Chancellor Sets Out Low Tax, Higher Growth Economic Vision
Will it all be in the Spring Statement?
Posted by Roger Eddowes on 17/03/2022 @ 8:00AM
On the 24th of February, Chancellor Rishi Sunak delivered a lecture. With it only being a few weeks before the Spring Statement, it was interesting to listen to his future economic vision ...
The chancellor has set out a low tax, high growth economic vision. What will make it into the Spring Statement?
He was very much on message for traditional Conservative thinking. Talking about a new culture of enterprise and an economic vision for both private businesses and individuals to thrive.
"He certainly believes in lower taxes!"
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.
"This will happen through capital, people and ideas!"
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 of the Organisation for Economic Co-operation and Development (OECD) average.
"This looks like he will be cutting taxes on business investments soon!"
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.
"It seems the Government are planning some big changes!"
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.
Until next time ...
ROGER EDDOWES Business Godparent
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about the Chancellor's economic vision, it may be a great idea to give me a call on 01908 774320 and let's see how I can help you.
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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