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This week, the NFDA have submitted their Budget Statement to the Chancellor outlining our views on key aspects such as cutting red tape, corporation tax cuts, consumer credit and business rate relief, to name a few. Below is the NFDA’s full submission.
The retail motor industry is acutely aware of the impact of current economic issues in the global marketplace and particularly the effect in the UK. New car sales are frequently used as a barometer for the economy and are closely linked to other key economic indicators. We are aware that registration figures hide the current fragility of the marketplace and, although new sales figures and forecasts remain positive, it is imperative that Government work to sustain and build upon this growth.
Government must continue to stimulate the economy in order to sustain and build upon the growth of the retail motor industry and other key sectors. An economic environment needs to be created that not only incentivises growth and investment but also stimulates consumer confidence and demand. To secure the future growth of the UK economy, Government needs to continue to improve employment prospects and business confidence through a low and simple tax and regulatory regime that works to encourage the retention and employment of staff and also encourages business expansion. The UK needs to be seen as a low tax environment that encourages business to invest and grow with a simple and straightforward tax regime. This will have both the benefit of helping businesses with tax compliance as well as insuring that tax authorities collect what is due.
The following paragraphs set out some of the major concerns of the retail motor industry that must be addressed in the forthcoming budget statement:
Cutting the regulatory burden on business
It has been positive to see Government’s continued commitment to cutting burdensome red tape and it is imperative that reforms are put into place at both a national and European level. Government must continue to work with UK businesses and the European Commission to implement the measures proposed in key reports such as the Business Taskforce report ‘Cut EU Red Tape’ in order to stimulate the growth of small businesses and the UK economy.
The Draft Deregulation Bill must be enacted into law as soon as possible and Government must continue to address the burdensome and often unnecessary regulation imposed on businesses, starting with much needed reform of employment and health and safety regulation.
Corporation tax cuts
The UK needs to ensure that it has the most competitive regime for businesses to encourage inward investment and business start up. To this end, the Government should look to reduce corporation tax rates during the current Parliament for both SMEs and larger corporations.
We have been encouraged by the reductions already introduced by the Government but would urge further cuts to allow corporation tax to be in line or beneath our European competitors.
Business rates relief
High business rates impose a significant burden on businesses and, with the current fragility of economic growth, Government should commit to freezing business rates for the foreseeable future. Business rates have been hiked for the last three consecutive years and further increases would only serve to negatively impact employment and growth.
We also encourage Government to commit to extending small business rate relief schemes beyond their current deadlines, in doing so reconfirming their commitment to supporting small and rural businesses.
Government needs to ensure that the transfer of consumer credit responsibility from the Office of Fair Trading to the Financial Conduct Authority is a smooth and simple process for businesses. Although we have been heartened by the public consultation process so far, particularly regarding fee structure, we are concerned that small firms will struggle with compliance cost, particularly around reporting requirements.
Government needs to closely monitor compliance costs for small firms and encourage finance houses to develop low cost options for small firms.
Whilst we agree with Government that the English Apprenticeship model is in need of reforming, we are extremely concerned about the announcement on funding reform due in the coming months. As an industry we employ thousands of apprentices every year and, if reforms are enacted that will place the financial burden of apprenticeships on the employer, it is highly likely that there will be a significant decrease in the number of firms willing to take on an apprentice.
Many businesses already face significant costs when training apprentices and adding to this burden will undoubtedly lead to a drop-off in demand. We urge Government to work with industry to undertake a full and detailed impact assessment into the consequences of funding reform and to take into account the damaging consequences funding reform could have on Apprenticeship take-up.
Although it is positive to see the retail motor industry recovering from the economic downturn, we cannot afford to get complacent. The market remains fragile and it is imperative that Government develop tangible policies to sustain growth.
While the manufacturing of vehicles is a key element of the British economy, not all the vehicles that are produced can be exported, and there is a need for the retail market in the UK to be strong and viable to sell vehicles domestically. It is no good making vehicles if we cannot sell them.
The UK car retail market is a vital part of the national economy and the NFDA believes it is essential that the forthcoming Budget is used to the best possible effect. It would be a pleasure to have the opportunity to discuss these proposals further.