IoD Autumn Budget submission: restore business confidence

The Institute of Directors has set out five priorities for the Autumn Budget on 28 October, calling on Chancellor John Healey to restore business confidence and encourage private investment. In its submission, the IoD warns against further increases in taxes on business, investment and employment.

The IoD says the UK economy has delivered stronger growth than many comparable advanced economies in recent years, but argues that persistent weaknesses in investment, productivity and business confidence risk undermining future prosperity.

The five areas are creating a competitive and predictable tax environment, mitigating the employment and investment consequences of the Employment Rights Act, sequencing devolution to support productivity across the UK, protecting and delivering economically productive infrastructure, and accelerating responsible AI adoption across the business population.

Anna Leach, chief economist at the IoD, said: “The UK has achieved respectable headline growth in recent years, but the fundamental challenge facing the economy remains unchanged: we do not invest enough. Business leaders consistently tell us that uncertainty, rising costs and doubts about policy delivery are holding back investment decisions.”

She added: “This Budget must restore confidence and provide a clear signal that the UK is committed to being one of the most attractive places in the world to invest, grow a business and create jobs. With fiscal headroom limited, the UK’s growth challenge cannot be solved by public spending alone: government must create the conditions for businesses to invest. That means no further increases to the overall tax burden on businesses, investors and employment, alongside greater policy stability, proportionate regulation, effective infrastructure delivery, well-sequenced devolution and wider responsible adoption of AI, all focused on raising productivity, crowding in private capital and improving living standards.”

Leach said: “The overriding test for this Budget is whether it helps move businesses from postponing investment to pursuing growth. If the government can rebuild confidence and demonstrate clear delivery, the private sector can play its full role in driving the next phase of economic growth.”

Tax and employment rules

The submission highlights concerns that confidence has remained subdued since 2024 amid uncertainty over taxation, rising employment costs and questions around policy coherence. The IoD argues that a successful Budget should restore predictability, reduce the risks associated with investing and hiring, and demonstrate a stronger focus on growth across government decision-making.

The IoD is urging the government to expand its existing corporate tax roadmap into a broader long-term framework covering the entire business tax system. It says firms and investors need greater certainty about the future direction of tax policy.

The roadmap, published by the Treasury in October 2024, set out a commitment to cap the headline rate of corporation tax at 25 per cent for the duration of the parliament.

The IoD is also calling on ministers to use the implementation process for the Employment Rights Act to reduce risks to hiring, particularly for smaller firms and those offering entry-level opportunities.

Its recommendations include proportionate adjustments to trade union access provisions, guaranteed-hours rules, shift notification requirements and unfair dismissal reforms, alongside additional resources for Acas and employment tribunals.

Devolution, infrastructure and AI

On devolution, the IoD says it supports the government’s ambition to devolve power but argues that responsibilities should only be transferred where there is sufficient institutional capacity, stable funding and robust accountability. It is calling for a cross-government Devolution Data and Statistics Delivery Plan and a shared performance dashboard to support effective local growth policy.

The submission urges ministers to protect high-productivity infrastructure investment and maintain momentum towards the delivery of a third runway at Heathrow. The IoD argues that major infrastructure programmes need clear milestones, accountable leadership and transparent measures of success to improve delivery and attract private investment.

The IoD also says the government should simplify support for technology adoption by bringing existing AI and digital-adoption initiatives together into a single national offer for SMEs through the Business Growth Service.

It recommends a new ‘Responsible AI Essentials’ programme to help smaller businesses adopt artificial intelligence securely and effectively.

The full submission includes further supply-side proposals on skills, sustainability and energy, international trade and the devolved nations.

Jamie Young

Jamie Young is Senior Reporter at Business Matters, covering SME finance, employment law and Westminster policy since 2016. He has reported on every Budget and Autumn Statement since 2018, helped make sense of the ‘covid era’ and the bounce-back loan scheme from launch through the fraud investigations, and broke the magazine’s coverage of the 2024 late-payment reforms. He joined Business Matters straight from completing his BA in Administration from Exeter University and is NCTJ-qualified. Reach him at jyoung@cbmeg.co.uk

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