Jeremy Hunt will deliver his autumn budget on 22nd November with the economic forecast to follow from the Office for Budget Responsibility (OBR).
Despite pressures from within his own party, Hunt warns that additional borrowing and tax cuts are unlikely.
So, what are the predictions for the autumn statement – and how might the announcement affect your business?
So, what does this mean for businesses?
Pushing the living wage into double digits for the second year in a row is set to help boost living standards, as the nation continues to feel the pinch of the cost of living crisis. It may also help to solve recruitment issues, as economically inactive individuals (students, early retirees and the long-term unemployed) are encouraged to search for work opportunities with greater financial benefits.
Increased wages can lead to improvements in wellbeing, and those who feel valued in their roles can boost company culture and productivity. It could also lead to a rise in consumer spending, benefiting businesses overall.
But, we can’t ignore some of the drawbacks to an increase in the living wage – the most significant being higher labour costs.
If you’re a small business owner, you may have concerns around affording an increased wage bill. Whilst these worries are valid, it’s up to you to adapt to the changes and look at where you could redistribute your budget.
For founders struggling to know how to adapt – start by looking at the resources you already have. Would money be better spent on extra training for your in-house team to meet the standards you usually get from outsourcing some of your work?
Employers could raise prices in line with the wider market on their products and services, or expand their target market to reach new audiences.
With the government’s pledge to reform business rates by 2026, Phil Vernon, Head of Business Rates at PWC, explains in this report that retailers fighting against a depleting highstreet may find assistance through a freeze “in the level of the multiplier[...]to ensure the tax rate doesn’t increase beyond the current multiplier of 51.2%.”
An extension of business rates relief beyond April 2024 may provide peace of mind for some hospitality, retail and leisure enterprises struggling with rising business costs.
On the subject of business tax, UK manufacturing organisations such as Make UK have criticised the current business tax and regulatory system, insisting more emphasis needs to be placed on boosting competitiveness, innovation, investment and green development to meet net zero goals.
Despite these concerns, Hunt is not anticipated to announce significant tax cuts to support UK corporate investment for economic growth. He’s likely hesitant to loosen fiscal policy as a result of the economic crash that followed the unpopular tax cuts announced in Kwasi Kwarteng’s mini-budget a year ago.
To encourage more people back to work, the government may be advising businesses on ways they could incorporate employee wellbeing into their business structure. Occupational health reforms could be on the cards, helping to reduce the amount of people that are off for medical reasons.
In this forum, UKBF member SillyBill cites the all too familiar experience of business owners across the UK:
“I'm paying up to £16K a month including VAT now, up from about £3.5-4k. The government's "support" lasted one month for us, we got about £4k in March off our bill then we were left to our own devices facing six figure increases.
The most annoying thing for me is the standing charge going up 1000%, so I'm now paying almost £10k a year in standing charges. And I've been quoted standing charges of £18k a year from next year on a new contract – up 2200% from what I was paying in February of this year.”
With many firms having to close or use personal savings to remain open, there are hopes that support for SMEs will be factored into the autumn statement.
Want more from UKBF? Upgrade to a Business Membership and make the most of exclusive benefits including premium forums, partner offers and member-only content. You could save your business up to £400 a year by upgrading your account today.
Despite pressures from within his own party, Hunt warns that additional borrowing and tax cuts are unlikely.
So, what are the predictions for the autumn statement – and how might the announcement affect your business?
Living wage increase
Confirmed by the government earlier in the year, the living wage will increase in April 2024 – rising by two thirds. This takes the hourly wage for over 23’s to £11, and could extend to employees over the age of 21.So, what does this mean for businesses?
Pushing the living wage into double digits for the second year in a row is set to help boost living standards, as the nation continues to feel the pinch of the cost of living crisis. It may also help to solve recruitment issues, as economically inactive individuals (students, early retirees and the long-term unemployed) are encouraged to search for work opportunities with greater financial benefits.
Increased wages can lead to improvements in wellbeing, and those who feel valued in their roles can boost company culture and productivity. It could also lead to a rise in consumer spending, benefiting businesses overall.
But, we can’t ignore some of the drawbacks to an increase in the living wage – the most significant being higher labour costs.
If you’re a small business owner, you may have concerns around affording an increased wage bill. Whilst these worries are valid, it’s up to you to adapt to the changes and look at where you could redistribute your budget.
For founders struggling to know how to adapt – start by looking at the resources you already have. Would money be better spent on extra training for your in-house team to meet the standards you usually get from outsourcing some of your work?
Employers could raise prices in line with the wider market on their products and services, or expand their target market to reach new audiences.
Business rates freeze
Rates bills are set to rise by CPI inflation in 2024, with an increase of 6.7% on the horizon for business owners in April.With the government’s pledge to reform business rates by 2026, Phil Vernon, Head of Business Rates at PWC, explains in this report that retailers fighting against a depleting highstreet may find assistance through a freeze “in the level of the multiplier[...]to ensure the tax rate doesn’t increase beyond the current multiplier of 51.2%.”
An extension of business rates relief beyond April 2024 may provide peace of mind for some hospitality, retail and leisure enterprises struggling with rising business costs.
Tax cuts unlikely
Amidst calls from his own cabinet and the wider public for tax cuts, Hunt has confirmed that there’s “no room to deliver tax cuts until the economy improves”, as reported by PwC.On the subject of business tax, UK manufacturing organisations such as Make UK have criticised the current business tax and regulatory system, insisting more emphasis needs to be placed on boosting competitiveness, innovation, investment and green development to meet net zero goals.
Despite these concerns, Hunt is not anticipated to announce significant tax cuts to support UK corporate investment for economic growth. He’s likely hesitant to loosen fiscal policy as a result of the economic crash that followed the unpopular tax cuts announced in Kwasi Kwarteng’s mini-budget a year ago.
Labour force reform
Though frustrations are setting in for the manufacturing industry, the government is expected to address the UK’s shrinking labour market, partly driven by a rise in economic inactivity due to Covid-19. A recent report by the ONS shows that long-term sickness affects 2.5 million people in the UK – an increase of more than 400,000 since the pandemic began.To encourage more people back to work, the government may be advising businesses on ways they could incorporate employee wellbeing into their business structure. Occupational health reforms could be on the cards, helping to reduce the amount of people that are off for medical reasons.
Energy bill support
With the Energy Bills Discount Scheme for businesses and organisations due to end in March 2024, there’s speculation as to whether additional support will be announced in the autumn statement.In this forum, UKBF member SillyBill cites the all too familiar experience of business owners across the UK:
“I'm paying up to £16K a month including VAT now, up from about £3.5-4k. The government's "support" lasted one month for us, we got about £4k in March off our bill then we were left to our own devices facing six figure increases.
The most annoying thing for me is the standing charge going up 1000%, so I'm now paying almost £10k a year in standing charges. And I've been quoted standing charges of £18k a year from next year on a new contract – up 2200% from what I was paying in February of this year.”
With many firms having to close or use personal savings to remain open, there are hopes that support for SMEs will be factored into the autumn statement.
Want more from UKBF? Upgrade to a Business Membership and make the most of exclusive benefits including premium forums, partner offers and member-only content. You could save your business up to £400 a year by upgrading your account today.
