EU Referendum: Procurement Legislation Implications

Procurement Legislation

Rely on facts not feelings

On 23 June Britain will choose whether to remain in or leave the European Union. Although this is a decision not to be taken lightly, many companies are still unsure of the facts.

Deloitte’s 35th Quarterly CFO survey concluded that only 26% of CFOs said their companies had taken steps to prepare for the referendum result – a worrying figure considering the direct effect a Remain or Leave vote could have on UK business.

To help professionals understand how the vote will affect UK exports, trade arrangements, business finance, procurement legislation and jobs; procurement specialist BiP Solutions has created an impartial White Paper EU Referendum: The Ins and Outs for Business.

Here’s a sneak peek into the third chapter covering Procurement Legislation.

Procurement legislation simply means the laws that govern the buying and selling of goods; a subject close to the hearts of all professionals.

Remain campaigners claim deviating from the rules of the EU Procurement Directives could cause the UK to effectively exclude itself from the EEA single market and erode or even end London’s status as the financial capital of Europe, with strong negative impacts on the wider economy.

In its 2016 Report, The Economic Consequences of Brexit, the Organisation for Economic Co-operation and Development said: “A UK exit (Brexit) would be a major negative shock to the UK economy. In some respects, Brexit would be akin to a tax on GDP, imposing a persistent and rising cost on the economy that would not be incurred if the UK remained in the EU.”

However, Leave campaigners argue that a Brexit would give the UK a valuable opportunity to disregard some of the more costly aspects of EU procurement legislation and instead adopt a more business-friendly legal regime.

In its 2013 report, Our Global Future: The Business Vision for a Reformed EU, CBI said: “The impact of poorly thought-out and costly EU legislation is a major issue for businesses: 52% of businesses believe that, were the UK to leave the EU, the overall burden of regulation on their business would fall.”

Answering this claim, Remain campaigners in turn contend that many EU Directives are enshrined in UK law, so a Brexit is unlikely to alter the UK’s procurement habits.

Mills & Reeve National Head of Procurement Law, Ruth Smith, and Mills & Reeve Trainee solicitor Tom Benjamin wrote in Procurement Law Today: “Whilst the EU Treaty and EU Procurement Directives would no longer apply in the UK, an ‘out’ decision would have no impact on the validity of the UK legislation put in place to transpose those Directives.”

Even if regulatory reform were to top a post-Brexit government agenda, the Government would be unable to disregard EU Directives, should it wish to remain part of the EEA single market.

Should the UK leave the EU but wish to maintain its single market trade arrangement, it would still have to adhere to EU legislation, but would lose any power to shape this legislation.

Read more about the economic implications of the EU referendum, with EU Referendum: The Ins and Outs for Business.


Budget 2016: Preview

The number10 on the door of the Prime Minister's official residence in Downing Street, London. 10 Downing Street vies with the White House as being the most important political building anywhere in the world in the modern era.

On Wednesday 16 March 2016, Chancellor George Osborne will deliver his fourth fiscal summary in the last 12 months – but what can businesses expect to see in the Budget 2016? Here BiP Solutions reporter Donald MacInnes overviews the hopes of industry leaders.

The Chancellor

In advance of tomorrow’s budget, the Chancellor has signalled tough times ahead stating that Britain must ‘act now to make sure we don’t pay later’.

In his November 2015 Spending Review and Autumn Statement, the Chancellor announced that Whitehall spending would be reduced by 19% in order to cut the deficit and secure a £10.1bn surplus by 2019/20. However, the Chancellor has recently said that spending must now be cut by another £4bn within this parliament to achieve this surplus.

In reaction to this some of the UK’s biggest business groups and think tanks have released their budget recommendations.

Leading industry representatives are looking to the Chancellor to spare UK companies any more financial burdens and instead aid them to grow their businesses.

Confederation of British Industry (CBI)

According to recent analysis from the Confederation of British Industry, a combination of inaction on business rates accompanied by recent Government policy changes, including the National Living Wage and the Apprenticeship Levy, will cost businesses around £9bn every year to 2020/21. The CBI has called on the Chancellor to strive for increased investment in businesses to harness and fuel innovation.

Rain Newton-Smith, CBI Director of Economics, said: “Businesses will want to see concrete action to reform the UK’s business rates system, support investment through the capital allowance system and equip our world-class innovators with the tools they need to compete globally.”

A key recommendation of the CBI is to reform the current business rates system, switching the uprating of the tax rate (‘multiplier’) from RPI to CPI and furthermore removing the smallest businesses from the tax entirely.

The CBI has also recommended an increase in the scope of capital allowances and the UK remaining competitive on interest deductions for Corporation Tax. Furthermore, the CBI wants to see an increase in the level of access to research and development (R&D) incentives, allowing companies to innovate better.

The British Chambers of Commerce (BCC)

The British Chambers of Commerce has also recommended that businesses be spared any hardships in the form of costs, taxes or obligations. The BCC has made three primary recommendations for Budget 2016 which directly involve businesses.

Due to the burden placed on businesses from pensions auto-enrolment, the National Living Wage, the Apprenticeship Levy, higher dividend taxes and other measures, the BCC has recommended that businesses should not have to endure any new taxes for the remainder of this parliament.

The BCC is also pushing for business rates reform, urging the Chancellor to prioritise resetting the valuation, collection and setting of the rates. The BCC has furthermore recommended greater support from HMRC for SMEs and is pushing to make compliance easier for businesses.

Engineering Employers’ Federation(EFF)

The call for business rates reform is being made by companies all over the UK, including those in manufacturing.

The manufacturing industry is pushing for plant and machinery to be withdrawn from rateable calculations. The EEF – The Manufacturers’ Organisation says that to do so would provide a boost for sectors such as steel, releasing figures which claim that 42% of companies surveyed said they would be likely to invest if plant and machinery were removed from the calculation of business rates.

Companies with a turnover below £5m and those with a turnover over £50m would be the ones most likely to increase investment, the figures suggest.

EEF Chief Economist Lee Hopley said: “Our evidence shows that removing plant and machinery from the calculation of business rates could help tip the balance for some companies, notably small manufacturers looking to scale up, and large manufacturers facing international competition.”

The Chancellor George Osborne is expected at the dispatch box around 12:30 pm on 16 March, immediately after Prime Minister’s Questions.

For updates and industry reaction to the Budget 2016, keep following the BiP Solutions news and blog section.

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