Chancellor’s Autumn Statement 2023: Comment & Reaction

Some comments after Jeremy Hunt’s latest Autumn Statement;

UK CAPTIVES CONSULTATION

 Caroline Wagstaff, CEO of the LMG comments on the UK Captives Consultation;

“The London Market Group is delighted by the announcement today by the Treasury that it will consult on the creation of a UK captive regime by spring next year, taking on board the recommendations within our Plan for the Future.  As the global centre for risk transfer, London needs to be able to offer all the tools in the toolkit, so this is a great step forward. We look forward to working closely with the government and regulators to ensure the UK remains a highly competitive insurance centre.”

ABI COMMENT

Caroline Wagstaff, CEO of the LMG.

THE PENSIONS REGULATOR

TPR HAS welcomed measures to enhance the quality of the pensions industry, support innovation and ensure savers are protected and get good value.

Part of the Chancellor of the Exchequer’s Autumn Statement today, the measures include:

• next steps for the joint Department for Work and Pensions (DWP), Financial Conduct Authority (FCA), TPR value for money (VFM) framework
• recommendations following a review of master trust authorisation and supervision regime
• helping industry to provide suitable products and guidance to savers accessing their pension savings
• an ambition for significant defined contribution consolidation by 2030, with greater scale facilitating productive UK investment with the aim of better value for savers
• responses to consultations/calls for evidence on defined benefit (DB) consolidation, productive finance and pension trustee capability and culture, including support for TPR in creating a trustee register, and a stronger role for trustee accreditation

Louise Davey, TPR’s Interim Director of Regulatory Policy, Analysis and Advice, said: “We welcome these important policies which will help create a pensions landscape made up of fewer, larger schemes which are well-governed and offer savers good value for money.”

SOLVENCY II CASH

Ross Evans, Life Insurance Partner at PwC UK, comments:

“The Government’s ambition is that the Solvency II reforms will help to incentivise £100bn of additional investment in UK productive assets over the next decade. The impact of the reforms is, however, yet to be seen and will also depend on the outcome of the current PRA consultation on the Matching Adjustment.”

QBE NOTES FULE DUTY RISE 2024

Jon Dye, Director of Underwriting, Motor, QBE Insurance: “This Autumn fuel duty decision (it’s likely to be a 5% rise in April 2024 – Ed) is a blow to fleet operators across the UK, increasing fuel costs and reducing money available to invest in important supply chain infrastructure. With the commercial motor sector already stretched this festive season, in particular fleet operators with increased winter road risks, high fuel costs leave less money available to manage risk and reduce accidents, which has a knock-on effect for all road users.”

QBE has been supporting the transports and logistics sector for nearly 90 years, providing Motor Fleet cover to more than a third of the UK’s top 25 hauliers.

SMALL BIZ, INVESMENT AND ENTREPRENEURS

Following the announcement to make full expensing permanent in the Autumn Statement, Lee Murphy, managing director of The Accountancy Partnership, has called for entrepreneurs to “transfer their gaze” to growth.

Mr Hunt announced what he claimed was the “biggest ever boost for business investment in modern times” in the House of Commons today. Full expensing (FE) allows companies to deduct all the qualifying expenditure from a company’s taxable profits in one year. Announced as a temporary measure in the Spring Budget, FE allows costs for items such as computers, tools and machinery to be claimed back in full in the year they occur.

Mr Hunt said the permanent extension would mean for every million pounds invested businesses would receive £250,000 off their tax bill in the same year. Or, for every £1 invested in items such as computers, machinery and tools, businesses can claim back 25p in corporation tax.

FULL EXPENSING

Purbeck Personal Guarantee Insurance has welcomed the permanent ‘full expensing’ in the Autumn Budget.  This means firms will get back 25p for every £1 they invest in the growth of their business. Purbeck also fully supports the extension to the reduction of business rates for the retail and hospitality sector, throwing a lifeline to many struggling small businesses in high streets across the U.K.

