Autumn Statement 2023: the CBI impact

The UK economy has proven to be more resilient to the pandemic and energy crisis than was previously expected. Consequently, the OBR have revised their outlook for the UK economy with an improvement in forecast economic growth for 2023 from -0.2% in March to 0.6%. The economy recovered its pre-pandemic level by 2021 and was 1.8% above it by March 2023, instead of 1.1% below, as the OBR assumed earlier this year. The economy has also performed more strongly in the face of higher energy prices, inflation, and interest rates over the course of 2023 than expected.

However, as a result of the economy having grown more quickly than expected in 2023, and with interest rates weighing on household and corporate finances, the economy is expected to grow more slowly over the rest of the forecast period. That said, real GDP is forecast to be 0.5% higher in the medium term than forecast in March.

While inflation has fallen from a peak of 11.1% in October 2022 to 4.8% by October this year, it is proving to be more persistent than forecast in March. Unlike a year ago, inflation is now primarily driven by domestic sources and this is reflected in the OBR’s forecast, which doesn’t see inflation falling below the Bank of England’s 2% target until 2025.

The UK’s public finances are forecast to be on a stronger footing than in the March forecast. More persistent inflation is forecast to push up tax receipts by £60 billion in 2027-28 and, combined with unchanged departmental spending, is forecast to result in £27 billion less borrowing in 2027-26 than forecast in March.

Despite two large tax cuts – making full expensing permanent and reducing national insurance – contributing a combined reduction in the tax burden of 0.7% of GDP, the tax burden is expected to rise to a post-war high of 37.7% of GDP by the end of the forecast period.

Public sector net debt is expected to finish the year at 97.9% of GDP, before rising to a high of 98.6% of GDP in 2024-25, from which point it falls to 94.1% in 2028-29. With higher interest rates, shortening maturities and a stock of inflation-linked debt, the expected cost of servicing these liabilities is fiscally significant.

With public debt falling as a proportion of GDP, the Chancellor is on track to meet his fiscal targets. There is forecast to be £13bn of fiscal headroom, which although more than £6.5 billion in March, is smaller than the historical average.

The exchange rate showed a relatively muted reaction to the Chancellor’s Autumn Statement. As of 14:00 on Wednesday 22 November, the pound stood at $1.25 against the US dollar and €1.15 against the euro, broadly unchanged from when market opened this morning.

Gilt yields fell steadily while the Chancellor was delivering his statement in the House of Commons. But they ticked up sharply following news that plans for bond issuances in 2023/24 would fall only slightly (by £500m to £237.3bn), by a smaller amount than markets expected. Nonetheless, yields remain close to where they stood when markets opened, with the 2-, 10- and 30-year gilt yield standing at 4.58% (+0.01pp since 8am), 4.11% (-0.08pp) and 4.57% (unchanged), respectively.

There’s been a mixed response from equity markets in reaction to the Statement. The FTSE 100 is trading below its opening value (having fallen steadily following a jump immediately after markets opened). The FTSE 250 (more reflective of domestic companies) has risen steadily since markets opened at 08:00 on Wednesday 22 November.

The weakness of the FTSE 100 likely reflects yesterday’s fall in the value of the S&P 500 (the world’s largest equity index). The contrasting rise in the FTSE 250 may be reflecting more clearly the reaction to the Chancellor’s announcements on making full expensing permanent, and forecasts that he will meet his fiscal rule to have debt falling as a share of GDP by 2028/29.

Energy infrastructure

Flagship proposals to improve the electricity grid and reform planning – core to CBI lobbying this year – were introduced to speed up energy infrastructure delivery. The most significant is publication of the Transmission Acceleration Action plan which promise to halve the build-time for new grid infrastructure to seven years and accelerate connection wait-times for viable projects to no more than six months or at their requested date. This is a response to the Winser Review.

Ofgem has already announced rule changes which mean that from next week connections will no longer be first-come, first-served, fast-tracking ready-to-go generation and storage projects in line with CBI recommendations. The government will also consult on introducing energy bill discounts for properties located near network infrastructure – community benefits which the CBI has also recommended.

