Experts react to National Insurance and Business Tax Cuts

It’s difficult to reconcile tax cuts, the continuation of triple lock in its current format (at least) with the fact that significant sections of working class remain worse off. These measures will only worsen the gap between generations. Jeremy Hunt’s plans for a consultation on ” Pot for Life ” pension reforms are unlikely to help close this gap through private pension savings.

This move could be a step in the direction of financial exclusion for women who have small pension pots. Women in Chasm’s recent study about pension decision-making are already facing barriers to getting financial advice and maximising their defined contribution savings.

Not the type of pension pot that the chancellor had in mind. szefei/Shutterstock

The funding of business may not be transformative

Phil Tomlinson is Professor of Industrial Strategy at the University of Bath

UK investment has only grown 4.6% since Brexit, as compared to 32% for the US and 15 % in the Eurozone. Low investment has been a major contributor to the UK’s slow productivity growth for many years. This was addressed in the autumn statement. Last week, the UK government announced 4.5 billion pounds sterling over five years to fund UK manufacturing in order to accelerate the move to net zero, as well as an expansion of support for digital technology for small and mid-sized businesses via the MadeSmarter Adoption program.

It is questionable whether this funding will have the necessary impact to propel the UK at the forefront of the global clean tech race. It’s “small beer” in comparison to recent intervention in the US and EU. Labour has proposed investing PS28 billion into green technologies during the next Parliament.

In today’s announcement, the most eye-catching part for businesses was that ” Full Capital Expensing will be permanent. It is a tax incentive that allows businesses to reduce their corporation taxes by deducting investment expenses from profits. The Office for Budget Responsibility believes that this could boost UK corporate investment by up to PS3 billion per year. It is not likely to be very useful to start-ups and smaller companies, who don’t invest much in capital equipment due to a lack of money and/or do not record high profits in the early years.

The Chancellor is hoping that his new fiscal incentives can boost investment by about 1% of the GDP. This may only be a wishful thought when high interest rates, and a generally poor economic outlook dampen the ” spirit of the animal“.

Read more: The UK needs a new industrial strategy or it will lose the global green subsidy race

Little investment in public services

Shampa Mukherjee, Vice Dean and Associate Professor, Royal Docks School of Business & Law at the University of East London

The UK government debt is currently at PS2.6 trillion, which is about 98% of GDP. It is the sixth highest in Europe. BBC reports that the government spent PS111bn on interest on debt in the last financial period, more than they spent on education. The government was still able to announce in its Autumn Statement tax cuts that would promote economic growth.

The reason for this is the increased tax revenue resulting from inflation, and also from the forecasted additional revenue from freezing tax rates until 2028. The statement shows that despite the increased fiscal headroom, there are few indications of any substantial expenditures in public services. This is except for the NHS. The forecast shows a real-terms reduction of 16% in the spending on other departments by 2028.

If the burden of interest payments had been much lower, the resources needed to improve public services and invest in growth plans could have been freed up.

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