Budget: London investment must continue for future global growth
The Government is set to deliver its first Budget on 11 March and businesses in London will be hoping that it’s an ambitious one, supporting the capital’s role as a strong connected city and global centre, writes Philip Abram, Senior Partner for KPMG’s London Region.
Against the backdrop of Brexit, Chancellor Rishi Sunak has an opportunity to set out a vision for the future which tackles low productivity and the skills gap to stimulate growth and support the tech-powered Industrial Strategy.
Addressing regional inequality played a big part in the election campaign and the Budget offers an opportunity for the government to demonstrate its commitment to lift regional growth. With the next steps for HS2 now confirmed, the Chancellor is expected to make announcements around infrastructure projects to help boost local economies, with the main beneficiaries expected to be regional cities.
Although we are expecting announcements on new infrastructure to be directed largely outside the capital, it is important that investment in London continues to support future growth and maintains our role as a strong connected city and global centre, and supports the transition to “net zero”, where the UK became the first major economy in the world to set a target in law.
After the uncertainty of the last few years, businesses want certainty. The Tory manifesto promised no changes to business taxes other than an increase in the NIC threshold from next year, but one area that businesses will be keen to hear more on the promised review of business rates.
For a typical business, it accounts for around 10% of operating costs and business rates, in one form or another, have been in existence for c400 years, so radical reform of the system is unlikely. Plans to reduce the rates burden by £320m in 2020-21, by extending a retail discount from 33% to 50% for businesses with a rateable value below £51,000 could however, provide a lifeline to our high streets and ensure we maintain strong and vibrant local high streets and communities.
Our diversity can been seen across London, from our world-class financial centre in the Square Mile, to the start-up communities popping up across the capital. Privately-owned businesses, particularly London’s growing army of innovative disruptors, will be hoping that any expected reform to Entrepreneur’s Relief will still enable true entrepreneurial activity to benefit from the relief. The tax break has proven to be one of many incentives which have helped London to become a global centre for innovation, producing successful scaleup businesses and future unicorns.
The government has now announced details on the broader future of our immigration system, and many firms will be eager to maintain the flow of talent needed to help drive our innovative young businesses forward post-Brexit. Initiatives such as the Global Talent visa programme will help to ensure employers can recruit essential hires from overseas to drive a tech-powered UK economy fuelled by innovation and research.
In addition to a growing talent pool, the capital’s businesses will want to hear the government’s plans for ensuring we have the right skills for the future, which are central to moving the UK to a highly skilled global technology centre.
Our cities are currently less productive than our counterparts in France, Germany and the US, so employers will no doubt be interested to hear how quickly the new £3bn skills fund announced to provide funding for further education and training will spring into operation to help fill the skills gap that continues to hamper productivity across the UK.
Philip Abram is Senior Partner for KPMG’s London Region
The London Society's Budget breakfast is now sold out. You can still book onto a Budget update on 12 March in Croydon here.
Liked this? Read these: