Liz Cameron
This week, the Chancellor of the Exchequer will publish the detail of his long awaited Spending Review and, whilst much of the attention has been on the Government’s plans for tax credits and Universal Credit, businesses will be awaiting news on a host of other issues too.
In his summer budget after the General Election, George Osborne made a number of important announcements that will affect businesses and the spending plans of the Scottish Government. Among these was the unveiling of the Apprenticeship Levy – a tax on large businesses to help fund ambitious plans to expand the apprenticeship programme in England. However this tax is expected to be applied to large business throughout the UK, including those in Scotland, and the question is what these businesses can expect in return. Of course, that decision will be one for the Scottish Government, since powers over apprenticeships are devolved and Scotland will receive a share of any revenues raised by the tax to spend as the Scottish Parliament sees fit. However we will be looking closely at the Spending review to see which businesses this tax will hit and how our Governments in Edinburgh and London will co-operate to deliver a return.
While Business Rates in Scotland are fully devolved, we will also be studying the detail of the Chancellor’s plan to reform the rating system in England, elements of which were revealed a few weeks ago. At a time when this tax in Scotland is unfit for purpose, it is interesting that it is the UK Government that is thinking seriously and creatively about how its operation could be improved south of the border. This is likely to result in even greater competitive disadvantage to businesses paying Rates in Scotland and, indeed, to local councils and the case is now overwhelming for the Scottish Government to fundamentally reform Business Rates as its revenue raising powers expand.
On the subject of new taxes, we will also be interested to see how the UK Government’s planned new Roads Fund will work. This promises to pay for investment in roads in England through a reformed Vehicle Excise Duty. Again, we need to see more detail about how this could help fund transport investment in Scotland, particularly as we expect the Spending Review to signal further significant cutbacks to public spending right through until 2020. Make no mistake, this Spending Review matters for Scottish business.
Liz Cameron is chief executive of Scottish Chambers of Commerce
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