Hampshire: Law firm Coffin Mew reacts to Autumn Statement 

Leading Hampshire law firm Coffin Mew, has commented on the Autumn Statement.  

Giving an overview, chairman Nick Gross said: “The chancellor Philip Hammond used the expression ‘productivity’ 13 times by my count.

“Much of his focus was on how the Government thinks that productivity can be boosted. Its figures suggest that we operate 30% less efficiently than the Germans (not surprising) and 8% less efficiently than the Italians (perhaps more surprising).

“The Government’s key focus on improving productivity was around supporting the creaking transport infrastructure – there’s funding for the roads, railways and new transport technology, the digital infrastructure, which we all know needs to keep pace with global developments and affordable housing, which is in short supply – the construction of 40,000 new homes is being supported, although the Government’s overall target in this area is much bigger, at 1 million new homes by 2020.

“The other major focus is in the ‘JAM’ part of the population – the people who are Just About Managing. 

“There are marginal improvements in the universal credit and the national minimum and living wages, the intended fuel duty increase has been put on hold, and upfront letting fees have been abolished. There is also a £500 increase in the personal tax allowance, following the trend of recent years. So, all these changes will help, but none are going to dramatically improve people’s standard of living. This shouldn’t surprise us though, as the chancellor didn’t have much to give away, given the uncertain state of the economy.”

Housebuilding

Paul Grant, associate solicitor in the real estate team, said: “The chancellor made a number of announcements that are intended to kick start further house building and deal with issues in the planning system. We await further details of how the Government intends to deal with more fundamental housing and planning issues to be outlined in a White Paper which was disappointingly not published today, but is expected soon.

“One of the key headlines was an announcement of £2.3 billion, forming part of the new £23b National Productivity Investment Fund, towards infrastructure needs in order to unlock 100,000 new homes in areas of high demand. 

“Another headline announcement was for £1.4b, forming part of the same fund, to go towards providing 40,000 additional affordable homes by 2020/2021. When one considers that the Government’s intention is to build 1m new homes over the course of this Parliament, helping to provide 40,000 new affordable homes appears as a drop in the ocean.

“It is clear that the Government is still relying on the private sector to drag Britain out of its housebuilding malaise, but in the last week government figures have been published showing affordable housing delivery has hit its lowest level since 2001, so it is questionable whether today’s proposals go far enough.”

Property

Senior associate Ian Peach, said: “I anticipate the news of the ban on letting agent fees will be met with despair by many agents and their landlord clients. Many agents operate both a sale and rental business and the past year or so has seen significant downward pressure on sale commission fees. Therefore, additional pressure on their fees for rental aspects of their business will prove a real challenge for a lot of them unless they pass responsibility for fees to the landlord. They certainly won’t be able to absorb the costs into their own businesses in my view.

“Many BTL landlords I speak to are feeling particularly bruised as a result of recent and pending government and regulatory measures such as higher rate stamp duty and limits on tax relief.  I have no doubt that they would be unable to resist the urge to seek to pass on any additional costs that they incur by way of seeking increased rents.

 “The Government seems to me to be looking for some formula where it balances the interests of both landlord and tenant whilst not wanting to stagnate transaction numbers. I’m just not convinced this announcement is the answer, because recent reductions of BTL investors is already being felt in the property sector, and further discouraging proposals could lead to their disappearance altogether for the time being.” 

Business

Hayley Bevis, senior associate solicitor, Coffin Mew, said: “Today’s Autumn Statement called for British businesses to continue to innovate whilst significantly improving productivity. To this end, the Chancellor announced a new £400 million investment into venture capital funds via the British Business Bank to assist British start-ups and to prevent those talents moving offshore.

“Venture Capitalists (VC) provide extremely useful expertise and resource to businesses, while opening a door to new opportunities and connections that those companies may not otherwise have had.

“While this investment is positive news, its size compared to others announced today seems to be fairly light. It is difficult to tell, at this stage, whether such an investment will be enough to keep overseas investors and purchasers from digging deeper into their pockets to acquire an interest in the best innovative and fast growth companies that Britain has to offer. Time will tell.

“You cannot, of course, read this headline in isolation. The announcement of a new National Productivity Investment Fund which will provide for £23b of funding over the next five years, together with an additional £2b per year for research and development by 2020-21 and the fall in corporation tax to 17% all helps towards the aim of building a stronger and more resilient British business base. The chancellor’s next challenge is getting that base to remain in Britain for the long haul.”

Transport

Gross, who is also head of transport and infrastructure, added: “We have had serial underinvestment in our transport infrastructure for years.

“The chancellor’s Autumn Statement has sought to inject some life into this creaking system, using this as a weapon in its drive to increase the country’s productivity.

“On the roads, such has been the underinvestment by cash-strapped local authorities that it is doubtful that the additional £1.1b promised by 2020-21 will be enough, if the massive over-subscription by the LEPs for the Local Growth Fund are anything to go by.  Here’s hoping that local roads, such as the M27, are given proper attention – the North and the Midlands were mentioned in the chancellor’s speech, but as is often the case, the south wasn’t. 

“On the railways, £450m for a trial of digital signalling is a step in the right direction, but I suspect that given several ailing franchisees, of equal importance will be the current drive towards open access providers.  There’s little point in having a high-tech rail network if the franchisees (such as Southern Trains) who operate it can’t keep their trains running.

“The Government has made it clear that it favours ‘shovel ready’ projects, the benefits of which can be felt more quickly, which is much needed. The support for companies investing in electric vehicle charge points, low emission vehicles and connected autonomous vehicles is welcome and progressive, although those areas are still in their infancy, so we can’t expect to see the benefits for some time to come.”   

Manufacturing

Hayley Bevis, senior associate solicitor, said: “While the strength of British high-technology manufacturing was specifically highlighted by Philip Hammond as a feather in the cap, the British productivity gap was noted as being a significant challenge compared to our counterparts in the US and Germany which were noted as being 30% more productive, with France at 20% and Italy at 8%. 

“The chancellor made it clear that Britain must address this productivity gap to ensure that we do not fall behind our counterparts. Some have theorised that the demise of British productivity has resulted from a reduction in the levels of pay during the recession and those finding work in lower paid jobs. Pay levels have, however, also been addressed by the chancellor, with a rise in the national living wage from £7.20 to £7.50 per hour due in April 2017 and a rise in the personal allowance to £11,500 at the same time, with a further commitment to raise personal allowances further during this government.

“What is surprising is the radio silence on the apprenticeship levy, which was predicted to be an area which may have come under review in today’s statement, but has remained intact. The levy will be introduced from April 6, 2017, and will be charged at 0.5% of an employer’s total wage bill. When offset against an employer allowance of £15,000, the levy will effectively become payable when an employer’s wage bill is in excess of £3m per year.”