It must be acknowledged that UK Chancellor Jeremy Hunt put the long-term interests of British businesses at the forefront of the Autumn Statement.
Most importantly, the government announced it would make full spending accounting permanent. In 2017, full spending was the best policy idea you’ve never heard of; Today, the idea that businesses should be allowed to deduct the cost of any investment they make from their corporate tax bill is orthodoxy. As my colleague Derin Kocer explains: “Comprehensive budgeting gives companies what they need: incentives to make long-term investments. Making this policy permanent will provide certainty to invest and incentivize businesses to improve the country’s capital stock, thereby increasing our productivity and opening new opportunities for entrepreneurs and innovators across the country.
Another crucial tax tinkering was the extension of the sunset clause until 2035 for the Enterprise Investment Scheme (EIS) and venture capital trusts (VCTs), which encourage individuals to invest indirectly in a range of smaller, riskier, unlisted trading companies. This follows calls from EISA, VCTA and more recently the All-Party Parliamentary Group (APPG) for Entrepreneurship. Financing to thrive report.
It is also worth noting that the government has announced that it will accept all of the recommendations of the Independent review of spin-off companies. Among these recommendations are calls: for academics and their institutions to enter into demerger agreements on market terms that avoid unnecessary negotiations; greater disclosure of transactions to increase transparency; and the ability for universities to use the funding to cover the costs of university technology transfer offices.
In response to this announcement, co-author of our latest article on spin-outs, Academic to Entrepreneur, Eamonn Ives said: “Ensuring that much of the research carried out in UK universities can be turned into dynamic businesses will be vital to growing the economy and tackling issues such as climate change or the aging of our population. In theory, the recommendations made in the independent study on spin-outs represent a good first step in enabling university entrepreneurs to create their own investable startups, but it remains to be seen how they will work in practice. If problems persist, the Government should not hesitate to go further in developing the spin-out sector in Britain.”
The government also announced that it would take forward the April recommendations of the National Infrastructure Commission (NIC) on planning by implementing reforms to restore the regime for infrastructure projects of national importance, which aim to strengthen the capacity of the planning system to provide a better service to businesses. It will also propose that authorities offer guaranteed fast-track decision dates for major developments in England in exchange for fees, thereby guaranteeing refunds when deadlines are missed and limiting the use of deadline extension agreements.
As we argued in Solid foundations, the UK’s rigid planning system is driving up the cost of housing, offices and laboratories, and significantly holding back our startup hotspots across the country. Britain’s sclerotic planning system makes building new infrastructure and housing more expensive and time-consuming to develop. This hurts businesses that otherwise wouldn’t be able to use it, and deprives those who want to build it of opportunity. Meanwhile, agglomeration is reduced as people cannot move to more productive areas to realize their potential. We therefore welcome incentives for local councils and other reforms to accelerate development.
With the Office for Budget Responsibility’s growth forecasts falling, Hunt was right to focus on British business as a key driver of future prosperity. It is simply a shame that this long-term thinking has not always been present in other budget announcements made over the past 13 years. With Brexit, the pandemic and falling energy prices, the last few years have been incredibly difficult for entrepreneurs. As our recent Risk Preparedness Report with Mishcon de Reya As shown, a significant proportion of entrepreneurs (39%) believe that the overall level of risk in the business environment is higher today than it was 12 months ago, and the The same proportion (39%) thinks that the level of risk will only increase in the years to come. year.
Good news is long overdue.