Autumn Statement: George Osborne finds another golden goose to pluck - big business
Headline corporation tax is unchanged – but look below the surface
![The apprenticeship levy is likely to raise about £2.7bn from 2017](https://static.independent.co.uk/s3fs-public/thumbnails/image/2015/11/25/22/AS-apprenticeships-1-getty.jpg)
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Louise Thomas
Editor
George Osborne has found a new golden goose to pluck: big business. By piling on more direct – you could say hidden – taxes on our larger companies the Chancellor can keep headline corporate tax rates low and keep the UK attractive to foreign investment.
By far the biggest tax burden of the Autumn Statement was on larger business in the form of the apprenticeship levy which is likely to raise about £2.7bn from 2017.
The amount raised also makes up more than the cuts to corporation tax announced in the summer Budget and, de facto, means big business is subsidising smaller companies. Indeed, SMEs are effectively exempt from the levy due to a £15,000 rebate that they can claim to help fund apprenticeships.
Hitting big companies above the line like this – or maybe it’s below the belt – is fast becoming one of the Chancellor’s favourite tricks to raise new revenue from overall turnover rather than profit. It’s also a highly efficient way of raising tax income as the huge collapse in receipts from North Sea oil companies show – and it’s a trend which Jane McCormick, senior tax partner at KPMG, says is likely to continue as a stable way to raise revenue.
But the most welcome news of all for business – small and big – was confirmation of the £61bn of new investment in the planned new road, rail and flooding infrastructure plans alongside the ambitious plan to build 400,000 new homes by the end of the decade which will bring thousands of new jobs down the supply chain.
The number of houses may sound grand but in reality its still far off the average 200,000 homes that were being built every year after the war until the 1970s. (Labour also aimed at building 240,000 a year back in 2007, and failed.)
As always, the Devil will be in the detail of how the Government manages to arm-twist local councils into giving planning consent as most of them continue to ignore the housing allocations in the National Planning Policy Framework and continue to refuse permission for most planning applications.
Hopefully, the carrot that Mr Osborne has given councils by allowing them to sell off local property assets – which are estimated to be worth up to £60bn – may prove to be enough to force them into action. But I wouldn’t bet on it without more stick.
Investors certainly liked the news, pushing up shares in the big house builders but actually the bigger beneficiaries of any potential building boom will the smaller private builders – more than half of all builders are small to medium-sized companies. Getting planning consent is not the only problem we face in building on any scale: a skills shortage in the building trade and brick-making may also make it difficult to achieve these numbers in the short-term.
On the flip side, buy-to-let specialist lenders squealed at the Chancellor’s 3 per cent stamp duty raid to penalise the wealthy few who are raiding their pension pots to buy property. It will not stop wealthy Chinese or Middle-East buyers snapping up top-end properties in London, but it should dampen demand overall.
On infrastructure, Mr Osborne confirmed plans to electrify three big rail arteries – good news for rebalancing the UK’s skewed geography. But here’s a special plea from eastern England. There’s a desperate need for a new West-to-East rail and road link to follow the route the monks took 800 years ago from Oxford to Cambridge –US investors have been known to decline visits to Silicon Fen start-ups because it takes so long.
However, there was news elsewhere to lift the mood of wannabe start-ups, mainly in that there weren’t any new taxes and entrepreneur’s relief was not abolished. There are to be 26 new enterprise zones and the science and research budgets haven’t been cut too badly. Grants for young companies will go but they are to be replaced by loans.
Keeping down energy costs for the steel and chemical industry was long overdue and, with the new Shale Wealth Fund, these moves should help make the UK’s energy costs more competitive.
It’s often several days before the unintended consequences seep through from behind the big-number headlines. But here’s one I am going to predict: City financiers, accountants and tax advisers are going to find new work following the revolutionary plans to devolve tax-raising powers for business rates and income tax to local councils and regions. The issue is whether there is enough talent around to cope with the changes: Mr Osborne may need a permanent fund to train a new generation of maths teachers alongside his pot-hole fund.
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