Writing to the Chancellor, ICAEW’s CEO Michael Izza calls for the Spring Statement to speed up the transition to net zero by reducing the UK economy’s exposure to global markets – especially in the energy sector – in light of the crisis in Ukraine. However, counterproductive tax hikes and regulatory burdens should be avoided.
The crisis in Ukraine has underscored the need to accelerate the transition to net zero – already brought into sharp relief by the coronavirus pandemic. “This is especially relevant in the energy sector, which will need to combine reducing its exposure to global markets with continuing to support the transition of the wider economy to net zero,” Izza writes.
In the letter, Izza argues that all spending decisions should retain a long-term perspective on delivering government’s levelling up and net zero missions. Specifically, ICAEW is calling on the government to maintain its commitment in two key areas: decarbonising the country’s energy network ahead of 2050, and improving skills to secure long-term growth built on rising productivity.
ICAEW commends the government for the pace with which it has brought forward and secured the passage of the Economic Crime (Transparency and Enforcement) Act. Taken together with the Home Secretary’s confirmation that there will be a further Bill containing reforms to Companies House and new measures to tackle the abuse of limited partnerships, these constitute a powerful attack on economic crime.
However, ICAEW believes the government could go further in isolating the enablers of activities such as money laundering. They include large numbers of unregulated financial advisers who may describe themselves as accountants but who are not subject to ongoing technical, ethical and disciplinary oversight by recognised supervisory bodies.
“Making ‘accountant’ a legally-protected designation – on the same footing as other comparable professional titles such as ‘solicitor’ or ‘architect’ – would be a simple step which would do much to safeguard the public and the public interest,” writes Izza.
Government should avoid counterproductive measures
ICAEW strongly supports the sanctions implemented by the government, the EU and US, which aim to demonstrate to Russia’s elite the financial costs of their aggression.
Although there is strong support among the public and the business community for this action, ICAEW warns there will undoubtedly be consequences for the UK economy as global trade patterns are dislocated and reset, and as inflationary pressures from energy and input materials spike.
For that reason, ICAEW believes it is vital that the government seeks to avoid unnecessary and counterproductive policy interventions in 2022 that could increase the cost of doing business, whether through higher taxes or greater regulatory burdens.
As HM Treasury monitors the developing situation, ministers must stand ready to defend the UK’s post-coronavirus economic recovery – if necessary, by providing targeted financial support to protect jobs and livelihoods, ICAEW urges.
Izza concludes: “ICAEW Chartered Accountants, whether in practice or in business, are ready and willing to play the fullest possible role in making these measures effective, and in helping companies across the economy cope with the disruption they will bring.
“Beyond that, our collective priority now must be on leveraging every aspect of the UK’s national power and influence to support the Ukrainian people.”
ICAEW latest on Ukraine and Russia
Ukraine crisis: central resource hub
Resources, news and features on the impact of the Ukraine crisis on accountancy, business and the wider economy.
Support for members during the Ukraine crisis
Technical and Ethics Advisory Services
ICAEW Members can contact our free confidential helpline for advice and support on technical, ethical, anti-money laundering and fraud issues.
Resources for members
Chartered Accountants from across the membership have reached out to share how they are responding to the sanctions. Many are re-screening all clients with connections to Russia. Here are some of the key resources to help you respond to clients' concerns.
Doing business in ...
Guides to affected countries
ICAEW's Library and Information Service produces guides for members who are considering doing business in overseas countries. There are separate guides for Ukraine and its neighbours, all of which include updates on the latest sanctions and restrictions.