Chancellor Rishi Sunak’s Autumn Budget speech today had good news for international trade – with an injection of millions into skills training, relief for hauliers and £45m in funding for services to support exports.
The Department for International Trade will see an increase in its budget next year (2022), while the government is also committing millions to digitalising trade through the development of a UK Single Trade Window.
Sunak said the budget overall “prepares the world for a new economy post-Covid” but acknowledged that it did not draw a line under Covid and that there were “challenging months ahead”.
Reuters reports the Chancellor’s analysis that stronger economic growth and lower borrowing would allow him to increase public spending as Britain emerges from the pandemic, and he vowed to protect households from inflation he said would reach 4% next year. Some pundits predict that it may actually hit 5%.
Here are eight trade-related measures in the 2021 Autumn Budget:
1. Skills boost
Amid a shortage of skills in international trade, and as previewed in yesterday’s Daily Update, the Chancellor confirmed the government is spending £1.6bn to roll out new T-levels (equivalent to 3 A-levels, developed in collaboration with employers) for 16 to 19-year-olds, with £550m for adult skills in England.
There will also be a further £170m for apprenticeships and training.
Marco Forgione, director general of the Institute of Export & International Trade, said: “The commitments of an additional £554m for adult skills and an uplift for apprenticeships are very welcome.”
2. DIT budget increase
According to the Budget’s accompanying red book (which contains the full details of the Budget) the Department for International Trade will see an increase in its budget next year (2022) with a £67.6 million cash boost over the Parliament, rising to £552.8 million in 2024-25.
The money would be spent “to support UK business to take full advantage of trade opportunities and facilitate UK exports”.
3. Expanding the Export Support Service
Alongside the government publishing its refreshed Export Strategy soon, it is committing more than £45 million for the digital transformation of DIT’s support services for exports. This would be delivered through “an expansion of DIT’s new EU-focused Export Support Service to cover all markets”. ESS, the government’s hotline for exporter queries, launched on 1 October.
Forgione said it was “good news the Chancellor has announced a rise in the Department for International Trade’s budget – in particular the allocation of £45m in funding on support services for exports holds out the prospect of really making a difference to how the Government can help businesses to export.”
4. Single Trade Window pledge
The Autumn Budget red book published today also included a commitment of £180m to build a UK Single Trade Window, to reduce trade costs by digitally streamlining trader interactions with border agencies.
It also includes £838m over the three years to 2024-25 to complete the delivery of critical customs IT, including the new Customs Declaration Service replacing CHIEF.
5. New Year customs consultation
The government also confirmed its promise that in the New Year, it will consult businesses on customs processes, the intermediaries market and transit “to ensure that government and industry can work in partnership together to deliver a world class customs regime”.
6. Alcohol duties shake-up
The Chancellor unveiled plans to completely overhaul the system of paying import duties on alcohol coming into the UK in “the most radical simplification of alcohol duties for over 140 years,” he said.
The number of main duty rates will drop from 15 to six, with a new system designed around “a common-sense principle – that the stronger the drink, the higher the rate”, Sunak said.
So while stronger red wines and high-strength ciders would see an increase in duties paid, lower-alcohol drinks would attract less duty.
7. Relief for hauliers
Transport Secretary Grant Shapps has announced new funding to improve lorry park facilities today, with the government also investing £21bn on roads and £46bn on railways. A rise in fuel duty was cancelled for the 12th year in a row.
Regarding the driver shortage, Sunak said the suspension of the HGV levy until August (2022) would be extended for a further year until 2023, while Vehicle Excise Duty for heavy goods vehicles would be frozen.
Although Sunak congratulated Shapps on his work in trying to alleviate the lorry driver crisis, under-secretary for transport Baroness Charlotte Vere told a select committee today that it would take until the end of next year to recruit 35,000 drivers to ease the “acute” logistics crisis, reports the FT.
8. Fly the flag
Sunak said leaving the EU allowed the UK to reform its ship tonnage tax system. This will reward ships that fly the Red Ensign flag, in an attempt to boost a registry that has been in decline for a decade, reports the FT.
The Treasury said it would also make it easier for ships that help the UK contribute to its net zero goals — such as cable-laying vessels for wind farms — to join its tonnage tax regime.
The economy: less scarring
On the macro-level, the Chancellor said the forecast for economic scarring from the pandemic has been downgraded from 3% to 2%. Unemployment is projected to hit 5.2%, much less than the 12% initially predicted as the cost of Covid.
Growth forecasts for 2021 have been raised from 4% to 6.5%, and the Office of Budget Responsibility (OBR) projects growth will reach 6% next year.
The OBR expects the economy to regain its pre-Covid level by the end of the year, earlier than its previous forecast, reports the FT.