Low-carbon projects will now be designated as critical national priorities (streamlining consenting processes), and consultation is forthcoming to permit development for petrol stations to convert to electric vehicle charging hubs and remove the restriction on heat pumps being 1m from a property boundary in England.

Low-carbon power investments

A new Green Industries Accelerator was the headline investment announcement for low-carbon power generation. This makes £960m available for five years from 2025 for manufacturing in clean energy sectors where the UK has the strongest current or potential advantage, including CCUS, hydrogen, offshore wind, electricity networks, and nuclear. £975m has also been allocated to develop zero-carbon and ultra-low emission aircraft technology and £2m to electric vehicles manufacturing and their supply chains.

The government has announced that it will legislate for a new investment exemption for the Electricity Generator Levy (EGL). New projects for which the substantive decision to proceed is made on or after 22 November 2023 will be exempt from the EGL, and it will end as planned for all projects on 31 March 2028. The CBI had campaigned to implement an investment allowance under the EGL.

The government said it wants to give the Crown Estate borrowing and investment powers to bring forward additional floating offshore wind capacity in the Celtic Sea. However, this is subject to Parliamentary time for new legislation (which is unconfirmed). Other measures to increase low-carbon power generation included restating the uplifted strike price for next year’s Contracts for Difference scheme auction rounds to better reflect higher project delivery costs.

Industrial decarbonisation

The government has committed £185m for the Industrial Energy Transformation Fund (IETF) to support industrial sites to invest in more energy efficient and low-carbon technologies. The first round of Phase 3 applications will be available in January 2024. The IETF is the only capital grant of its kind, so the CBI had called on the government to respond to the Future of the IETF consultation which was announced alongside the funding.

A new six-year Climate Change Agreement Scheme has also been announced, offering around £300m in tax relief annually in exchange for meeting energy efficiency targets. It is intended that eligible businesses that meet agreed energy efficiency or decarbonisation targets between 2025 and 2030 will be entitled to reduced rates of the Climate Change Levy from 1 July 2027 to 31 March 2033. The scheme will be open to applications from new sectors that meet energy intensity and import penetration criteria and will require more regular reporting of energy and throughput data.

The CBI has been campaigning for the UK to bring forward investment incentives that respond to the game-changing US Inflation Reduction Act. While low-carbon power investment and confirmation of permanent full expensing is welcome, it is unlikely to significantly change investors’ view of the attractiveness of the UK’s green market.

This is because assets like solar panels and thermal insulation are subject to a write down allowance of only 6% after the 50% first year and annual investment allowances are claimed. Recognising that the UK cannot match competitors’ subsidy race, businesses had wanted the government to ensure that the tax system supports the net zero transition, including by introducing a new green super-deduction to boost investment in capital assets that reduce carbon emissions.

The CBI had also called for the introduction of a UK Net Zero Investment Plan, as recommended by the independent Mission Zero Review. This should identify green investment gaps and where private finance can be crowded into close sectoral financial gaps, address market barriers, and hit domestic net zero targets.

Heating and insulation

There was little mention of domestic energy efficiency, with no update on the Clean Heat Mechanism and Boiler Upgrade Schemes, nor a commitment to reintroduce Minimum Energy Efficiency Standards in private rented sector properties.

A slew of over twenty policy documents and consultations have been published on energy and decarbonisation. The CBI will analyse these and invite members to inform our positioning on the most significant in due course. Key policy issues to look out for include:

• Consultation on strengthening the regulation of the energy, water and telecoms sector, including to increase investment, promote competition and enhance transparency – closes 17 January
• Outcomes on the review of the Oil and Gas Fiscal Regime, especially relevant to the sector
• The forthcoming UK Battery Strategy, outlining the government activity to achieve a globally competitive battery supply chain in the UK by 2030
• Forthcoming consultation on CBAM and carbon leakage, impacting businesses across the energy sector.

The CBI will continue to develop tax policy with members on net zero and engage with the government to make the case for a green super-deduction and a more coordinated approach to tax incentives to support green investment ahead of Spring Budget.

