The apprenticeship levy of 0.5% on employers’ pay bills was described as a “blunt instrument” that would hit larger businesses. The levy will be introduced in April 2017, although only firms with wage bills above £3M must pay.
The day-to-day operating budget of DEFRA will also be slashed by 15%, sparking concerns about the impact on the department’s activities.
The UK Trade and Investment (UKTI) department will have its budget cut from £299M in 2015–16 to £277M by 2019–20. The government aims to make it a “world-class export and investment promotion agency.”
Meanwhile, George Osborne has done a U-turn on proposed changes to tax credits, safeguarded police budgets and laid out his industrial strategy for Britain.
Autumn statement – at a glance
- Apprenticeship levy of 0.5% on employers’ pay bills.
- DEFRA day-to-day operating budget cut by 15%
- Plans to cut tax credits scrapped
- Shift from grants to loans for Innovate UK
- UKTI budget cut from £299M to £277M by 2019–20
- Food and Drink Federation director general Ian Wright said the industry body was speaking with DEFRA to understand the impact of the cuts and raised concerns over the apprenticeship levy.
“The rate announced today will be a cause of concern for larger businesses, and may hit company investment pots for staff training and, perversely, new apprenticeship starts,” he said.
“Government’s emphasis on research and innovation is both timely and heartening.”
EEF the manufacturers’ organisation chief executive Terry Scuoler chief executive said: “The chancellor’s enthusiasm for an industrial strategy for Britain is hugely welcome, as is his promise to continue to support Catapult centres, the successful incubators of new business ideas and product development.”
He added: “The apprenticeship levy is a blunt instrument, and the government must work hard to ensure employers are not disadvantaged and that many smaller and medium sized businesses are exempted.”
- National Farmers Union chief economic adviser Gail Soutar said: “The chancellor has announced that the DEFRA day-to-day operating budget will be cut by 15% and we must wait for more details before understanding the full impact of this on farmers.
“It is reassuring that the flood defence budget will be ring-fenced and that the government will prioritise spending on animal and plant disease prevention, for example by continuing to invest in implementing its 25-year strategy to eradicate bovine tuberculosis.”
- Confederation of British Industry director general Carolyn Fairbairn said: “This was a good spending review for longer-term investment in the economy but there’s a sting in the tail in the size and scope of the apprenticeship levy.”
She added: “Firms will be reassured by the protection of the science budget, but the shift from grants to loans for Innovate UK could dampen bold and game changing innovation, particularly amongst smaller businesses.”
- KPMG head of retail in the UK David McCorquodale said: “The retail sector continues to face significant cost increases from the already announced National Living Wage and was hoping for earlier reform of the business rates from the promised review.
“However, the chancellor has kicked the ‘business rate can’ further along the road until the budget.”
- Freight Transport Association director of policy Karen Dee criticised the government’s decision not to reduce the fuel duty.
“The lack of recognition of the importance of reducing fuel duty is a missed opportunity by the government in the Autumn Statement,” she said.
- PwC industrial manufacturing leader Cara Haffey said: “Moves to create three million apprentices by 2020 will be a boost to the manufacturing sector as they look to secure their talent pipeline for the future.
“However, this comes with a bit of a sting in the tail and manufacturers will be looking to understand the devil in the apprentice levy detail.”