9 March 2017

A good Budget for print, supporting the industry's long-term future

The first of two Budgets in 2017 enabled the Chancellor to deliver some good news and plenty of jokes, with an announcement of higher growth for 2017 than previously forecast, up to 2.0% from 1.4%. There were some efforts to signal that the Government is listening to business, quite possibly in part response to the recent backlash on business rate revaluations. The BPIF was delighted to see our recommendations for improving the R&D tax relief system seemingly taken up, which could open up the system more widely for the print industry. Significant boosts for technical education have been designed to promote occupations including engineering and manufacturing to young people, and to ensure they're work-ready once their qualifications have been achieved. These might be considered the biggest steps towards levelling the playing field between technical and academic education in a generation. On the whole - a good Budget for print, particularly when it comes to supporting our industry's long-term future.

Business tax
On Corporation Tax, we are pleased to see that the Chancellor has kept his predecessor's promise to reduce Corporation Tax to 19% next year and to 17% by 2020. While these reductions in Corporation Tax aren't a simple solution to deliver growth, using the fiscal regime to boost the competitiveness of the UK's offer during the Brexit process is sensible to ensure that Britain remains a competitive place to do business. However, the reduction in tax-free dividend allowance from £5000 to £2000, on top of last year's dividend tax increases, will be an additional burden on company owners. Consultations on employee benefits-in-kind and expenses have also been announced, with the Government seemingly concerned that the tax system treats the wide range of employees benefits inconsistently and unfairly. We will monitor these consultations and contribute where necessary to ensure that our members are able to continue to offer employees the range of employee benefits which are right for the employees and the business. The good news is that childcare, pensions and the cycle-to-work scheme will still be tax-free. For businesses coming in at below the current VAT thresholds, there will also be a one-year delay to the requirement to submit quarterly tax reporting using the new Making Tax Digital initiative, giving the smallest of businesses more time to adjust.

Also for small businesses was a cap of £50 a month for those losing their business rate relief and a £300m fund for discretionary rate relief for those struggling in the local area. Quite how the £300m will be allocated between local authorities isn't yet clear, but with many BPIF members, especially in London, the hardest hit by the recent revaluations, we will be watching closely to ensure that those members most affected see some relief. Also announced was a plan to reform the business rates revaluation process, with the aim of making it smoother, more frequent and avoiding dramatic rise rises. The Government will consult on this, and we will ask for your views ahead of making a submission.

Finally, there will be no vehicle excise duty (VED) increase above RPI, and a freeze on VED for HGVs and the Road User Levy, welcome news for our members heavily reliant on road transport to reach customers up and down the country.

R&D Tax relief
In our pre-Budget submission to HM Treasury, the BPIF called for HMRC to take steps to increase the understanding of the scheme in our industry, in order to encourage take-up. So we were delighted to hear that the Government has today committed to take action to improve awareness of R&D tax relief to small businesses, and we hope to work with them to ensure that our ideas are included in their plans for improved communications.
We also pointed out that investing profits into plant and machinery assets generally fall outside of eligibility for R&D tax relief. However, the Government has today committed to make 'administrative changes' to the R&D Expenditure Credit, so we hope that this means there is potential for including capital expenditure in future, as well as revenue expenditure. This would be great news for those investing in plant and machinery for the purposes of advancing knowledge and capability in our industry.

Education and skills
A host of measures were announced with the intention of removing the stigma around technical training and placing it on a parity with academic education. We very much welcome the aim, and intend to play a significant role in monitoring whether the Government's steps to get there are the right ones. The most significant is the introduction of new 'T Levels', of equal value to A-Levels, based on recommendations made by the Sainsbury Review last Spring. The new 'T-Levels' will replace 13,000 qualifications with just 15 - the 'career-focused routes' relevant to our industry are likely to fall into the following four categories, Business & Administration, Creative & Design, Digital and Engineering & Manufacturing. At the same time, the number of hours training for 16-19 year old technical students will increase by over 50%, and maintenance loans will be available for those studying at technical colleges as an encouragement. The new qualifications will include a three-month work placement for every student. Done well, we think this has the potential to go a long way to ensuring that young people are work-ready when they come to their first job, which we know is a concern for many of our members. We will watch with interest - and contribute where possible - to the plans to streamline technical training down to just 15 qualifications, to ensure that these reflect what the printing industry needs from its young workforce.

The £23bn of science and innovation funding announced in November's Autumn Statement was also given more detail today, including £300m for 1000 PhD places in Science, Technology, Engineering and Maths (STEM) subjects - which could include print technology.

A business environment that supports competitiveness and growth for our members is always at the forefront of the BPIF's messages to Government, and along with the outcomes of the Government's current Industrial Strategy consultation, we hope that today's Budget will help deliver that. With a bumper year of two Budgets - another expected in Autumn - we will not miss any opportunities to ensure that our members' views contribute to Government's decision-making.