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The Rt Hon George Osborne MP
Chancellor of the Exchequer
HM Treasury
1 Horse Guards Road
LONDON
SW1A 2HQ
12 February 2015
Dear Chancellor
Budget, March 2015
It is my pleasure to set out below Grant Thornton's Budget representation.
Our most recent business confidence monitor with ICAEW for January 2015 showed that despite strong economic growth during 2014, UK business confidence fell for the third consecutive quarter. Our Agents of Growth analysis by the Centre for Economics and Business Research (Cebr) suggests that further measures to promote growth and productivity in mid-sized businesses(MSBs: firms with 50 to 499 employees or turnover of £25 million to £500 million)could add an additional £50 billion to the UK economy by 2020. We would therefore recommend the following five priorities for business growth in the Budget.
Exports
The latest ONS figures show that exports declined by 5.5% in the year to Q3 2014. In our Autumn Statement submission we set out proposals for a tax relief for the initial costs of researching and entering a new export market. We would welcome the launch of a Treasury consultation on this idea, which now has widespread support from a significant number of business organisations including CBI, Forum of Private Business, Institute of Directors and ICAEW.
Skills and training
UK businesses reported increasing skills shortages in the most recent Grant Thornton/ICAEW Business Confidence Monitor. We welcomed your announcement in Autumn Statement of an exemption from employer's National Insurance Contributions for apprentices under 24 years old; we would now encourage you to extend this further, to apprentices of all ages, in order to further stimulate employer investment in training. We also support the government's continued commitment to give employers direct control of apprenticeship funding and would welcome furtherprogress in implementing this at Budget.
Regulatory and administrative burdens
Our Agents of Growth research found that regulatory burdens are now seen as the biggest barrier to growth by mid-sized businesses and43.5% of MSBs reported that meeting regulatory requirements would be more of a challenge this year than 2014. We believe that the Office of Tax Simplification (OTS), which you set up in 2010, has played an important role and we strongly support the recommendations of its review on the competitiveness of UK tax administration. We would urge you to commit to rapid implementation of all the OTS recommendations, including on raising the thresholds for transfer pricing and for quarterly installment payments. We would also encourage government departments to stop treating all businesses with turnover above £25million as 'large businesses' for the purpose of new regulatory requirements, such as the new reporting requirements currently being introduced by the Department for Business Innovation and Skills.
Northern Powerhouse and city region devolution
The Business Confidence Monitor showed that, unlike the rest of the UK, business confidence held steady at the start of this year in Northern England and Yorkshire and Humber, perhaps buoyed by stronger export performance than the rest of the UK. These encouraging signs area further demonstration of the importance of devolution to city regions and investment in the infrastructure of the Northern Powerhouse. We would welcome further commitments to empowering city regions, particularly on transport and skills and further consideration of business rates;to invest in coast-to-coast transport connectivity in the North; and to look at ways of expanding international flights from regional airports such as Manchester.
Access to long term growth finance
In the latest Grant Thornton 'International Business Report' survey only 8% of UK businesses pointed to access to short-term finance as a potential constraint; the lowest amongst global economies surveyed. We therefore believe that the government is right to focus on longer term growth capital, rather than short-term finance, and we welcome proposals for a new 'Help to Grow' initiative by the British Business Bank. We would also recommend a consultation on promoting corporate venturing, as also supported by Policy Exchange, RSA, BVCA, Social Market Foundation, COADEC and Centre for Entrepreneurs.
I very much hope this provides a constructive and helpful input to your thinking and we would be happy to discuss further with you or your team.
Yours sincerely
Scott C Barnes
CEO
For Grant Thornton UK LLP
T +44 (0)20 7728 2428
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