Monday 6 February 2017 12:05 am

Government should cut business rates if there is a Brexit slowdown says CBI

The government should be prepared to cut business rates in the event of a Brexit slowdown, says an influential business group, while expressing concerns the apprenticeship levy may not be ready in time.

The Confederation of British Industries (CBI) expects growth to slow in 2017 to 1.5 per cent, and wants the government to be ready to help businesses.

“We can see a lot of headwinds this year,” said Rain Newton-Smith, chief economist at the CBI. “We highlight business rates as an area where the chancellor could take action.”


Read more: The last Spring Budget will be on 8 March 2017 – before Article 50

The group has also called for the chancellor to bring forward the point at which business rates increases are benchmarked against the consumer price index rather than the retail price index in its submission to the chancellor ahead of the budget. The early adjustment would cost the government £1bn, according to CBI calculations.

The CBI also highlights risks the apprenticeship levy will not function as planned, with concerns the supply of high-quality training will fall short of demand.

Business groups have previously condemned the apprenticeship levy of 0.5 per cent on company payrolls above £3m, while an independent report by the Institute for Fiscal Studies showed the forecast revenue was not all being directed towards training.

Newton-Smith said: “In effect the apprenticeship levy works as a tax on payroll. What we want to see is that that is directed towards training.”

Read more: The apprenticeship levy – little more than a stealth tax?

The budget will take place on 8 March, when the chancellor is expected to reveal more details of his National Productivity Investment Fund (NPIF). The budget will be the last to take place in the spring as the UK moves in line with most other countries in having a single fiscal event per year.


The UK’s productivity growth is persistently lower than other developed nations, and there are big disparities in productivity by region, with the Bank of England pointing to a majority of companies lagging behind those on the cutting edge.

The £23bn NPIF is expected to try to address this, although economists' opinions differ on whether it can achieve this.

“One of the things we want to see [in the budget] is more clarity on how the money is spent,” said Newton Smith, with more detail on research and development spending as well as how existing funding bodies will fit in the plan.

The CBI says raising education and training levels – a key component of productivity gains – should be prioritised by the chancellor, with a "leadership investment fund" to boost the standard of head teachers.

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