• Swindon & Wiltshire News
• Monday March 21 2022
• Author Name: Peter Davison

Business leaders call for support ahead of Spring Statement

Business leaders have called for support ahead of the Spring Statement on Wednesday, when chancellor Rishi Sunak unveils his ‘mini-budget’.

The British Chambers of Commerce has published a five-point plan which it says would ease the ‘cost of doing business crisis’.

Their call comes as businesses face various cost pressures including rising raw material costs, soaring energy bills and other overheads.

Meanwhile raising taxes, says the body, would “weaken the UK’s growth prospects further, by undermining confidence and diminishing households’ and firms’ finances”.

The plan includes:

• Delay the impending National Insurance rise by one year to give firms much-needed financial headroom to weather this unprecedented surge in costs facing businesses and power the recovery.
• Temporary energy price cap for small businesses to protect smaller firms from some of the price increases they would otherwise face, offering the same protection as households.
• Additional financial support, through the expansion of the energy bills rebate scheme for households to also include small firms and energy intensive businesses, a new support fund, administered by Ofgem to support the smallest firms with their soaring energy bills and a six-month extension to the Recovery Loan Scheme, leaving it in place until the end of 2022.
• A moratorium, for the life of this parliament, on all policy measures that increase business costs, including no new business taxes or added regulatory burdens, but excluding only evidence-based changes to the National Living Wage.
• A commitment from the government’s Supply Chain Advisory Group and Industry Taskforce to continue to work with industry to urgently deliver practical solutions to ease the supply chain disruption and labour shortages that continue to drive the upward pressure on prices.

Shevaun Haviland, director general at the BCC, said: “The Spring Statement is taking place against a backdrop of soaring uncertainty surrounding both the UK and global economy, so a business-as-usual approach from the Chancellor simply won’t cut it.

“Business confidence is on the floor. Coming so soon after a covid-induced squeeze on cashflow and investment plans, the cumulative effect of rising raw material costs, soaring energy bills and other overheads is causing many firms to take cost reduction measures. This is weighing down on their ability to invest, recruit and grow.

“Businesses strongly oppose a rise in national insurance contributions as it will be a drag anchor on the economy, landing significant costs on firms when they are already facing a raft of other cost pressures and have built up huge debt burdens.

“The government must now fortify our economy for what will likely be some gruelling weeks and months ahead. It must prove it is serious about doing whatever it takes to support companies through these domestic and global economic shocks.

“Implementing our five-point plan would help shield firms from the worst of the costs’ crisis – giving them headroom to keep a lid on prices, protect jobs and make investment that is so vital to sustaining our economic prospects.”

The Federation of Small Businesses has called on the chancellor to “move away from ‘eye-wateringly expensive’ tax break for big corporates and towards support for community firms”.

Newly-appointed FSB national chair Martin McTague says the super deduction tax break “will primarily be used by corporations and multinationals, not small businesses operating in all our communities.”

Its recommendations include:

• Increasing the Employment Allowance to £5,000.
• Taking an additional 200,000 community small businesses in levelling up target areas out of the business rates system by increasing the rateable value ceiling for small business rates relief to £25,000, and extending a one-year relief on business rates increases linked to property investments in plant and machinery.
• Extending support with energy costs being allocated via the council tax system to micro businesses via the business rates system, and launching a Help To Green initiative to spur on-site renewable generation.
• Delivering on pledges to end the UK’s poor payment culture by making Audit Committees directly responsible for ensuring best practice within supply chains.
• Expanding and making permanent a statutory sick pay rebate for small firms whilst continuing with incentives in England to take on apprentices and T Level placements.
• Widening eligibility for the Help To Grow Digital and Management initiatives to the 750,000 small firms currently excluded from them.
• Simplifying the R&D tax credit system to make it more accessible for small businesses without having to use paid intermediaries.

“When we look back at this tumultuous period, next week’s Spring Statement will, for better or worse, be seen as a turning point,” said Martin.

“The chancellor has a choice: plough on with damaging tax hikes, or take steps to protect the most fragile and empower small firms to deliver his ‘culture of enterprise’ vision.

“He rightly talks about the need to invest in capital, people and ideas. However, that investment cannot happen so long as surging operating costs are depleting cash reserves and disposable incomes. Pulling the rug from under small research-intensive firms with the removal of incentives would make a bad situation worse.

“The time to deliver a low tax, high investment, dynamic economy is now, not later in the political cycle. The chancellor cannot control the wholesale price of gas and oil, but he can control tax policy.”

At the CBI, the chancellor is being urged to use his Spring Statement to stabilise business confidence and get firms investing by doubling down on green energy and creating a permanent investment deduction.

Making homes and commercial buildings more energy efficient would help reduce demand from sources overseas, reduce emissions and spur investment. And setting out a Contracts for Difference model on hydrogen could keep us ahead of international rivals in a new green market, says the organisation.

The CBI has also called for a series of urgent measures to help businesses and consumers in the face of short-term uncertainty and rising inflation, including:

• Maintaining and expanding the Recovery Loan Scheme until the end of 2022.
• Reducing network costs for Energy Intensive Industries (EIIs) and increase their level of renewable levy exemptions in line with international competitors.
• Setting out support for low-income households to address cost of living pressures.

Tony Danker, CBI director-general, said: “With economic turbulence meaning a rocky spell in recent months, the time for action is now to not only mitigate as best we can, but also set the UK on a higher trajectory of economic growth. The chancellor may have wanted to delay taking decisive moves on the economy but that no longer makes sense.

“Despite labour shortages, rising cost pressures and supply chain disruption, most firms still had growth and much-needed investment firmly in their sights.

“But the tragic outbreak of war in Ukraine threatens to sap that post-pandemic optimism. This is a chance for the chancellor to signal that the UK can continue to grow independent of Putin’s actions.

“With expected tax rises also thrown into the mix, all-important investment plans could be shelved unless we act to boost confidence. That’s why we need a substantive and permanent replacement for the successful super-deduction.

“The chancellor must put growth and economic resilience front of mind when delivering his Spring Statement. We must leverage North Sea production as we manage our energy transition, but we also need to now go full throttle in pursuit of green growth. It was always good for humanity but it’s now essential for national security. It’s also the greatest economic opportunity for businesses to thrive and to level up the United Kingdom.”

Our Expert of the Week, Michael Blaken of Optimum Professional Services, explains what the Spring Statement could mean for you and your business.