Outlining his “vision for a fairer Britain”, the chancellor announced that the ‘Staircase tax’, highlighted around seven months ago by the Federation of Small Businesses (FSB) as forcing SMEs that occupy split workplaces to receive hiked business rates bills, will be changed in law and any impacted business will have its original bill reinstated and any additional payments since the tax came into force refunded. 

The revaluation period reduction is aiming to eliminate the issue of 'cliff-edge' businesses that experience huge hikes upon revaluation. Hammond did not, however, issue an update on the £435m emergency relief fund roll-out to these businesses, which was first promised in April 2016. PrintWeek reported earlier this year on printers, mainly in the South, struggling with soaring business rates post-revaluation. 

Business rates bills were also initially set to rise by 3.9% in line with the Retail Prices Index (RPI) in April 2018, but Hammond lowered this to rise in line with the Consumer Prices Index (CPI), 3%, which he said would save businesses more than £2.3bn over the next five years.

“We can’t build an economy fit for the future without supporting its backbone, our 5.5 million SMEs, responsible for nearly half of our private-sector jobs,” said Hammond.

“They give our economy its extraordinary vibrancy and resilience, but I recognise that many are feeling under pressure right now.” 

Alex Probyn, president of the UK business rates division of rates advisory firm Altus Group, called the ‘Staircase tax’ news a “victory for common sense”, but warned that the shorter revaluation periods would lead to an “inevitable increase in costs”. 

BPIF chief executive Charles Jarrold praised the changes but highlighted that nothing had been mentioned about the elements of plant machinery costs that are included in the rates.

“If it is deemed to be part of the fabric of the building it increases the evaluation, then you're taxing investment, which is exactly what we don’t want to be doing,” he said. 

Hammond also said that, after consideration, he would freeze the VAT business threshold at £85,000, which he described as the highest threshold in the OECD and said would keep the majority of UK SMEs out of paying VAT.

Focusing on productivity, Hammond announced an extension to the £23bn National Productivity Investment Fund, first announced last autumn, for a further year to £31bn. A further £23bn has been secured for R&D, with the R&D tax credit increased to 12%.

Signalling the need to boost productivity, Hammond also said that business secretary Greg Clark would be issuing a white paper on the subject in the next few days. 

“Regrettably our productivity performance continues to disappoint,” added Hammond.

 “The Office for Budget Responsibility (OBR) assumes at each of the last 16 fiscal events that productivity growth would return to pre-crisis trends at around 2% per year, but it has remained flat” 

Looking even further back, we're living through the worst decade for productivity growth since Napoleon invaded Russia pic.twitter.com/aiEDLNCCfY

— Matt Whittaker (@MattWhittakerRF) November 22, 2017

Jarrold said: “I think it’s good to extend the fund and is encouraging to recognise that productivity is a problem in the UK. There is a long tail of statistically less productive organisations and there is not an easy solution to that but addressing skills and making investment easier are two key things.”

Unite assistant general secretary Tony Burke denounced the productivity fund extension as a “damp squib”.

“You’re not going to tackle productivity unless it’s tackled properly,” he said.

“Investment is okay but the reality is that you’ve got too much precarious employment and people don’t know whether they will stay with a company for any length of time. When they feel confident about their job and have the opportunity to reskill and upgrade, people will work much more productively but, as it is, we don’t; it’s flatlining all the time.” 

Burke also called on Hammond to consult with the print and packaging industries on any proposed taxation on food packaging and plastics.

Delivering his second Autumn Statement since becoming chancellor, Hammond said he was reporting on an economy that continued to grow, creating more jobs than ever before, and “confound those who seek to talk down an economy set on a path to a new relationship with our European neighbours and a new future outside the EU”.

He announced an additional £3bn over the next two years towards the Brexit preparations, on top of the £700m already spent, but reported on OBR growth forecasts slipping, with GDP growth revised down to 1.5% for this year, 1.4% for next year and 1.3% for 2019 and 2020.

On apprenticeships, Hammond said he would look at increasing the flexibility of Apprenticeship Levy payers, which came into force earlier this year but has initially led to a drop in apprenticeship take-ups, a worry considering that the government has targeted 3 million apprenticeships by 2020. 

“A shifting culture towards greater recognition to the importance of vocational training is something we really need, particularly as we move towards a Brexit world,” added Jarrold. 

Elsewhere, the National Living Wage was increased, from £7.50 to £7.83, the income tax lower rate threhold rose to £11,850 and Hammond also announced a national scheme for re-training, to boost digital skills and support the expansion of the construction sector.

Delivering the traditional budget response, Labour leader Jeremy Corbyn said the “test of a budget is how it affects the reality of people’s lives” and that this latest offering would leave a lot of people “no better off” than before.