The UK government’s Autumn Statement for 2023 was released in November. It presents a series of key fiscal policies and economic measures poised to substantially influence businesses across various sectors including Facilities Management, Water and Drainage.

This blog post aims to explore the specific implications of the Autumn Statement for our customers. We will examine the impact of debt reduction strategies, changes in taxation, enhanced support for business investment, and the broader economic outlook. These insights are intended to help businesses in these sectors navigate the evolving economic landscape and align their strategies with the government’s fiscal direction.

The Autumn Statement 2023 places a strong emphasis on reducing national debt and borrowing, which is crucial for maintaining stable inflation and affordable mortgage rates. The government’s approach involves a series of difficult decisions to lower borrowing and debt as a percentage of GDP.

For larger businesses, this means a more stable economic environment, which is beneficial for long-term planning and investment. It should also help reduce inflation and long term interest rates which are key when making investment decisions such as investing in infrastructure or new housing starts which can impact our customers and their subcontractors.

The government is on track to meet its debt and borrowing fiscal rules, providing greater predictability in the economic landscape​.

In an effort to boost economic resilience and support working individuals, the government is implementing significant tax cuts. The main rate of Class 1 employee National Insurance contributions will be reduced from 12% to 10% starting January 2024, benefiting over 29 million working people.

Taxes for the self-employed will also be cut, with Class 4 NICs reduced from 9% to 8%, and Class 2 NICs abolished. These changes are expected to increase employment numbers and benefit those working increased hours.

For our larger customers, this could translate into potential savings on employment costs and a more dynamic labour market which should benefit many of our customers who have struggled to recruit in a labour market which has been difficult over the last few years.

The government is actively promoting business investment and growth. Notably, on Capital Allowances, it has made full expensing permanent which it says is the biggest business tax cut in modern British history. The changes aim to boost the UK’s capital stock and close the productivity gap with other countries.

The change allows companies incurring qualifying expenditure on the provision of new plant and machinery to claim a 100% first-year allowance for main rate expenditure and a 50% first-year allowance for special rate expenditure. This change is particularly beneficial for some of our companies who invest heavily in plant and machinery​

The government is also introducing measures to simplify and improve R&D tax reliefs and reforming the planning system to facilitate investment in critical infrastructure. It will merge the current small or medium enterprise (SME) and R&D Expenditure Credit (RDEC) schemes for accounting periods beginning on or after 1 April 2024.

Additionally, there’s enhanced support for R&D intensive SMEs, providing a higher rate of payable tax credit for eligible SMEs. The intensity threshold required to qualify for this enhanced support will be reduced from 40% to 30% from 1 April 2024

The rate of Aggregates Levy will increase in line with the Retail Price Index (RPI) from 1 April 2024. This change could affect costs for companies involved in construction-related activities, including those in the facilities management sector that deal with building materials​​.

Landfill Tax Rates: The standard and lower rates of Landfill Tax will increase in line with RPI, effective from 1 April 2024. This increase could impact companies in the water and drainage sectors, particularly those involved in waste management and disposal activities​​.

The Construction Industry Scheme (CIS) will be reformed with changes to the Gross Payment Status test in the CIS, including adding compliance with VAT obligations. The changes will also expand HMRC’s powers to remove Gross Payment Status in cases of serious non-compliance. This reform could impact companies in the trades, particularly those involved in construction and related activities​.

These tax changes are designed to encourage investment in plant and machinery, simplify the tax system for R&D activities, and adjust the tax rates in line with economic indicators, which could have various implications for businesses in the water industry, facilities management, and trades.

The Autumn Statement presents a positive outlook for the UK economy, with the Office for Budget Responsibility revising its forecast for growth upwards. The economy is expected to grow in every year of the forecast period, driven by government policies that aim to boost business investment and bring more people into the labor market.

This growth is expected to enhance the economy’s potential output, leading to the largest increases in potential GDP since the establishment of these fiscal measures.

For larger businesses, this suggests a conducive environment for expansion and investment which should also have a knock on effect for subcontractors and smaller suppliers.

The 2023 Autumn Statement sets forth a strategic framework aimed at strengthening the UK’s economic stability and growth.

For many of our customers across Facilities Management, Utilities and the Trades, the implications are manifold: a stable economic environment with controlled inflation, significant tax cuts, enhanced support for business investment, and a favourable economic outlook.

These measures collectively pave the way for growth, innovation, and expansion in the UK’s business landscape. Following a period of challenge, the outlook finally appears to be looking up with opportunities for our customers to leverage these changes and expand their operations.