By Kate Holton and Paul Sandle
LONDON (Reuters) – Britain’s finance ministry is considering making permanent a time-limited tax incentive that is designed to spur corporate investment, according to the boss of telecoms giant BT, who said any such move would be a “game-changer”.
Finance minister Jeremy Hunt will next week set out his plans to snap the economy out of anaemic growth, which has been held back by, among other things, weak business investment since the 2016 vote to leave the European Union.
The government has introduced two tax incentive schemes in recent years to boost corporate spending but, while well received, bosses have complained that they do not enable them to make long-term investment decisions.
Philip Jansen, the outgoing CEO of BT which has used the schemes to accelerate the roll-out of its fibre broadband network, said making the tax incentives permanent would take the UK investment environment from good to great.
“I know the chancellor (Hunt) is considering this as one option for next week’s Autumn Statement,” he said in a blog that is due to be published later on Thursday.
“He has said he would like to take this step when the economic conditions allow. With billions of pounds of potential investment at stake, it’s also important to ask whether, as a country, we can afford not to.”
A government source said a final decision had not been made but noted that it would cost around 10 billion pounds ($12.40 billion) a year to extend the scheme.
BT, the country’s biggest telecoms company, said Britain had suffered in recent decades from a comparative lack of corporate investment.
It said its 15 billion pound investment to take fibre to 25 million premises would take at least 10 years to generate a return.
It ramped up its roll-out in 2021 after the government introduced a “super-deduction” that offsets investment against tax. It was replaced by a policy of full expensing, which is due to expire in March 2026.
Hunt’s options are limited after heavy state spending on the coronavirus pandemic and last year’s surge in energy prices. Public debt now stands at close to 100% of economic output, more than three times its size 20 years ago.
Company bosses are hoping that rather than an extension, the scheme will be made permanent. “The real game-changer would be to put these tax incentives on a permanent basis,” BT’s Jansen said.
($1 = 0.8066 pounds)
($1 = 0.8065 pounds)
(Additional reporting by Elizabeth Piper and Andy Bruce; editing by Susan Fenton)