Todd Davison, MD of Purbeck Personal Guarantee Insurance said: “These measures are logical and necessary given the macroeconomic indicators have improved, with inflation moving back to target levels and the Monetary Policy Committee putting a stop to any further bank rate increases in recent months. These are the kind of robust policies we have called for to support business investment and provide assistance to sectors which are still facing strong headwinds.

“It is disappointing however that there has been no reversal of Section 24 giving landlords the ability to set the full amount of mortgage interest against rental income, before tax is calculated. This would have helped stop private landlords leaving the rental market which is pushing rental prices up for tenants.”

EISA REACTION 

Christiana Stewart-Lockhart, Director General of the EISA commented, “The extension of the EIS is excellent news for early stage business growth in the UK. Entrepreneurs are now able to seek much needed investment with the confidence that the EIS will still be available to support their future growth beyond April 2025. The current economic climate has definitely been a challenge for many entrepreneurs and this announcement about the EIS will provide some much needed reassurance for entrepreneurs and investors across the UK.

Today’s announcement is fantastic news for start-ups in all regions and devolved nations. This is a world leading scheme. It’s success in fostering innovation and entrepreneurship, as well as economic growth, has been internationally recognised and it’s great to see the Government backing British businesses in this way. The Government’s emphasis on the importance of entrepreneurship in our economic recovery is very welcome.”

CBI

Rain Newton-Smith, CBI Chief Executive, said:

“With tough decisions to be made, the Chancellor was right to prioritise ‘game-changing’ interventions that will fire the economy. While the move on National Insurance will give hard-pressed households some much needed breathing room, making full capital expensing a permanent feature of the tax system can be transformational for accelerating growth and improving living standards in the long-term.   

“Helping firms to unleash pent-up investment is critical to getting momentum into the economy. Making full expensing permanent will give firms the stability they need to press on with decisions on investment whilst keeping the UK at the top table internationally for investment incentives.  

“Moves to speed up planning and grid connectivity should also bolster business confidence to invest in high growth areas like green technologies, renewable energy and advanced manufacturing.” 

PHASING OUT DIVIDENDS FOR SMALL BIZ DIRECTORS

Faye Church, Senior Chartered Financial Planner, Investec Wealth & Investment:

“The dividend allowance will reduce again from £1,000 to £500 in April 2024. It’s an allowance that’s almost not worth having. An investment of £15,000 in the FTSE 100, yielding on average 3.5%, would breach this threshold.

“It may be worth continuing to reassessing whether dividends are the most effective way of receiving income, especially if you own your own business or have the flexibility to generate an income in other ways. Fixed income investments such as corporate bonds and gilts have definitely been a very attractive option whilst interest rates have been so high.”

NI THRESHOLDS & CUTS

Mohsin Rashid, CEO of ZIPZERO, said: “All the National Insurance cuts in the world will still fall short of rebuilding the pile of rubble that millions of Britons’ finances have been left in after years of fiscal chaos.

“Hunt’s priorities are understandable – he has to paint a picture of long-term economic prosperity – but his focus was also misguided. It’s all very well for him to pat himself on the back for introducing policies that will put more money in people’s pockets in the long-term, and may eventually contribute to restoring economic stability (providing of course that they don’t spike inflation). But where is the relief that is so sorely needed by those still struggling to put clothes on their backs and food on the table?

SAVINGS

Andy Mielczarek, Founder and CEO of SmartSave, a Chetwood Financial company, said: “It was good that the Chancellor’s statement included a focus on the savings market. Modernising rules and regulations around savings products is a necessity as economic conditions change, so announcing reforms was a must after years of rampant inflation and a devastating cost-of-living crisis.

“The Chancellor’s wider emphasis on putting more money in people’s pockets through wage increases and tax cuts bodes well for people’s finances, but overlooking their ability to save effectively would have been a grave omission. With some saving providers offering inflation-beating rates, now is the time for action – not only by the government, but also by consumers, on whom the onus remains to make savvy financial decisions.

“Many banks are still failing to pass better rates onto customers, so it is up to savers to shop around for the best products and providers that can enable them to meet their long-term financial goals.”