The topic was “opportunity, productivity, investment and change”. While his focus was on the farming community, much of what he said applies across all business sectors.
While productivity in most major economies fell after the 2008 crash, the UK has recovered more slowly than our main competitors. Increased productivity will be vital if the UK is to boost economic growth (and having led the G7 in growth for several years we are now lagging behind other G7 nations). One way to improve productivity is to invest in equipment and infrastructure designed to speed or automate processes. Anyone who lives in a rural area will have seen the way farming has changed over recent years, through investment in machinery and through changes to production methods.
The challenge for government is to encourage even more investment and change and one way to do that is via the tax system, for example through the increase in the Annual Investment Allowance (from £200,000 a year to £1 million a year for the two years commencing 1 January 2019) and the new Structures and Buildings Allowance, both announced in the October Budget. If you are thinking about using these allowances by the way, you should take advice before you commit to the expenditure as the rules are complex.
Digital technology also has a role to play in modernising farming and business generally. HMRC’s Making Tax Digital project, which will affect almost all VAT registered businesses with sales over the VAT threshold from 1 April next year, is focusing minds, but there is a case for using software and technology more generally. Yes, there are problems facing some (such as poor or non-existent broadband), but also potential benefits.
Paul mentioned one other thing in his speech at the NFU and that was uncertainty, both in the global economy and specifically relating to Brexit. This makes planning for the unforeseen important. Margins in farming and in many other sectors can be slim and if borrowing is high, the effect of a small change in interest rates could be serious for many businesses. Some “what if” planning would be prudent, however small or large your business is.