As far as we could see, overall the statement was a mainly political and fiscally neutral one, with little in the way of major changes that were not already leaked, briefed or expected. Much of it was, understandably, devoted to outlining the recent improvements made on the growth, employment and the national debt. It was also a ‘don’t rock the boat’ statement with a healthy dose of ‘we’re not out of the woods yet’ and sensible calls for further long term fiscal responsibility, given the remaining scale of the deficit.
Plenty of political capital was made of the fact that the recession in 2008/09, inherited by the Chancellor, was deeper than previously thought but that the country did not actually suffer a ‘double-dip’ on his watch. Whilst the targets that he set himself in 2010 have by and large not been achieved, being able to paint the UK as now growing faster than any other major, developed economy and confirming the previously reported upturned OBR growth forecasts of 1.4% this year and 2.4% next year, for the UK economy, were easy wins.
There was plenty of forecasting of growth rates, annual borrowing figures and reductions in the deficit, out as far as 2018/19, but how accurate these will prove to be is anyone’s guess. Continued fiscal prudence was emphasised with “fix the roof while the sun is shining” rhetoric and more practically the formal announcement of the welfare cap and further departmental budget cuts over the next 3 years, as well as a ‘charter for budget responsibility’ setting out targets for continually reducing debt as a percentage of GDP.
Other than broad economic measures, the Chancellor attempted to tackle what he highlighted as remaining risks (or unhappy voters?) in the economy – namely youth unemployment, small businesses, exports to emerging markets and the cost of living, with measures ostensibly aimed at small businesses, the young unemployed and the eponymous ‘hard working family’.
Perhaps the single item of most specific relevance to contract and freelance workers could be the brief reference, in the tax avoidance section of the speech, to clamping down on disguised employment intermediaries. Commentary within the industry has suggested though that this is to likely to refer to employment agencies engaging workers with self-employed status, as well certain partnership (non-limited company) arrangements and a continuing focus on office-holders using personal service companies to pay themselves. It is thought that genuine self-employed contract workers, using limited companies or PAYE umbrella arrangements were not the main focus and that no changes to IR35 are intended, with changes to Agency Workers legislation more likely.
However, there was little detail behind the reference and with a House of Lords committee currently looking at the role and impact of personal service companies on tax collection and further HMRC resource allocated to IR35, we’re certainly not being complacent, though we remain confident that genuine self-employed workers should not be at risk.
Other aspects of the statement that may be of relevance or interest to contract or temporary workers (much of which had already been reported prior to yesterday) were:
• No risk of a change of tack on the trend to reduce corporation tax
• A package of help for small businesses on business rates
• Further tax relief for film production
• Cancellation of the planned fuel duty increase next year
• Loan help for another 50,000 start-up businesses
• Help for exporters
• Focusing the Funding for Lending scheme away from housing and toward small business
• More capital infrastructure projects - including transport, shale gas and nuclear power
• £1bn of loans to promote new house building
• An increase in the bank levy
• A rise in the state retirement age to 68 in the 2030s and 69 in the 2040s
Further detail can be found at Contractors' quick look: Autumn Statement 2013 - Contracting, the self-employed and disguised employment