Occupational health

We welcome the government’s direction of travel on boosting occupational health across the country to improve the health of those in work. We support the commitment to deliver an expert advisory group to shape a minimum level of occupational health intervention and create a voluntary standard for health and disability. To harness the full potential of employers in preventing poor-ill health and getting people back into work, we must now look at providing further support through the tax system by delivering on health incentives.

Pensions

The Autumn Statement also delivered £320m to drive forwards the Mansion House Reforms – a series of pension reforms to unlock capital for investment and increase returns for savers – , including £250m committed to successful bidders under the Long-term Investment for Technology and Science (LIFTS) initiative. The LIFTS initiative seeks to establish new funds to crowd in UK institutional investment to support the growth of the UK’s most innovative science and technology companies. The government will also establish a new ‘Growth Fund’ within the British Business bank to help pension funds access investment opportunities.  These measures will support pension schemes to invest in the high-growth scale-up businesses needed to help build the more productive, dynamic economy critical for delivering sustainable growth.

Defined benefit scheme consolidation and surpluses

Finally, the Chancellor announced a consultation on an expansion of the Pension Protection Fund to small and solvent Defined Benefit (DB) schemes that do not have commercial opportunities available for consolidation, thereby allowing for the greater scale in DB needed for higher levels of investment in high-growth, illiquid assets. That consultation will also consider changes to rules around when and how scheme surpluses can be shared with employers. In line with this, the Chancellor is reducing the authorised surplus repayment charge from 35% to 25% April 2024, meaning that it will be cheaper to return surpluses built up in schemes to the sponsoring employer. Ensuring employers have easier and cheaper access to scheme surpluses will ensure that capital can then be devoted by the employer to growth.

There were few announcements on education and skills policy, and little offered to address immediate skills shortages.

We would need to see more details on the announcement of a £50m Apprenticeship Growth Sector Pilot, a two-year apprenticeships pilot to explore what prevents businesses in growth sectors taking up apprenticeships, and what prevents individuals for applying for them. This move may pay dividends in the future, but there was no mention of the Apprenticeship Levy reform which would help businesses today.

Businesses will be disappointed that the government once again missed the opportunity to make anion announcements on reform to the Apprenticeship Levy and answer calls to make it more flexible. The CBI has continuously made the case that many employers consider Apprenticeship Levy regulation too rigid, resulting in inefficient or unused funding; the Apprenticeship Levy has failed in its purpose of increasing training numbers and in many employers’ minds the Levy remains unfit for purpose.

Beyond broadly positive steps on occupational health, the government missed the opportunity to fully harness businesses potential on preventing poor-ill health through better incentivisation. The government must look to make Employee Assistance Programmes a fully tax-free service as well as ambitiously expand tax incentives for employers providing occupational health support to their employees to activate businesses’ critical role in this space.

The CBI remains committed to reform of the Apprenticeship Levy and the need to broaden out training solutions beyond just apprenticeships. Apprenticeships are part of – but not the entire – solution, and we need more than we have today, but fulfilling the UK’s upskilling needs requires a broader mix of training solutions. The CBI will be meeting with HMT officials in early December to explore how best to take this forward.

The CBI will continue to work with members, stakeholders, HMT and other government departments to reiterate and demonstrate the strong case for better financial incentives for workforce health and wellbeing through future fiscal events and the lead up to the general election. Reach out to Lydia Hamilton-Rimmer to get involved.

Innovation Investment Allowances

• The CBI’s accepted core call for permanent full business investment expensing is welcome for innovation as it will support many businesses investments in plant, machinery, and technologies which support both their moves to Net Zero, and to boost productivity through innovation.  
• Removal of EIS and VCT sunset clause: The government will legislate to extend the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) to 2035. This should enable more investment to flow in our startups and scaleups.

Innovation taxes

The CBI called for the merging of the R&D tax scheme to give greater clarity to business on R&D tax claims – this was confirmed. Allowing 5,000 more businesses to access the R&D intensive and loss-making company scheme is also welcome; these are often our most exciting, innovative businesses, and the R&D credit is a vital source of funding for them. The government calculates these are 'changes worth £280m a year to simplify and improve R&D tax reliefs’.

