Included in this is a £400million Northern Powerhouse investment fund to help small business growth in the area. Details were also given on the apprenticeship levy, announced in the Summer Budget. The levy will be come into effect in April 2017 at a rate of 0.5% of an employer’s pay bill. A £15,000 allowance for employers will mean that the levy will only be paid on employers’ pay bills over £3m, meaning less than 2% of UK employers will pay the levy, which will create 3m apprenticeships by 2020.
Semta has welcomed the clarity given on the apprenticeship levy, but Semta’s chief executive, Ann Watson warned: “While £15,000 to offset the impact on employers is to be welcomed it is important to note, with the levy affecting employers with a wage bill of £3m or more, many SMEs could end up paying the levy and not just the big businesses as has been suggested.”
Simon Walker, director general of the Institute of Directors, went further by saying the levy "can only be described as a new payroll tax. At 0.5% of payroll it will be a big new cost for many companies, including medium-sized ones".
Watson said it said it was vital all sides now work together to make sure implementation of the levy is fair, workable and affordable.
The Department of Business, Industry and Skills’ budget will be cut by 17% from £16.6billion to £13.2bn in 2019-2020 and capital investments more than halved from £3.8bn to £1.7bn.
Secretary of State for Business, Innovation and Skills, Sajid Javid, said: “We are putting Britain’s economic security first and that means making further savings to eliminate the deficit.
“In the next five years we will create more opportunities for businesses to grow. By increasing productivity and competitiveness we will make Britain the best place in Europe to do business, create a stronger, more resilient economy and provide greater security for working people.”
Science funding of £4.7bn will be protected in real terms, including a £1.5bn Global Challenges Fund. Also, the Government has committed to maintaining Innovate UK support for businesses and funding aerospace and automotive technologies for 10 years, with over £1bn addition funding for innovation in these sectors.
Carolyn Fairbairn, Confederation of British Industry’s director-general, commented: “Businesses will be pleased to see the Chancellor staying the course on deficit reduction, his commitment to an industrial strategy, and the emphasis on nurturing a vibrant business community.
“This was a good spending review for longer-term investment in the economy but the cumulative burden of the living wage, apprenticeship levy and business rates risk hurting competitiveness,” she concluded.
Dr Colin Brown, director of Engineering at the Institution of Mechanical Engineers concluded: “Although some of the proposals in the spending review are encouraging, the cuts and efficiency savings earmarked for transport, energy and healthcare are worrying. It also worrying that in his hour-long speech there was not one mention of the word ‘engineering’. It is only by the application of science and engineering that we will achieve the efficiency savings the Government is aiming for.”
