Search
Please make sure you are using a supported browser. To find out more click here.

Spring Statement response

By Arianna De Angelis, Specialist - Advocacy

Our Spring Statement submission identifies three critical areas in which the Government should focus on increasing resilience: SMEs and the wider business environment (including UK supply chains), skills and productivity, and the wider public finances.

The UK like all global economies has in recent years faced a number of economic shocks including the pandemic, supply chain issues resulting from the pandemic, and now Russia’s military invasion of Ukraine. This global trend of business risks and uncertainty seems set to continue, with global inflationary pressures and a seemingly more volatile geopolitical climate set to be here in the medium-term. Uncertainty seems likely to remain in the short to medium term for businesses and consumers alike.

Throughout the pandemic we have advocated for our members in the UK and across the globe for support measures so they could not only survive the pandemic but come out of it and thrive and help support economic recovery.  In the UK we achieved a number of policy wins from our Budgeting for Recovery report that supported members and their businesses during the pandemic and on the road to recovery.  Some of these successes included t the UK Government introducing the Help to Grow – Management and Help to Grow Digital schemes and during the pandemic the government introducing a Recovery Lean Scheme for businesses.

Now in the wake of more uncertainty we have submitted a Spring Statement submission to the Chancellor of the Exchequer, Rishi Sunak MP,  ahead of his Spring Statement on the 23rd of March 2022.  Our submission focusses on pressing for support for our members and the wider UK economy to build resilience and better manage risk. We have identified three critical areas in which the Government should focus on increasing resilience: SMEs and the wider Business Environment (including UK Supply Chains), Skills and Productivity, and the wider public finances.

SMEs and the wider Business Environment

In our Spring Statement Response, we highlight how good businesses are underpinned by strategic planning and strong risk management; they anticipate and are prepared for a range of risks with plans to mitigate against their impact. However, many businesses in the UK have faced multiple challenges in short succession (pandemic, Brexit, supply chain and rising inflation), and still face a number of risks and uncertainties in the near future.

One of the key suggestions we have put forward in this year’s submission to support SMEs is for the introduction of a Growth Accelerator Scheme for SMEs. There was a previous Growth Accelerator Scheme for SMEs during the Coalition government from 2010-2015 and analysis conducted by the then Department for Business showed that the previous scheme had an economic benefit of at least £1 billion, with the benefit likely to be substantially higher. We know from conversations with our members during the last few years that there would be huge value in the scheme being reintroduced and support SMEs manage risks and grow during the UK’s recovery from the pandemic.

We have also called for an expansion of the range of investible opportunities in UK SMEs.  Creating more opportunities to invest and provider capital to SMEs will help SMEs to expand and grow and provide more jobs and wealth in the regions they work in. To help achieve this aim we ask that the UK government review whether regional stock exchanges could be brought back in some way to help provide more investment opportunities in SMEs and for the introduction of an SME Investment ISA.

Finally, we believe that an additional focus should be placed on building resilience in supply chains. The pandemic, Brexit and the recent crisis in the Ukraine have showed that businesses who had more diverse supply chains were better able to manage supply shortages. Having more diverse supply chains means the economy and businesses within them have more resilience and are in a stronger position to be able to plan and manage disruption.

In order to help supporting diversification and resilience of UK supply chains, we have provided a number of recommendations to the government which would help to ease some of the supply chain pressures the UK is facing.

Skills and Productivity

Last year CIMA produced a report titled, Tackling the UK's Productivity PuzzleThis report found that in the period since 2008, the UK has had some of the slowest productivity growth compared to its nearest neighbours and other G7 countries.  Slow productivity growth is a long-term structural problem in the UK economy. In the report we have outlined 35 recommendations, aimed at improving productivity and creating a higher-wage society and more prosperous businesses.

In our Spring Statement submission, we build on some of the recommendations in the report and call for the government to have a clear and holistic strategy to improve productivity and to support this clear strategy there should be the creation of a Productivity Commission.  The Commission could help drive up UK productivity by focussing on four keys areas: improving productivity reporting and measuring; ensuring more research that is translatable to businesses on productivity; promoting guidance and information to businesses on productivity and the commission should have a mandate to close the productivity gap between the South-East and the rest of the UK.

Moreover, investing in skills and improving workforce reskilling is an important element of improving productivity and building resilience in the UK labour market. Improving skills will also support UK businesses as they have a more skilled workforce and are better capable of meeting the differing challenges of the future including from economic shocks and increasing technological and digital adaption. In our submission we have put forward a number of measures to help drive reskilling in the UK economy.

Increasing Resilience in Public Finances

Our two main recommendations regarding Public Finances are:

· Merge the national insurance, income tax and new health and social care levy tax rates to simplify the tax system.

· The Office for Budget Responsibility to compile a national register of state assets and liabilities

During the last two years one of the key messages, we have heard from our members is the need to create simplification, particularly in the tax system. This is why we have called for the merging of NI, income tax and the new health and social care levy. This issue has been looked at before by the former Chancellor George Osborne and HM Treasury held a consultation looking at merging NI and income tax in 2012.  There would clear benefits from this simplification in terms of a making tax more transparent and easier to administer. The Office for Tax Simplification backs the merger of NI and Income Tax.

To help support the public finances we have also called for the Office for Budget Responsibility to compile a comprehensive national register of state assets and liabilities. This would provide the government and public with an idea on the scale of the UK debt challenge and what is needed to reduce it, but also provide a holistic view of all of the UK plc financial commitments and resources and assets too. This would provide a stronger platform in which to make decisions around government spending and investment.

Looking ahead

Overall, this Spring Statement could provide an opportunity to accelerate growth and productivity for all businesses and we hope the Chancellor uses this opportunity to achieve that.

To summarise, our main recommendations for each area are:

Increase Resilience among SMEs and the wider Business Environment, including UK Supply Chains

· Provide More Certainty for Businesses 

➢ Outline Tax Plans for the Next Two Years

➢ Create an SME Investment ISA

➢ The Government should start legislation this year following the White Paper, Restoring Trust in Audit and Corporate Governance, released in 2021.

➢ Pause Business Regulations for SMEs

· Introduce a Growth Accelerator Scheme for SMEs

· Review Regional Stock Exchanges

· Support Businesses to Diversify their Supply Chains

➢ Support and encourage business investment in new technologies

➢ Removal of Tariff Barriers

➢ Support for Seasonal Work and Sectors

➢ Efficiency Reforms to support skills and supply side shortages

· Consider introducing legislation to create a strategic national stockpile in partnership with businesses

Skills and Productivity

· Invest in Skills and Reskilling

➢ Introduce a similar scheme to the Government’s Multiply scheme for literacy and soft skills too.

➢ Create Skills Clusters across the UK

➢ Invest and support the creation of higher-level apprenticeships across the UK.

➢ Improve skills mapping across the UK economy.

➢ Explore mandated time off for training and a rebuttable right to retrain.

· Introduce a Productivity Strategy

· Introduce a Productivity Commission

The Public Finances

· Merge the national insurance, income tax and new health and social care levy tax rates to simplify the tax system.

· The Office for Budget Responsibility to compile a national register of state assets and liabilities

As we transition to a post-pandemic world, we will continue to work closely with our members, businesses, and the government to ensure that we can successfully tackle the challenges of today and build a lasting and more resilient recovery for tomorrow.

You can read our full Spring Budget Response HERE.