Technology adoption

A long-standing CBI ask was for the national rollout of the innovative Made Smarter advanced manufacturing technology adoption programme; such programmes are crucial for UK businesses to effectively adopt technology to improve productivity and tackle labour shortages. The government announced this rollout with £100m over four years of funding.

Innovation regulation

The CBI has long supported the Pro-Innovation Regulation of Technologies Review as a mechanism for improved emerging tech regulation. We welcome that – published alongside the Autumn Statement – the government has accepted almost all the recommendations of the final two outputs from the review: the Advanced Manufacturing paper, and the cross-cutting issues paper. It also confirmed the importance to regulators of outcomes-focused regulation around promoting innovation and growth – as the CBI called for.

Supporting investments into innovative scaleups

We welcome the progression of the Mansion House Reforms. We recently published research into the need to improve the culture and skills of investors, and welcome the creation of the venture capital fellowship scheme. Replenishing the Future Fund Breakthrough is welcomed. As well as a focus on implementing the spin-out review with additional funding.

Additional targeted funding in technology and innovation

£500m extra for public supercomputing power for many AI applications is welcome. Compute power underpins a range of important research and innovation initiatives and can complement the larger investments in compute being made by the private sector.

Improving public innovation

The government shows it continues to take the Office of Science and Technology Strategy Framework seriously, with confirmation of the ‘Competitive Flexible Procedure’ pathway, plus improved guidance to support government in procurement of innovation – a long-standing policy ask of the CBI.

Devolution of Innovation

We look forward to representing business, working with DSIT, UKRI, and Mayoral Combined Authorities in the newly-announced collaborative approach for identifying and building on genuine place-based innovation assets which will aid the commercialisation of R&D across the country.

On technology adoption, we wanted to see more than just the welcome Made Smarter national rollout. We also wanted to see greater effort by the government to agree co-ordination of its tech adoption initiatives, programmes and investment for business – including appointing a national champion. Without this, technology adoption risks being undervalued and disjointed in delivery.

Despite welcome individual tech and research funding announcements - such as the £500m for new compute capacity – we wanted clear evidence that these investments are deploying underspend from the delayed Horizon Europe R&I programme association. We also would like to have seen more explicit indications that the full £20bn of R&I funding was being retained for research and innovation spend by next year, to avoid the clawback of up to £1.6bn that occurred last year.

The government’s response to the AI White Paper consultation was not published, with it set instead to be available by the end of the year. Given the need for expert regulatory skills and capacity being put in place as soon as possible as more and more UK businesses grapple with challenges around how they can and can’t deploy AI, we hoped for a swifter announcement of concrete plans alongside the other regulation reviews published today, and evidence the government’s ambition here will be backed by sufficient funding.

We would like to have seen more scheme detail on the R&D tax credit merged programme - the failure to confirm whether the scope of the scheme will be expanded to include capital or social sciences is a missed opportunity to create a best of all worlds scheme.

Mansion House Reforms

We will move beyond today’s encouraging announcements by working with CBI member investor communities, investing businesses, financial services, pension companies, and investment experts – particularly around pension fund investment capabilities into innovative businesses and pension trustee risk appetite – building on our October 2023 work on the competitive environment for growing scaleups from Unicorns to Decacorns

Technology adoption

We will work with members, Trade Associations including Tech UK, and government departments, to help government understand business’ needs from subsidised technology adoption programmes – including on the Made Smarter model - and shape a suite of suitable programmes.

Funding the R&D Ecosystem

We will work with DSIT, UKRI, and research and innovation-focused members to campaign to ensure the UK maintains its ambitions for R&D intensity within the economy from both public and private sector investment.

R&D tax credits

If you claim R&D tax credits, how you do so and how much you can claim is set to change from April 2024. We will work to ensure members understand the coming changes and are appraised of the details of the merged scheme as soon as they are confirmed.

