Robert Lloyd Griffiths, Director of the Institute of Directors in Wales, said:
“Businesses see strong public finances as the basis for sustainable economic growth, and will welcome Osborne’s confirmation today that he aims to run a budget surplus by the end of the Parliament. The Chancellor was dealt a remarkably strong hand by the Office of Budget Responsibility, which is predicting stronger growth, lower than expected borrowing costs and significantly higher tax receipts. He’s chosen to play this hand with more spending than expected. Although departmental budgets outside the ringfence are seeing significant reductions in expenditure, overall the Chancellor will continue to preside over a rising real terms budget this Parliament.
“There will be plenty of complaints about individual cuts, but it’s important to remember that total debt will still be colossal, over £1.715 trillion (70% of GDP), by the end of the spending review period. The Chancellor will know that if the economy chills and tax receipts disappoint, his plans will suddenly become much harder to achieve. With over a dozen tax consultations launched since the election, there is a real worry for businesses that next year’s Budget will see further tax increases.
“The major business tax announcement of this Autumn Statement was the Apprenticeship Levy, which 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. We are concerned by the Government’s assumption that a quarter of the money collected will be spent on just administering the levy.
“Further clarification is needed as to how this tax will be operated in Wales, so that Welsh businesses benefit from an even distribution. We would obviously have concerns if this is to be a tax raised across the UK, but any benefits were denied to Welsh businesses.
“From a Welsh perspective, the commitment in principle to support a new infrastructure fund for the Cardiff Capital Region (as part of a City Deal) is to be warmly welcomed and the IoD and, I’m sure the entire business community, will want to play its part in a successful outcome to this initiative.
“Naturally we are disappointed with today’s announcements of the delays announced to rail electrification, particularly to the extension from Cardiff to Swansea. But, this is a delay and there is commitment to actioning it in future.
“We note the Chancellor’s comments on the funding for the Welsh Government, particularly in relation to the funding floor, and also his comments on income tax, and will play our part in the debate of responsibility and accountability, which, of course, is the key to good governance and is particularly aligned to the interests of IoD members in Wales.
“We would have liked to have seen the Swansea Bay Tidal Lagoon Project being specifically referred to, as this transformational project represents such a major opportunity for South Wales and the wider Welsh economy. Business wants this to happen.
“The Chancellor’s re-affirmation of borrowing powers for the M4 relief road is noted. We just now need to get on with it.”