• Swindon & Wiltshire News
• Thursday March 24 2022
• Author Name: Peter Davison

Spring Statement – businesses have their say

A cut to fuel duty, tax cuts, and initiatives to boost investment, innovation, and growth are among the tools chancellor Rishi Sunak says he will employ to counter spiralling inflation and soaring costs.

But the contents of his Spring Statement – a mini-Budget – met with mixed reaction from business leaders.

The British Chambers of Commerce said the Statement fell “short of the action businesses needed to see” and “did not fundamentally address the huge cost pressures they are facing.”

“Businesses will be pleased that the employment allowance has been increased. This long-running ask of the BCC will provide a small amount of financial headroom for firms facing rising costs,” said Shevaun Haviland, director general of the BCC.

“But today was a missed opportunity to rebuild and renew the economy and ensure business has the resilience to weather the uncertain and volatile times ahead.

“The cut in fuel duty, though very welcome, is just a drop in the ocean compared to the larger tsunami of surging costs that is bearing down on firms and households.

“Smaller businesses are particularly exposed as they have neither the protections or financial support provided to households, nor the negotiating power of larger businesses.

“As the economic outlook is likely to get worse before it gets better, many firms will be forced to continue raising prices, further fuelling the cost-of-living crisis.

“We urge the government to take further action – including the introduction of an SME energy price cap – to tackle the escalating cost of doing business crisis.

“Firms need the headroom to keep a lid on prices, protect jobs and make investment that is so vital to sustaining our economic prospects.”

At the Federation of Small Businesses, national chairman Martin McTague was happy to see the organisation’s top ask – uprating the Employment Allowance to help small employers with national insurance costs – adopted by the chancellor.

“We originally put forward the Employment Allowance as a targeted measure to help small firms, and it has now been expanded three times since its creation,” he said.

“Together with a cut to fuel duty, these measures will provide crucial breathing space for our embattled small employers.

“This Spring Statement marks a good starting point, with welcome measures on business rates, net-zero and energy investment taking effect next month.

“With steep inflation, energy bills increasing fast, without the same support in place as enjoyed by consumers, and hiring pressures landing hard on small firms, more of the right stuff will be needed in the autumn given this challenging backdrop.

“We’ve seen a VAT cut on net-zero investments for households today, which is good for small firms involved in their installation.

“However, a high street shop or local bar cannot access the same support that consumers do when dealing with the same energy supplier, and they should have access to the same assistance to reduce energy use and support the move to net zero.

“We look forward to working with the chancellor on his new tax plan. Achieving the new culture of enterprise vision he rightly aspires to, alongside levelling up aspirations, will mean putting community small firms and sole traders front and centre of reforms.

“That means taking more of them out of the business rates system, protecting SME R&D investment incentives and delivering on commitments to end an endemic late payment culture that destroys thousands of firms a year.”

At the CBI, director general Tony Danker said the chancellor had “taken steps to sustain confidence in our economy,” but they “don’t do enough to tackle the current challenges facing firms.”
“His new plan to incentivise business investment from next year is very good news.

“We stand ready to work with the chancellor on measures essential to transforming productivity such as capital allowances, R&D reforms and a revised apprenticeship levy. These measures lie at the heart of U.K. competitiveness.

“In reality, we cannot wait until October to get growth going. The government needs to get moving straight away.

“We need concrete plans now on how we get new nuclear, hydrogen and onshore wind investment. We need more EV charging infrastructure deployed this year. We need post Brexit regulation changes that unleash the potential of our health, science and technology sectors.

“The chancellor is right that the government can’t solve every challenge. However, the only enduring response to inflation, energy prices and cost of living challenges is a relentless campaign for economic growth.”

The cut to fuel duty was welcomed by the Road Haulage Association, which said it equated to a £2,000 per year saving on running a typical HGV.

Rod McKenzie, executive director, said: “Cutting fuel duty is a common sense move and will be a boost for the economy, but more could have been done.

“The chancellor missed an opportunity to announce a rebate to relieve more pressure on businesses. We’ll continue to press the Government hard for this measure as firms grapple with huge operating cost hikes.”

“Longer term, we believe the government should bring in an essential fuel user rebate for coaches and lorries to bring UK operating costs into line with our key European competitors.”

Locally, experts at Optimum Professional Services said measures might ease the financial burden for businesses.

Accounts director Michael Blaken said the increase in the National Insurance Contributions threshold, to bring it in line with personal allowance at £12,570, would help those on a low income.

He said plans to reduce the basic rate of income tax from 20 per cent to 19 per cent by the end of this Parliament in 2024 was also good news.

“These measures, and the cut in fuel duty of 5p per litre, will help households and also businesses. They may in turn ease the pressure on businesses to bring in pay rises, because the increase in the cost of living is being shared.”

Michael added that as ever the devil will be in the detail, because while the NICs threshold has increased for employees from April, it appears that employers will be paying the same rate.

“However, the increase in Employment Allowance from £4,000 to £5,000 is good news for employers, because it reduces their annual National Insurance liability by an extra £1,000 per year which helps mitigate the April increase in National Insurance rates of 1.25 per cent.”

Martin Gurney, tax partner with Haines Watts Swindon said: “There was a widely held belief that the Spring Statement would be relatively benign and, to some extent, the chancellor did not disappoint in that respect.

“The government continues with its strapline that borrowing our way out of difficult times is not the answer, and therefore all budgetary measures announced have to be funded in another way.

“However global economic and political conditions have created supply chain problems and inflationary pressures which the chancellor recognises is adversely affecting households and businesses.

“Tomorrow is promised to no one, and therefore there is always scope for the chancellor to retract future changes in the light of prevailing economic conditions, however there has at least been some attempt to alleviate the burden of households and businesses in these challenging times.”

Meanwhile, the move to zero per cent VAT on energy-saving material purchases such as solar panels and heat pumps was welcomed by Chris Blackwell, director of Swindon-based independent mortgage adviser TED Mortgages.

“This is a positive move to encourage people to make environmentally friendly investments into their property,” he said.

“This is something mortgage lenders are encouraging by offering special mortgage deals for properties with a higher EPC rating and I am sure we will see more in this area in the coming years.