SCC Response to the Autumn Budget

Chancellor’s Budget falls short of reassuring business owners, says Scotland’s leading business organisation

The Scottish Chambers of Commerce has warned that businesses are on the brink following the Chancellor’s Autumn Budget.

As Scotland’s largest business organisation, representing thousands of businesses across every region and sector, SCC is deeply concerned about the impact of the Government’s tax plans on businesses, particularly SMEs.

Dr Liz Cameron CBE, Chief Executive of SCC, said:

“After months of speculation and leaks, the Chancellor has simply delivered a trade-off budget which hikes taxes to increase government spending.

“While our members will welcome some of the encouraging announcements on regional investment and support for entrepreneurship, it is a far cry from the radically pro-business reset that firms across Scotland so desperately need. Chancellor has not done enough to restore the confidence of business.

“SCC called on the Exchequer to take serious, pro-growth measures, like targeted reductions in VAT, a reversal of last year’s ill-thought-out Employer NICs increase, and reform of the Energy Profits Levy to support the UK’s energy transition. It is disappointing and damaging that these opportunities for Scotland have fallen on deaf ears.

“But, the net effect of this Budget will be to dial up the pressure on businesses even further, in turn risking the UK’s reputation as a magnet for global investment.

“If the Government wants to make good on its stated commitment to sustainable economic growth, then it must listen more carefully to the businesses and people footing the bill.”

On the minimum wage, Dr Cameron said:

“Raising the National Living Wage by 4.1% may help stimulate demand in the short term, as some consumers feel a boost in their back pockets; but in the absence of targeted relief for already-squeezed SMEs, it will simply add to the rising cumulative cost of doing business. Without cost reductions elsewhere, businesses will suffer under the weight of additional cost pressures.”

On the Energy Profits Levy (EPL), Dr Cameron said:

“The Government’s intention to replace the EPL with a permanent windfall tax mechanism is deeply concerning for the oil and gas sector which contributes so much to UK economic growth and to the strength of Scotland’s supply chains. We join OEUK in expressing our disappointment, and the threat it poses to thousands of jobs in the North East region.

“Keeping the tax in place is both punitive and wrong-headed.

“Research from OEUK shows that reforming the EPL immediately could raise up to £15bn additional revenue by 2030. While we await full details of how this windfall tax will work, we stand with our vital North Sea oil and gas sector, and will continue to work to strengthen its role in delivering our national energy transition.”

On alcohol duty, Dr Cameron said:

“It is a missed opportunity that the Government has chosen to ignore industry-wide calls to reduce or freeze alcohol duty. This is a punishing tax on Scotland’s world-renowned whisky industry, worth £7 billion in Gross Value Added to the economy.

“Scotch is already the highest-taxed alcohol category in the UK, and these costs push investment to other, more profitable markets.

“A government serious about growth would be playing to the UK’s strengths and leveraging the commercial success of its flagship exports, not stifling them. We will work with industry and trade partners in any effort to reverse this rise, so that Scotch whisky can thrive on the global marketplace once again.”

On funding for SME apprenticeships, Dr Cameron said:

“Scrapping the co-investment in apprenticeships and training for under-25s for all SMEs, backed by over £700m of funding will help tackle youth unemployment, reduce the burden on small businesses, and boost vital training in high-growth sectors.

“We need similar action from the Scottish Government to attract talent and investment.”

On investment in Scotland, Dr Cameron said:

“The Government’s investments in Kirkcaldy, Grangemouth and Inchgreen are positive steps, which leverage Scotland’s diverse regions to support economic growth and deliver the UK Government’s industrial strategy. To make the most of these spending commitments,  business needs devolved housing and transport policy that works in lockstep with the Treasury.”

On international trade, Dr Cameron said:

“We welcome the Government’s intention to bolster the relationship with our European neighbours, leveraging overseas talent to support our economy in high-growth areas. Reforming customs treatment for low-value imports will reduce the administrative costs for SMEs trading in international markets. While we welcome this consultation as a step in the right direction, we need progress to happen at pace.”

On the electric vehicle tax, Dr Cameron said:

“The Government’s policy on EVs has been confusing, conflicted and contradictory, hurting both motorists and manufacturers in the process. The Government has signalled a desire to phase out fossil fuels – why then is it extending the cut in fuel duty, all while ramping up taxes on EVs? Businesses can support the transition away from diesel and petrol cars, but only if we have consistency and clarity.”