Autumn Statement 2023 – What FMs Need to Know

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23 November 2023

Chancellor of the Exchequer Jeremy Hunt has presented his Autumn Statement for 2023 – let’s take a look at the main announcements that those working in the built environment should be aware of.

 

Tax Cuts

 

The main rate of Class 1 employee National Insurance contributions will be cut from 12 per cent to 10 per cent from 6 January 2024. So someone earning £35,400 will receive a tax cut in 2024-25 of over £450. National Insurance contributions will also be cut for self-employed people earning more than £12,570 a year. The government estimates that an average self employed person on £28,200 will save £350 in 2024-25. 

Sam Robinson, SMF Senior Researcher said: “Today’s cuts to National Insurance rates barely touch the sides of the tax increase from frozen thresholds, meaning they aren’t really a ‘cut’ at all for many households. But these changes do represent a welcome rebalancing of personal taxes, shifting away from national insurance towards income tax, which covers a broader range of earnings including pensions and rental income.”

 

National Living Wage is Increasing 

 

From April 2024, the National Living Wage will increase by 9.8 per cent to £11.44 with the age threshold lowered from 23 to 21 years old.

Ben Willmott, Head of Public Policy for the CIPD commented on the news: “While the new rates will be welcomed by workers grappling with the cost-of-living crisis, many employers could struggle to afford this. To meet this additional cost expectation many businesses will need to boost productivity. This highlights the importance of the Government working with employers to develop policies and support that can help raise business investment in the skills, people management capability and technology needed to improve productivity, especially in low-skill and low-wage sectors.

 

Expensing Tax Breaks Made Permanent

 

The government will make the ability for businesses to write off the full cost of qualifying plant and machinery investment permanent. The Office for Budget Responsibility expects this to provide an additional £14 billion of investment over the forecast period. 

 

“Out of all the Autumn Statement’s measures, full expensing has by far the biggest potential to stimulate economic growth."

–Sam Robinson

SMF Senior Researcher 

 

Sam Robinson, SMF Senior Researcher said: “Out of all the Autumn Statement’s measures, full expensing has by far the biggest potential to stimulate economic growth. But given the big price tag associated with the tax cut, and OBR projections that business investment will decrease as a share of GDP, it is vital that full expensing is rigorously monitored to ensure it is as effective in the real world as it looks on paper.”

 

Business Planning Applications to Speed Up

 

The government also wants to make it easier to invest in critical infrastructure projects, so it’s reforming the planning system to speed up approvals, believing that these reforms will unlock new commercial developments to “enhance our energy security and help drive the transition to net-zero.”

The planning system will also now feature a paid-for “premium service” to accelerate decision dates. The government will also invest £5 million to incentivise greater use of Local Development Orders in England, to end delays for businesses so that key commercial projects secure planning permission faster.

William Poole-Wilson, Founder of workplace design and strategy architects, WILL+Partners had their reaction: “We labour under a planning system which, love it or loath it, is no longer fit for purpose. However, local authorities have insufficient resources to dedicate to an expensive planning system that has built up a level of bureaucracy which means that large applications need to be delivered in a van. At present, most local planning authorities don't have the technical competency to know whether a design is missing an opportunity or has a technical flaw. Therefore, some significant upskilling will be needed to help ensure that all major projects are vetted on a like-for-like basis nationally, helping to remove inconsistencies in the system.”

 

Investment in ‘Clean Energy’

 

The statement also included the news that £4.5 billion would be made available to unlock investment in strategic manufacturing sectors: auto, aerospace, life sciences and clean energy.

Simon Harris, CEO of Avrenim commented: “With the net-zero agenda taking precedence, the implementation of effective measures to promote greener growth will be essential to ensuring the UK doesn’t fall behind other countries when it comes to incentivising investment that is good for our cities, society, the environment as well as our economy and we need to put a plan in place to ensure we don’t wander into low growth and lost opportunities. 

“Research shows that not only would the right strategy with the right backing deliver on the net-zero ambitions, but it could also contribute some £74 billion into the UK economy and given our current economic outlook, that would be a very welcome boost. That said, I welcome the £960 million worth of investment into growing the green sector and the £4 billion worth of investment over the next 5 years into more strategic investment into manufacturing with a net-zero focus.”

 

Work Capability Assessments Will be Reformed

 

Reflecting the cultural shift to hybrid working models, Jeremy Hunt’s statement also included changes to the Work Capability Assessment: “Changes to the activities and descriptors will better reflect the greater flexibility and reasonable adjustments now available in the world of work, preventing some individuals from being deemed not fit for work and ensuring they will be better supported into employment.”

 

"This raises concerns, particularly given the loose threat of revoked benefits that underpins the new policy. Individuals with mental health issues need varying levels of support and not all employers will have the right communications policies and practices in place, let alone the support network and resources necessary to help people navigate periods of poor mental health."

–Jo Sutherland

Managing Director – Magenta Associates

 

Jo Sutherland, Managing Director of Magenta Associates, a communications consultancy which specialises in the built environment, expressed her concern at this announcement: “This raises concerns, particularly given the loose threat of revoked benefits that underpins the new policy. Individuals with mental health issues need varying levels of support and not all employers will have the right communications policies and practices in place, let alone the support network and resources necessary to help people navigate periods of poor mental health. 

“Often the middle management layer does not receive adequate training to deal with the issues that can arise when working with a diverse team, and there is still much more work to be done to reduce the stigma attached to mental health– driving an inclusive culture is essential and that is an art as much as a science. Add to that the plethora of challenges which these individuals may feel in an isolated environment, not to mention the pressures associated with looking for and securing a new job in the first place, and we may witness an increasingly disillusioned workforce. 

“The lack of face-to-face support and social interaction associated with homeworking may also impact their wellbeing. For those employers that want to up the ante with the level of support on offer for those experiencing poor mental health, prioritise check-ins, virtual team activities, and promote a supportive work culture which can foster a sense of connection among employees working from home.”

Picture: a photograph of Jeremy Hunt, current Chancellor of the Exchequer. Image Credit: https://members.parliament.uk/member/1572/portraitvia an Attribution 3.0 Unported (CC BY 3.0) licence: https://creativecommons.org/licenses/by/3.0/legalcode

Article written by Ella Tansley | Published 23 November 2023

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