Friday, December 6, 2013

News: The Autumn Statement 2013

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Editor, Tom Austen, picks out some of the announcements made by The Chancellor of the Exchequer, George Osbourne in his Autumn Statement 2013.

The Chancellor began by saying that "Britain's economic plan is working. But the job is not done." He relayed news from the government's statisticians that the growth forecast for this year increased from 0.6% to 1.4% and was revised up for next year from 1.8% to 2.4%.

He also said that businesses have already created three jobs for every one lost in the public sector, but didn't say whether they were full time or part time jobs.

With the aim of getting more businesses growing and generating employment, the government announced a further £250m for the £1 billion British Business Bank (to be based in Sheffield) for late stage venture capital funds which in turn invest in high growth potential SMEs; an innovative new scheme to support the provision of lease and asset finance; and launch a programme of wholesale guarantees for SME loans.

The Chancellor also said that "exports are not growing quickly enough" so announced that reforms to UK Trade and Investment (UKTI) will be considered by the next budget and upped the limit for export finance to £50 billion.

The Government has committed an additional £160m to Start Up Loans over six years, doubling the amount of funding provided and said that it would publish "a clear statement of its offer to small businesses" in December.

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The hot topic of business rates was also addressed with the increase in rates in England set to be capped at 2% rather than linked to RPI inflation. It still looks like a rates review will take place in 2017 and not any earlier as hoped by many outside London and especially in the north.

Changes to business rates are also being used in an effort to boost the High Street. There will be £1,000 off business rates bills for retail premises (including pubs, cafes, restaurants) with a rateable value of up to £50,000 (a lot of premises in Rotherham town centre) in 14-15 and 15-16. Aiming to reduce the barriers to taking on empty premises, a 50% discount from business rates will be made available for new occupants of previously empty retail premises for 18 months.

Liz Peace, chief executive of the British Property Federation, welcomed the changes but added that "simply tinkering around the edges of the system will not be enough – the business rates regime remains one of the greatest barriers to investment in the built environment, and is fundamentally unfit for the 21st century."

Measures to address youth unemployment (a big issue in Rotherham and the region) were included with £10m a year for Job Centre Plus to provide support for 16-17 year old "NEETS" who want help to find apprenticeships and traineeships, to be delivered in partnership with local authorities.

Employers are also being given an incentive to take on young people with the employer NICs abolished for under-21 year olds earning less than £813 a week.

Businesses are set to be placed at the centre of apprenticeships with providers having to come to terms with a system that enables employers to receive funding for the training costs of apprentices directly through an HMRC-led system that ensures employers also contribute.

Economic development was covered too with the Chancellor hinting at further decentralisation of funds and powers. Local Enterprise Partnership (LEPs) are to bid for share of government funding using their strategic economic plans. The Local Growth Fund will be a minimum of £2 billion each year from 15-16 to 20-21 and the government will make £110m of Regional Growth Fund available for the Local Growth Fund.

LEPs will also be allocated £800m of borrowing from the Public Works Loan Board in 14-15 & 15-16 as part of growth deals, to borrow funding for infrastructure and regeneration projects. The government will also make £50m of funding available to LEPs through the Large Sites scheme.

It all means that the resources under the strategic influence of LEPs is at least £20 billion in the years to 2021. In addition to allocations from the Local Growth Fund, LEPs are encouraged to make the case for freedoms and flexibilities to support delivery of their wider strategic economic plans, with the presumption in favour of decentralisation.

James Newman, chairman of the Sheffield City region LEP, said: "The LEP welcomes the Chancellor's Autumn Statement and his renewed commitment to rebalancing the UK economy by decentralising powers and funding.

"Whilst we are pleased that the national economy is moving in the right direction, we recognise that further "difficult decisions" will be needed in 2014, and urge the Government to follow through on their commitment to devolution.

"We support the Chancellor's focus on supporting business growth through increases in funding for exports and innovation.

"We will welcome more detail on the allocations of funding as we develop our Strategic Economic Plan ahead of the Government’s deadline later this month."

Images: HM Treasury

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