On the 24th of February, Chancellor Rish Sunak delivered a lecture. With it only being a few weeks before the Spring Statement, it was interesting to listen to his thinking on the state of the economy ...
However, he did warn that due to the UK's ageing population, for tax cuts to be sustainable, it needs hard work, prioritisation and the need to make some difficult, and possibly unpopular, decisions. He said, "It's hard to cut taxes when demands on the state are growing."
He did say that he was going to deliver a low tax economy, but he'll do it in a responsible way that tackles the country's long-term challenges. He's working on a new culture of enterprise that will help the economy grow in the future.
One thing that stood out for me was this sentence: "What the Government does is far less important than creating the conditions for both private businesses and individuals to thrive". Certainly food for thought in the SME world.
He highlighted that private sector investments have been falling for years and quoted an alarming statistic that since the global financial crisis, investments grew just 0.4 percent per year in the UK, which is half the OECD average.
He also talked extensively about his second priority of increasing skills and technical training for individuals already in work saying, "We lag behind our peers in adult technical skills". It was alarming to hear that just 18% of 25-64-year-olds have vocational qualifications. Quite possibly a result of the 90s policy of sending everyone to university, but he'll be taking a good hard look at the Apprenticeship Levy to understand if he can incentivise businesses to invest in the right kinds of training.
And finally, on his 'ideas' thinking, he was asked about R&D investment and said it was time to look at the tax regime to see if he could increase spending here. Again, we're lagging behind our peers, spending only four times the value of R&D tax relief compared to the 15 time OECD average.
The Spring Statement is going to be really interesting as everything Rishi Sunak said will appear in the Levelling Up white paper. It seems that the Government are done with coronavirus and moving past all the Partygate nonsense, so barring any major problems arising from Ukraine, we should see some positive changes in the months ahead.
If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.