Planning reform

• The introduction of a new premium planning service across England with guaranteed accelerated decision dates for major applications and fee refunds wherever these are not met
• £5m in additional funding for DLUHC’s Planning Skills Delivery Fund for Local Planning Authorities to target application backlogs alongside further reforms to streamline the system
• Reforming the process for updating National Policy Statements, which will include updates to the National Networks and Energy National Policy Statements.

Devolution

• The government has published a new framework for extending deeper devolution to existing Level 3 Mayoral Combined Authorities (MCAs). The Level 4 framework provides new powers for MCAs to draw down on, based on the trailblazer deals negotiated with the Greater Manchester and West Midlands Combined Authorities, including powers over adult skills, local transport and housing
• The announcement of new Level 3 deals with Greater Lincolnshire, and Hull and East Yorkshire, and Level 2, non-mayoral, deals with Cornwall and Lancashire. Mayoral elections are expected in May 2025.

Investment Zones

• The government is now going further by extending the Investment Zones programme from five to ten years, which will double the envelope of funding and tax reliefs available in each Investment Zone 
• The government also announced the next set of Investment Zones in Greater Manchester, the West Midlands and East Midlands
• To ensure Investment Zones and Freeports can respond nimbly as investment opportunities arise, the government is also creating a new £150m Investment Opportunity Fund, which will be available over five years.

Harrington Review of Foreign Direct Investment (FDI)

• The CBI submitted a response to the Review in Summer 2023. We welcomed the launch of the review in March as it was an acknowledgement that the UK needs to be more competitive in the global competition for attracting and retaining FDI
• While the UK remains a good place to invest, there has been a weakening in some structural areas of the economy and supporting new and existing investors is vital for UK competitiveness. Therefore, we welcome the publication of the Review and look forward to working closely with government on the next steps
• We particularly welcome the government response and acceptance in principle of the headline recommendations, which are based upon key recommendations put forward by the CBI on behalf of our members.

Although out of scope of the Harrington Review, the link between investment and the domestic economic environment still needs to be made. 

The CBI will continue to lobby for plans to be put in place to support pan-regional infrastructure delivery, both physical and digital – ensuring local plans for employment land uses are equally as important as those for new housing.

We will continue to monitor the implementation of the Harrington Review recommendations and look forward to working with government on the next steps – including the important work on the financial incentive landscape and the Business Investment Strategy. Lord Harrington is attending our Global Competitiveness Committee on 23 November to talk about what comes next and how CBI members can continue to be involved in this important area.

On Tuesday 21 November, the Treasury announced plans to deliver the first phase of the Mansion House Reforms – a series of pension reforms to unlock capital for investment and increase returns for savers – a day earlier than expected. This included committing £320m to existing funds as well as a plan to create a new investment vehicle under the British Business Bank to help facilitate investment by pension funds into high-growth start-ups.

The Mansion House reforms are exactly the sort of reform that the CBI has been calling for – making better use of existing funds and mechanisms to provide opportunities for companies to access capital and grow, delivering better outcomes for citizens. Solvency II, the Edinburgh Reforms and now the Mansion House Reforms are all part of the regulatory puzzle to encourage investment, particularly investment into productivity-enhancing businesses.

There was no strategy or timeline for reviewing the VAT treatment of the financial services sector. Businesses in this sector have been waiting for an official update since 2020 and will be disappointed with the lack of movement in this space.

This was also a missed opportunity to report on progress and update timelines on the Green Finance Strategy announced earlier this year. Also, to respond to the Inflation Reduction Act with a Net Zero Investment Plan. However, the CBI are hopeful we will see the publication of this consultation before the end of the year, which will form a critical part of how we finance the transition.

The CBI will continue to work with members, government, and other stakeholders to build on the strength of the UK’s world-leading financial services sector. In particular, promoting the vital role of financial services in enabling all sectors of the economy to innovate and grow sustainably.

