In his speech yesterday (27 October), Sunak pitched the measures as putting in place foundations for “the stronger economy of the future”.

“An economy fit for a new age of optimism. Where the only limit to our potential is the effort we are prepared to put in and the sacrifices we are prepared to make,” he said. 

Sunak said the five key takeaways from the budget and spending review were: strengthening public services through a £150bn increase in spending; investing in growth and levelling up with £130bn spend on economic infrastructure and investing in innovation; investing in skills to spread opportunity; helping families with the cost of living via the previously announced rise in the National Living Wage, reforming the alcohol duty system and cancelling the planned fuel duty increase; changing the Universal Credit taper rate; and setting out new fiscal rules to help repair the public finances. 

The long-awaited and much-hoped-for reform of business rates remains on Sunak’s ‘to do’ list, but there will be a 50% business rates discount (up to a maximum of £110,000) for the retail, leisure and hospitality sectors in England in 2022-2023.

Despite Sunak’s upbeat tone, in response the Institute for Fiscal Studies (IFS) warned that millions of people would be worse off in the short-term due to upcoming tax rises and rising inflation leading to soaring costs. 

Director Paul Johnson said: “This is the year when a Conservative chancellor raised taxes by £40bn or so; when the tax burden was put firmly on a path to exceed 36% of national income and hence settle at a record sustained level, a full 2.7% of GDP higher than it was in 2019-20; and when public spending was increased across the board to take the size of the state back to levels not seen in normal times since the days of Geoffrey Howe.

“It is important to be clear. This is almost entirely a set of policy choices unrelated to the pandemic. What we have had is a chancellor responding to the ever-increasing demands of the healthcare system on the one hand, and the increasingly dire plight of the likes of the justice, social care and prison systems, starved of funding for a decade, on the other. He has also presided over big increases in capital spending that were put in place by his predecessor.

“The worry for the government is that, for all the chancellor’s upbeat delivery, the voters may not get much feel-good factor. High inflation, rising taxes, and poor growth, still undermined more by Brexit than by the pandemic, will see real living standards barely rising and, for many, falling over the next year,” Johnson stated. 

Reaction to the autumn budget:

Charles Jarrold, CEO, BPIF

“Overall, it’s a budget that moves in the right direction – on skills very positively; on investment and support for business, which is so important right now, less so. On the skills side, support for training generally, and especially in apprenticeships is really good news; the employer incentives to take on an apprentice has been extended to January 2022 which is good news, and apprenticeship funding has also been increased although we need to look at the detail on that. Kickstarter has had its challenges, but in our sector been quite successful, so we are pleased to see that extended to March 2022. 

“UK print really sets an example with its training culture, and it’s really important that government recognises the importance of work based employer led training, and this budget moves in that direction.

“In terms of overall business support, there’s quite a lot to welcome, but, in the environment that so many of our members find themselves in, especially with the pressures on finding staff, supply chain costs and energy, we’re going to need to work closely to see what additional steps can be taken to support businesses in the short and medium term. 

“The steps taken in respect of support for investment are helpful and we hope those will be extended beyond the short timeframe they’ve been confirmed for, and the business rates support for retail and hospitality, an important element of print’s demand base will help the recovery in members businesses. Steps on rates don’t go far enough though, we want to see much greater reform in business rates to support UK print and manufacturing more generally.”

“We’ve had the National Insurance increase this year, and the real issue now is the pressure on businesses as they come out of Covid, and the pressures on cashflow as they scale up. There’s a real need for industry and government to work really closely as we get through this period.”

Andrew Large, director general, Confederation of Paper Industries

“Disappointed in the budget – a missed opportunity to address soaring industrial energy costs and their impact on competitiveness. Industry was promised constructive engagement on energy issues more than two weeks ago, but no information on potential support has been forthcoming, while other nations such as Italy and Spain have offered significant support already.

“Government support for decarbonisation is welcome, but is on a tiny scale in comparison to that of European competitor nations.

“The Chancellor’s comments on the role of government are concerning. governments all over the world work in partnership with their major industries. In the real world, government support is a positive factor in attracting the investment essential for the UK to achieve net zero. If companies are not convinced that the UK Government is a reliable partner in this massive economic and energy transition then investment will leak away and the UK will decarbonise by de-industrialising.

“Government bears substantial responsibility for UK energy costs. It is government that has created the underlying structural issues for industry such as how energy transition costs are shared, how network development is paid for, and how electricity is generated. The government cannot therefore shirk the obligation to engage with industry to resolve this energy crisis. We’re ready to come to the table and talk constructively – but it takes two to tango.”

Graeme Smith, chairman, IPIA

"The budget has sought to address a number of key areas where manufacturing and industry sectors such as print are the hardest hit, with some welcome measures. The cancellation of the fuel duty rise is very important, as with so many challenges contributing to pressure on margins, this is at least one area where there can be some relief. 

