Spending Review 2020: news in brief
26 November: Smaller Announcements from the UK government’s spending review including, confirmation of a freeze in the business rates multiplier, funds for Companies House reform, a pledge that the UK Shared Prosperity Fund will match EU receipts and more apprenticeship funding for SMEs.
Funds for Companies House
The UK government has pledged £20m to fund reforms of Companies House announced in September. The reforms include new requirements for identity verification and additional powers to enable Companies House to query submitted information and remove information that is not accurate. The changes followed a consultation in 2019 to which ICAEW provided a detailed response.
The £20m for Companies House is an addition to £63m of funds to tackle economic crime, including the expansion of the National Economic Crime Centre and reform to suspicious activity reports and to the Action Fraud system.
Business rates multiplier frozen
The business rates multiplier will be frozen for the 2021-22 financial year. The government estimates that this will save businesses in England £575m over five years in its Spending Review and pledges to ‘fully compensate’ local authorities for the change.
The freeze follows calls from ICAEW to reduce the multiplier in September. In responding to part of HM Treasury’s review into business rates, ICAEW concluded that the tax liability had reached unsustainable levels and that there was a “strong case for a significant reduction”. call for evidence on business rates. This was backed up in October by a survey of 400 ICAEW members, 62% of which agreed that a reduction in business rates would help to boost the recovery of the UK economy.
UK Shared Prosperity Fund to match EU
In a Spending Review that made little reference to the UK’s departure from the EU and subsequent support for businesses, the Chancellor did confirm that finance available through the UK Shared Prosperity Fund will “at least match EU receipts”. This will reach around £1.5bn according to the government’s calculations. The fund will play a key role in the government’s “levelling up” agenda which aims to support regional investment across the UK. The Spending Review document includes a map which outlines significant projects and programmes for each of the UK’s regions (see figure 3.1 on page 38).
More apprenticeship funding for SMEs
From August 2021, employers that pay the Apprenticeship Levy will be able to transfer unspent levy funds in bulk to SMEs via a pledge function. Unspent levy funds still expire after 24 months. A new online service will be introduced in the same month to match levy payers with SMEs that share their business priorities.