Irwin Mitchell Experts Share Their Views

Chancellor Jeremy Hunt delivered his Autumn Statement on Wednesday 22 November 2023 setting out the Government’s tax and spending plans.

Our experts share their views and explain how some of the announcements may affect you:

Pensions

Pensions comment from pensions partner, Penny Cogher:

“Today’s autumn statement signifies that it is full steam ahead with the pension Mansion House Reforms but with more structure around what that actually means. The Chancellor's thrust is on consolidation of Defined Contribution (DC), Defined Benefit (DB) and the Local Government Pension Schemes, following the successful pension models of consolidated pension schemes in places like Canada and New Zealand. Local Government Pension Schemes, who have already started to pool investments, will become massive superfunds by 2040 with over £200 billion of assets. This will enable these schemes to move further into all different types of investment including those with longer returns and more illiquid assets like infrastructure.

“For Defined Contribution savers, the emphasis remains on moving the smaller DC schemes to the DC master trusts who have proved to be successful. The objective is for there to be £30 billion of assets in these DC master trusts by 2030 and this should help produce better member outcome for savers in these schemes, with lower charges, better investment returns, the ability for more interesting investments and members and employers benefitting from the economies of scale.  

“The Government shows its confidence in the Pension Protection Fund by making this a consolidator of small and medium sized Defined Benefit schemes. It will be interesting to see how this develops, and whether it is a popular choice, as many such schemes are on the flight way to buy out with insurance companies. This change will require significant legislation to implement. There was no announcement of tax changes on the return of pension surplus to employers which had been widely floated before the Statement.

“Finally the Chancellor at long last is supporting pot follows member, with an employee having a legal right to require their employer to pay pension contributions to the employee's existing pension schemes. This approach to pot follows member has the approach to significantly increases the costs of employers in implementing these requests and also increases the likelihood of something going wrong. The extra administration involved could be considerable and seems to fly in the face of the Chancellor's other direction of travel of having a reduced number of DC schemes overall.  Perhaps this choice will be limited to DC master trust consolidators only and this would be more manageable for employers, although still a hassle, particularly for the larger employers whose payroll systems are less advanced.

“If the employer could be required to pay pension contributions to any pension scheme then if employers get the payments wrong or are paid, they are potentially named and shamed by the Pensions Regulator, especially if there have been auto-enrolment breaches as well. This approach would make auto-enrolment compliance more difficult  and also more tricky for employers in terms of what messaging they give employees about pensions overall as they will have to cover all bases. I think there may also be something of a disconnect here between employers who use GPP/SIPP type arrangements for their current pension schemes compared to those that use the trust based vehicles of occupational pension schemes. I suspect the Chancellor will want to nudge employers and employees to trust based occupational pension schemes as that is where the Government will find investment growth from illiquid assets that are not really available to GPP investors.”

Planning

Boosting growth by “removing planning red tape” that is a bold promise from the Chancellor, and one that we have heard before – but did the detail of the Autumn Statement deliver anything new? Well actually, yes- says Nicola Gooch, Planning Partner at Irwin Mitchell:

“We have a promise of full cost recovery for major business-related planning applications – provided that the application is determined within the statutory timescales. If not, then there would be an automatic fee rebate. This will require yet another amendment to the Fees Order, which is a little surprising given that it is about to be amended, with increased planning fees coming into effect on 6 December 2023. The ‘prompt service or your money back’ guarantee does not appear to relate to residential planning applications, so will likely only affect a very small proportion of planning applications in any one local planning authority. If these changes to planning fees are limited to non-residential applications, then there could be unintended consequences. It could result in commercial applications being prioritised over housing schemes, where the planning application fee would not be set on a costs recovery basis and the risk of a refund would be lower.

“There has also been a promise of more money for nutrient mitigation schemes – to help unblock 40,000 homes that are currently held up by nutrient neutrality issues; as well as funding to tackle the ‘planning backlog’ and deliver new homes in Cambridge, London and Leeds and more money for the Local Authority Housing Fund.  If this is genuinely new money, this will be very welcome indeed. However, the key test will be whether the new homes, or the mitigation schemes required to release them, are actually delivered.

“We have also been promised yet another consultation on new permitted development rights. This time to allow the conversion of a house into two flats if there are no changes to exterior of the building. This will continue a long-running trend of expanding the scope of permitted development rights in England and will add to the eleven planning related consultations that we have had in the last twelve months – most of whom are still awaiting a response.

“The promise to cut grid access delays for renewable projects will come as a huge relief to the sector, but whether financial incentives will make residents more accepting of new transmission infrastructure remains to be seen.

Manufacturing

Comments from Claire Petricca Riding - head of manufacturing group Irwin Mitchell:

"The Chancellor's announcement regarding the creation of three additional investment zones in the West Midlands, East Midlands, and Greater Manchester, focusing on advanced manufacturing, presents an exciting opportunity for the manufacturing sector. These zones are expected to generate approximately 65,000 new jobs and attract over £3 billion of private investment, which has the potential to provide a significant economic boost to these regions. However, it will be important to closely monitor the implementation and progress of these zones to ensure that the projected benefits are realized, as the success of such initiatives can depend on various factors such as infrastructure, skills development, and sector-specific challenges.

“While the additional investment zone in Wales, specifically in Wrexham and Flintshire, is a positive step towards promoting manufacturing growth in the country, the lack of detailed information at this stage makes it difficult to fully assess its potential impact. Further clarity on the specific plans, funding allocation, and support available within this zone will be crucial to effectively evaluate its effectiveness in driving manufacturing growth and job creation in Wales.

“The commitment to invest an extra £4.5 billion between 2025 and 2030 in manufacturing demonstrates the government's recognition of the sector's importance. However, it will be essential to closely monitor the allocation and utilisation of these funds to ensure that they are effectively targeted towards initiatives that drive innovation, productivity, and competitiveness within the manufacturing industry.

“While the allocation of £1 million towards aerospace companies and businesses working on green technologies is a positive step towards promoting sustainability and technological advancements, it is important to consider the scale of this investment in relation to the broader manufacturing industry. Further support and incentives may be necessary to encourage widespread adoption of green technologies and ensure a significant impact on the overall sustainability of the manufacturing sector.

“While the Autumn statement's focus on investment zones, job creation, and support for green technologies presents promising opportunities for the manufacturing sector, cautious monitoring and evaluation will be necessary to ensure the successful implementation and impact of these initiatives. By closely examining the progress and addressing any challenges that may arise, we can maximize the potential benefits for the manufacturing industry and the overall economy."