9am Lowdown: Autumn Statement predictions
Good morning everyone, and welcome to the lowdown.
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Big firms predict Autumn Statement stability
With Phillip Hammond due to deliver his first Autumn Statement as Chancellor tomorrow, big firms have been busy predicting what the government is likely to change in its first fiscal event since the Brexit vote.
According to EY, measures the Chancellor may be considering include a temporary cut in the rate of VAT to boost growth and spending, the reduction in the rate of employer NI contributions and the expansion of the new disguised employment/IR35 rules into the private section.
Grant Thornton’s head of tax Jonathan Riley believes that the Chancellor’s statement is likely to focus on spending rather than tax giveaways. He added that businesses consistently report that stability and certainty in the tax regime are more important than additional cuts.
“Further cuts to corporation tax, which is already planned to fall from 20% to 17%, are not likely”, said Riley. “While in some quarters this will be unpopular, the UK should not join the race to the bottom in terms of business tax. Restoring trust in businesses and institutions is fundamental to addressing some of the issues borne out in the recent Brexit vote”.
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Sage chief calls for ‘radical’ tax reforms
Sage CEO Stephen Kelly has called for a “radical reform” of the tax system ahead of tomorrow’s Autumn Statement.
Speaking to the BBC’s newsnight Kelly said the tax system unfairly benefitted multinationals over small companies, and was holding back digital entrepreneurship in the UK.
Kelly singled out business rates as a particular offender, stating that the rates system in this country was invented 400 years ago and is now “totally unfit” for a digital age.
“You can now have a small business that has a high street store, a website and is adopting e-commerce, but finds it has to sell through a digital multinational from the US”, said Kelly.
The accountancy software giant is now the UK's biggest tech company following the sale of the chip maker ARM earlier this year, is now valued at £7.4bn and employs more than 13,000 people.
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NAO: NHS finance trend ‘not sustainable’
The financial performance of NHS bodies worsened considerably in 2015-16 and this trend is not sustainable, according to the National Audit Office (NAO).
In 2015-16, NHS commissioners, NHS trusts and NHS foundation trusts reported a combined deficit of £1.85bn, a greater than three-fold increase in the deficit position of £574m reported in 2014-15.
A headline figures was trusts’ combined spending on agency and contract staff, which reached £3.7bn in 2015-16 compared with £3.3bn in 2014-15. Although the rise in agency spending has slowed, according to the NAO it may take years to resolve workforce issues that affect the successful recruitment and retention of permanent staff.
Commenting on the figures Amyas Morse, head of the National Audit Office, said: “With more than two-thirds of trusts in deficit in 2015-16 and an increasing number of clinical commissioning groups unable to keep their spending within budget, we repeat our view that financial problems are endemic and this is not sustainable.”