"As the retail, hospitality and leisure sectors are a bread basket sector for the commercial and promotional print sectors, then the 50% business rates discount is an important shot in the arm that will hopefully rebuild confidence in this sector, take some pressure off budgets and release spending on areas such as printed marketing and communications. With much of the industry still only at 85 - 90% of pre-Covid demand levels, such initiatives are crucial. 

"While inflation remains a real threat, it was also heartening to hear the Chancellor set out his vision for a 'new economic model' that focuses on driving growth through wage increases and a focus on building productivity. This position of moving towards investment over retrenchment and also setting out a plan to further the 'levelling-up' plan is also key, as the heartlands of our manufacturing belt will benefit if it can be delivered on. For instance, the investment of £21bn on roads and £46bn on railways to improve journey times between cities is sorely needed if we are to keep up with other developed nations."

Sharon Graham, general secretary, Unite the Union

“The chancellor’s statement today makes it clear that the government wants workers to pay for the pandemic. Their incomes are under attack from tax rises and inflation while the super-rich will continue to prosper. That is not acceptable.

“So, workers will need unions more than ever. Union members consistently get higher pay than non-members and Unite the union will be fighting to improve our members’ real wages in the face of these attacks.

“This budget also failed to invest in growth and jobs on anything like the scale required. The government delayed its own targets for R&D investment and the talk about world class public services is laughable – we will need more than a little bit of rowing back on the damage done by years of austerity policies to get there. This is a million miles away from fixing the every-day realities of life for those facing broken services or those in the never-ending queue for vital NHS operations.

“Then take the raising of the National Minimum Wage. An extra 59p is nowhere near enough. So, to get a decent wage workers will still have to fight and win pay rises by organising in unions and fighting for a better deal.

“The chancellor said CPI will average 4% next year. But that figure understates the real rise in cost of living for ordinary workers, which is better illustrated by RPI. The OBR says that RPI will hit 5.4% in the first and second quarters of 2022.

“We will be fighting for serious increases in workers’ pay that mean their real incomes go up rather than being reduced.

“This was a budget of smoke and mirrors and in time will be seen to be one of insignificant promises that will never be kept. New economy? More like same old same old.”

Mike Cherry, national chair, Federation of Small Businesses

“This budget has delivered some measures that should help to arrest the current decline in small business confidence.

“But, against a backdrop of spiralling costs, supply chain disruption and labour shortages, is there enough here to deliver the Government’s vision for a low-tax, high-productivity economy? Unfortunately not. Where inflation and forthcoming tax hikes are concerned, the clouds are gathering.  

“It’s good to see the Chancellor embrace our recommendation for business rates reform: changing the system so it stops hitting small firms that invest to make their premises more sustainable with higher bills. 

“That said, much more will be needed to support small employers in the months ahead. Our call for an increase in the Employment Allowance to £5,000 would have made a real difference to efforts to increase wages, retain staff and create jobs as we head into the critical festive season. 

“Wider rates reform is positive, especially the promise of a substantial discount on bills for the hard-hit retail, leisure and hospitality industries, alongside cancellation of an increase in the rates multiplier.  

“Ambitious investment in skill development is much-needed, and should rightly go some way to putting vocational training on a par with academic qualifications. 

“We look forward to more detail on how funding for T-levels, apprenticeships, bootcamps and lifelong learning will reach the smallest businesses that make the biggest impact when it comes to creating opportunities within local communities.

“Vital too is expanded funding for the British Business Bank, empowering it to extend the reach of its work and add to its thousands of existing success stories across the UK.

“If the OBR’s concerning inflation forecasts come to pass at the same moment when national insurance contributions and the living wage rise significantly, many small firms will be considering their futures – we’ve already lost close to half a million over the last year.

“National insurance contributions serve as a jobs tax, one which threatens to seriously hamper our economic recovery over the coming months if the planned increase to them is left unaddressed.”  

Tony Danker, director general, Confederation of British Industries

“On business rates, the Chancellor made real strides in making the system more palatable for businesses in the shorter term. More frequent valuations, wider reliefs and improving the incentives for firms to decarbonise their premises is what firms have been calling for. But the hard truth is that wholesale reform to unlock investment was rejected today. The Government missed the opportunity to truly reform a business rates system that diminishes Britain’s high streets and factories.

“The Government’s commitment to innovation will be a central cog to the UK’s prospects to leading in the industries of the future. This will be essential to be globally competitive so the Government must stick to these targets in the coming years.

“Meanwhile, businesses will welcome the new skills bootcamps. This agile approach must now be the watchword when it comes to revolutionising the skills landscape, including for apprenticeships.

“This budget alone won’t seize the moment and transform the UK economy for a post-Brexit post-Covid world. Businesses remain in a high tax, low productivity economy with concerns about inflation. But the budget will have a positive impact across the economy and makes several changes that will be welcomed by UK businesses.”