’ whilst urging Labour to shift from consultation to co-design.
Survey reveals damage
The CBI’s post-budget survey revealed that nearly two-thirds of firms reported that the budget will damage UK investment with half of firms looking to reduce headcount as a result. Calling for closer collaboration between firms and government, Newton-Smith argued that ‘tax rises like this must never again simply be done to business’. Under a ‘Blueprint for Competitiveness’, she called for action on the pressing challenges facing business, including a faster more transformative timetable for business rates reform, flexibility on the apprenticeship levy and boosting occupational health incentives to support the health of the workforce.
Pull the growth levers
She also said at the conference the government should pull key growth levers to get the economy moving, by going further on tech adoption, planning reform and regulation. She said: “Right now, we are standing on a shoreline and in the distance, there’s a vision of growth. The real, long-term sustainable growth that we so badly need. It’s a vision we all share. It’s a vision the Prime Minister and Chancellor have set out with strength and determination. It’s a vision we in business feel down to our very bones. ”But what we must all understand… is that there is only one force that can bridge that gap. Only one force that can make that vision a reality. That’s the people in this room. It’s the ingenuity, the ideas and the investment of business. ”Business is the innovative power in the UK. All of industry, corporations, further education, our great universities. You are the true engine of sustainable growth. The ones who are quietly creating jobs, opportunities and better quality of life in your communities.” Thinking for the long-term again
Newton-Smith added: “It’s been a tough few years and often the ingenuity of industry has been spent just fighting fires. Boardrooms have been crying out for stability, optimism and the possibility of thinking for the long-term again. ”That’s what we’ve been pressing this government for. Be bold, be brave, give hope and have confidence. ”And we saw the Chancellor deliver on that in part – with stability in our public finances, with the brave decision to create space in our fiscal rules for capital spending. And the corporate tax roadmap we called for, to give business certainty for the long-term. ”While things remain uncertain abroad, this government has put us in a strong position by drawing the curtain on a near-decade of instability at home. Profit is not a bad word “When we look at OBR forecasts for just 1.5 per cent growth by the end of this Parliament we know that meaningful growth is a long way off. That’s because stability is a precondition, not a blueprint, for growth. The missing piece – the steel supports that hold the whole bridge up – that’s investment. ”Above all, it’s corporate Britain. Because vital as they are for employment, for every £1 an SME invests, larger firms invest £500. It’s CFOs and CEOs asking can we afford to invest? Can we afford to expand? Can we afford to take a chance on new people? The answer we’re hearing from so many firms is still – not yet. The rise in National Insurance and the stark lowering of the threshold, caught us all off guard.
“Set alongside the expansion and rise of the National Living Wage – which everyone wants to accommodate – and the potential cost of the Employment Rights Bill changes… they put a heavy burden on business. ”When firms I speak to want to be creating more opportunities, more investment, more training in their local communities, many have gone into crisis containment. ”Even where the risk isn’t critical, firms that have been through really tough years are now in damage control again. ”They are looking with heavy hearts to cut training and investment, delay decarbonisation projects or pass on costs to customers.”
“Across the board, in so many sectors, margins are being squeezed and profits are being hit by a tough trading environment that just got tougher. ”And here’s the rub – profits aren’t just extra money for companies to stuff in a pillowcase. Profits are investment. ”And if you’re a small business, profits are survival.”
Get Britain working There are 9 million working-age people out of the labour force. Newton-Smith said: “Getting them back in and raising productivity are mission critical not only for growth but for the wellbeing, the life opportunities of those people. Business is absolutely essential for that – but the budget just made it harder for firms to take a chance on people. ”Half of businesses are now looking to reduce headcount. And almost two-thirds are looking to cut their plans to hire. ”The OBR says the National Insurance rises alone will reduce labour supply by 50,000. I believe making occupational health tax-free would stop 34,000 people dropping out of the workforce. Apprenticeship levy
The budget also announced £40 million for the new Growth and Skills Levy. Newton-Smith said: “What we need is immediate flexibility in the apprenticeship levy so firms can use the funds for the training they need right now.”
And finally
Newton-Smith said: On tax, our complicated rulebook craves simplification that is bold with digitalisation that saves business time. ”On tech adoption, there’s extra support for manufacturers through Made Smarter. if we can push that to more sectors, if we can get just 25 per cent more small firms adopting new tech, then we can add £45bn to our economy by the end of the decade. ”So let’s get to it – fast.”
Picture: Rachel Revees’ Labour budget has been condemned and applauded by the Confederation of British Industry.
Article written by Cathryn Ellis
28th November 2024