Autumn Statement: 'Austerity is working'

Chancellor pledges more investment in skills and apprentice schemes, but some in the channel felt he could have gone further

Chancellor George Osborne claimed his austerity plans were working today in his Autumn Statement, with growth in 2013 set to hit 1.4 per cent, up from 0.6 per cent.

Looking ahead to 2014, the Office for Budget Responsibility (OBR) said economic growth will be 2.4 per cent, up from 1.8 per cent.

Employment rose by 400,000 in 2013 according to the OBR, with unemployment falling from 7.6 per cent this year to seven per cent in 2015, and 5.6 per cent by 2018.

The chancellor also said that employer National Insurance contributions will be removed on workers aged under 21 – which affects 1.5 million jobs, and the small business rate relief scheme will be extended for a further year from April 2014.

Inflation increases in business rates will be capped at two per cent from April 2014.

Osborne also appeared to clamp down on large-scale tax avoidance both in corporates and on a personal level, and he pledged to invest in more apprentice schemes to address the growing skills crisis in certain parts of the economy – a particular issue in the IT sector.

This point was welcomed by the industry, although some felt more should be done by the government to encourage private sector growth.

Ian Jackson, managing director of security VAR Imerja, said: “We are encouraged by the government's continued support of the technology sector with both short and long-term solutions. The industry is facing a skills shortage and measures such as these will help in addressing it.

“Ours is a sector which has the potential to get the British economy back on track, and we are pleased that this has been continually recognised by the policy makers.”

Tim Patrick-Smith, CIO at service provider Getronics, added: “It’s promising to see the chancellor commit to creating more higher apprenticeships over the next two years and this should go some way in helping to close the technical skills gap.

“That said, the IT skills shortage is still a complex problem that requires stronger attention from the UK government. Politicians, schools and businesses must work together to introduce next-generation computing skills to the school curriculum. Progress needs to be made here before the next general election in order to equip the workforce of the future with the skills needed to fuel British growth.”

But Patrick-Smith felt the benefits could have gone further.

“I would have liked to see tax breaks for SMBs providing their own IT equipment and office space, as well as more support for companies providing tax-efficient allowances to staff bringing their own devices to work,” he said. “As a driving force behind the UK economy, the government needs to do more to help small businesses stay agile and grow through smart use of technology,” he said.

Darron Antill, chief executive of Intrinsic Technology, felt not enough was being done to support mid-market businesses.

“With every Budget statement we hear commitments made to small businesses and enterprises, yet the chancellor should give mid-market business the limelight and support they deserve,” he said.

“Despite the downturn, these businesses continue to create jobs and wealth. Training and skills development are absolutely crucial to helping these businesses realise their ambitious growth plans and break into the enterprise sector, so the chancellor’s pledge to create new apprenticeship schemes is encouraging. However, it would also be useful to see Osbourne giving mid-market employers more control over the design and funding of apprenticeships to ensure they are tailored to their business needs.”

Phil Orford, chief executive of the Forum of Private Business, welcomed some of the announcements but said there was still work to be done.

“There are some positive measures in today’s speech to help reduce the cost of doing business. With fuel duty frozen, £1,000 rebate on business rates and a subsidy on employing young people, there are measures worth thousands to small businesses. Within a time of constrained budgets, it is good to see the chancellor has listened to the concerns of small firms around rising costs.

“Of course, there are other issues not addressed directly today, but upon which work is ongoing. Top among these is energy prices. We are working hard to ensure members benefit from any reining back of green taxation,” he said.