We will do the following:

• On the Mansion House Reforms, the CBI will work with members and the British Business Bank on the delivery of the newly announced investment vehicle to ensure this works effectively in practice
• On the review of the VAT treatment of the financial services sector, we will organise a roundtable with HM Treasury as soon as their industry stakeholder engagement team has agreed its priorities following the recent change in ministers
• On green finance, we will continue to be the business voice on financing the transition to net zero and championing sustainable finance. We will host our first Sustainable Finance Working Group on 27 November to discuss our 2024 priorities, and will work with members through this forum to:
  • Respond to the Transition Plan Taskforce consultations on large corporate disclosures for DBT expected this year, and sector-specific guidance by the FCA expected next year
  • Respond to the UK Green Taxonomy consultation when this is published.

Full expensing

The CBI has been calling for a permanent full expensing policy since 2021, and the decision to do so now demonstrates the Chancellor is serious about boosting business investment – and about ensuring the UK economy is more competitive, with the joint highest machinery investment allowances in the OECD. The support from Shadow Chancellor, Rachel Reeves, in her response to the Statement demonstrates there is cross-party consensus which should give businesses the certainty they need to invest now and for the long-term in the UK, as an era of chopping and changing in investment allowances comes to an end.

Reduction in National Insurance rates

The reductions in National Insurance rates for employed and self-employed workers are welcomed. The cuts will help businesses to support staff to keep more of the pay they earn in difficult times. However, as the income tax personal allowance has been frozen in recent years, the effect of fiscal drag means taxes will not be reduced overall for most workers in real terms – and employer NICs remains at 13.8%.

Offsetting PAYE taxes for IR35 workers

On IR35, the government will legislate to enable PAYE taxes payable by businesses hiring contractor workers to be offset from 6 April 2024, by allowing taxes already paid by the worker or their personal service company to be taken into account in cases where the worker’s employment status has been wrongly assessed. This is a pragmatic solution which will help businesses complying with these rules and the backdating to 2017 is welcome.

Micro sole traders will be kept out of the Making Tax Digital for Income Tax Self-Assessment regime for the foreseeable future. The regime will go ahead for unincorporated businesses with income over £50,000 from April 2026 and £30,000 from April 2027, with more flexible quarterly reporting removing the need to submit an End of Period Statement.

Although we welcome today’s business rates announcement that the small business multiplier will be frozen, and that Retail, Hospitality and Leisure relief will be extended, the CBI's call for a full freeze in business rates has not been answered in full. Many UK businesses (including SMEs) face a hike in bills of 6.7% from March next year – when margins are tight, many of them will have no choice but to pass this on in whole or in part to customers, potentially fuelling further inflation.

It is disappointing that the tax-free mileage allowances for employees who use their own vehicles for business journeys were not uprated. The current 45p per mile rate for the first 10,000 miles of travel has been in force since 2011 and is outdated, leaving employees out of pocket.

The Chancellor did not respond to the OTS’s Hybrid and Remote Working Report published in December 2022. The tax rules in this area urgently need reviewing to ensure they reflect modern working practices.

Retail businesses will be disappointed that they still face paying VAT on goods donated to charities and given to struggling families.

Where policies were not taken forward – for example, the tax-free mileage allowances and expanding VAT relief for goods donated by businesses to charities – we will continue to work with businesses to achieve a more positive outcome at Spring Budget 2024.

There are a number of consultations and calls for evidence on tax proposals that have been published alongside the Autumn Statement document. We will work with businesses to respond to those that are of interest to a cross-section of membership.

We will continue to work with Treasury as part of the expanded working group on capital allowances and leasing, to broaden the scope of full expensing to leased and rented assets from 2024.

An additional £185m was delivered through the Barnett Consequential, and it has now been confirmed that £75m of this will not be used to repay the budget overspend from 2022/2023. The CBI are waiting to see how the remaining £110m will be used – it is expected this announcement will be made early in the new year.

Businesses in Northern Ireland will benefit from: 

• The introduction of a permanent full expensing policy will help Northern Irish businesses invest
• Confirmation of the merging of the R&D tax scheme, which will give greater clarity to business on R&D tax claims in Northern Ireland, the same as rest of the UK
• Reductions in National Insurance rates that will help Northern Irish businesses to support staff to keep more of the pay they earn in difficult times.

