ICAEW letter to the Chancellor
In this letter, ICAEW's CEO outlines that while the government must provide organisations with clarity over the UK’s relationship with the EU, further support is needed to promote the UK's competitiveness and enable innovation.
Michael Izza calls for coordination in the creation and implementation of regulation, alongside independent monitoring, as well as for further action to be taken in support of industry and to address the skills gap.
15 October 2018
Rt Hon Philip Hammond MP
Chancellor of the Exchequer
1 Horse Guards Road
In your Mansion House speech you said decisions taken in the next few months will shape the UK economy for decades. That is why this year’s Budget is so important. It is an opportunity to set the UK on a course towards an economy that continues to support world leading industries and is home to the markets of the future.
The form of the UK’s relationship with the EU is vital to business. However, this must not be the exclusive standalone focus of the government’s economic planning. A much wider programme of support is required that provides certainty, promotes competition and enables innovation.
When businesses succeed, society benefits - creating jobs, wealth and adding to tax revenues. To meet the challenges facing our society in the coming decades, the UK needs a strong and growing economy.
Providing certainty for services
Accountancy and professional services are vital components of the ecosystem that underpins markets, guiding and advising businesses in every sector of the economy and providing the expertise that maintains London’s position as the world’s leading financial centre. The right deal with the EU is key to ensuring our continued ability to facilitate investment and influence global standards. We ask government to:
- Deliver a deal that supports UK professions: We welcome the importance afforded to the mutual recognition of professional qualifications in the Chequers White Paper which is highly relevant for all professions. Our aspiration is for the incorporation of accountancy and audit within the deep economic partnership approach in the White Paper and for a similar type of UK-EU regulatory interaction as that outlined for the financial services sector.
- Develop a network of advice: All businesses require certainty and a clear road map on what to expect as the UK exits the EU. Government must redouble its efforts by working with organisations like ICAEW, whose members advise more than two million business in the UK, to promote the availability of business support and guidance.
Creating a competitive business environment
Our Business Confidence Monitor (BCM) shows regulation as the biggest challenge facing companies. The impact of regulation on business has grown over the last eight quarters reflecting the quantity of legislation and compliance introduced. Examples of more recent changes include: IR35; auto enrolment pensions; the roll out of Making Tax Digital; GDPR; as well as the increasing depth of health and safety legislation. We ask government to:
- Coordinate across government: The government needs to act in concert to manage the application and timing of new regulations. This should include a slowdown in the introduction of new tax legislation. Pressure on government departments, caused by Brexit, is leaving those responsible for developing and implementing new policy in the tax system under-resourced.
- Create independent oversight: There should be independent monitoring by the National Productivity Council of the impact of regulation on productivity growth, especially for certain hard-hit sectors.
Investing in markets and jobs
Investment by the government in research and development and innovation has never been more important. Currently, UK investment in innovation is dwarfed by international competitors. Investment has a distinctive multiplier effect for the economy, enabling growth in all parts of the UK. For example, the £2.5bn allocated to British Patient Capital creates a significant opportunity to boost investment in the expansion and scale-up of UK companies. We ask government to:
- Implement the industrial strategy, second wave: Build on the commitments in the Industrial Strategy to support innovation in activities, such as next-generation financial services with a second wave of investment. Significant investment in digital infrastructure throughout the UK is needed to drive productivity, innovation, regional business creation, education and the better provision of public services.
- Address the skills gap: There is a mismatch between the skills sought by businesses and their availability within the labour market. The government must boost the status of technical educational programmes and take into account the regional disparity in the availability of skills. All regions within the UK must have access to the right skills to enable growth and spread prosperity.
I would welcome the opportunity to discuss this in more detail.
Michael D M Izza