Whilst Northern Irish companies who have operations in Great Britain will welcome the flagship proposals to improve the electricity grid and reform planning, these are not applicable in Northern Ireland due to these being devolved matters.

The CBI Northern Ireland team will be working with key stakeholders to explore ways that similar initiatives can be introduced in Northern Ireland to speed up planning and grid connectivity and bolster business confidence to invest in high growth areas like green technologies, renewable energy and advanced manufacturing.

There will be disappointment that Northern Ireland is not receiving any funding from this phase of Levelling Up due to the lack of a Northern Ireland Executive.

CBI Northern Ireland will continue to engage with key stakeholders including government officials on how we can create the conditions to ensure a growing and prosperous economy.

The Autumn Statement committed an additional £545m via the Barnett formula over 2023-24 and 2024-25. CBI Scotland is waiting to see what impact this will have on the Scottish Budget when the Cabinet Secretary makes her announcement to Scottish Parliament on 19 December. 

Businesses in Scotland will benefit from: 

• Full expensing being made permanent, helping Scottish firms invest
• A reduction in National Insurance rates, helping businesses support staff by helping them keep more of their pay in difficult times
• A simplified R&D tax scheme that will give greater clarity to business on R&D tax claims in Scotland, the same as rest of UK
• Levelling Up Partnerships (LUPs) extension to Scotland – the government, in collaboration with the Scottish Government, is announcing over £80m of investment for the expansion of the Levelling Up Partnerships programme. This will benefit firms in Scotland. 

The UK Government will have to consult and work with Scottish Government on the following areas, to reach agreement:

• Green Freeports – an extension on the Freeport Tax Relief Sunset. The UK Government will work with the devolved administrations to agree how the 10-year window to claim reliefs can be extended to Freeports in Scotland
• Investment Zones Programme extension – the UK government will work in partnership with the Scottish government with the intention of delivering an extension to the Investment Zones programme in Scotland
• Grid Infrastructure Action Plan – this includes consulting next year on reforms to energy consenting rules in Scotland.

The CBI’s Scotland team have submitted a paper to the Scottish Government ahead of the Scottish budget, which is on 19 December. This includes an ask to bring business rates in line with England.

The submission covers six critical areas where the Scottish Government can collaborate with industry to enhance economic performance. These areas include:

1. Realising Scotland’s Net Zero Growth Opportunities
2. Infrastructure and Connectivity
3. Scotland’s Transport Needs
4. Leveraging Technology and Skills Enhancements
5. Workforce Skills and Employability
6. Creating a Competitive Business Environment

If you would like a copy of the submission or more information, please contact Mags Simpson.

The government confirmed two Investment Zones for Wales: one located across the Cardiff and Newport area and delivered by the South East Wales Corporate Joint Committee; and another focusing on the Wrexham and Flintshire region delivered by the North Wales Corporate Joint Committee. The North Wales Zone will encourage further growth and investment with up to £160m of support to invest in advanced manufacturing, protecting tens of thousands of existing skilled jobs and creating thousands more.

The UK government is also reforming the planning system to speed up approvals and setting out a plan to reduce the time it takes for new projects to connect to the grid. Grid connections are not devolved so these reforms will hopefully unlock new commercial developments. 

We would welcome an announcement on Freeports that would make it quicker and easier to get the necessary approvals from local government to open them fully. Securing these approvals within a smaller timeframe would mean a Freeport could open its doors sooner and begin attracting investment.

There were several announcements which CBI Wales will be pursuing with both the UK and Welsh governments. They are:

• We will be working with the Welsh government to understand if the business rates reduction for SMEs applies in Wales
• We will be working with both governments to unpack the 110 supply side measures to understand which apply to Wales and where improvements could be made
• The Treasury also announced measure to attract more foreign direct investment. We will be working with both governments to maximise the benefits of these changes for Wales
• The introduction of an incentive system for planning officials is one that members would like to see implemented in Wales.

If you would like more information or would like to provide feedback, please contact Leighton Jenkins.