Business leaders have their say on yesterdays budget announcement from Chancellor Jeremy Hunt.
Robert Lloyd Griffiths OBE, Director of ICAEW in Wales said:
“Confidence is a major driver of a successful and sustainable economy built on nurturing growth and encouraging investment. Today’s budget certainly brings some welcome news for businesses in Wales with research and development incentives, an increase in the small business investment allowance and the introduction of at least one new investment zone along with funding for carbon capture and storage pilot projects in North Wales. We’re not out of the woods yet but with the economy expected to now avoid a technical recession and inflation predicted to return to more normal levels, the headlines of today’s budget should certainly help to boost business confidence.”
Ben Francis, FSB Wales Policy Chair responded to the Chancellor’s Spring Budget today:
“With the announcement of the Spring Budget today, the Chancellor is playing a long game, hoping to return the UK to economic growth. While confirmation from the Office for Budget Responsibility (OBR) that we are likely to avoid recession and inflation will reduce is very welcome, we saw little in today’s Budget to address the immediate pressures plaguing small firms such as extending support for sky-high energy bills which we know many Welsh small businesses are facing.
One area that has caused considerable concern for small businesses is the planned rise in fuel duty, which over half of firms we surveyed reported fuel as a main driver of rising costs. We are pleased the Chancellor listened to our calls and has announced fuel duty will be frozen. This provides small businesses with the breathing space they need to allow them to focus on growing their businesses.
We note with interest, the measures announced for childcare. The delivery and detail of this will be absolutely key and we would want to see the ambition which underpins this – to assist more people with childcare costs and bring people back into work – reflected in any measures taken forward by Welsh Government.
On Investment Zones, we welcome the intention of at least one investment zone in Wales. It will be imperative that Welsh and UK governments move now with partners to identify how that model can be implemented in such a way that not only helps with the mission of levelling up but also focuses on growing small business enterprises in Wales – particularly in more deprived or rural areas.
Some of the smaller measures announced today will benefit the economy, such as the tax on draught beer remaining frozen in pubs from August this year but given the pressures facing this important sector, further support will be required from governments as the year progresses.
While some of the economic indicators are more positive than expected, the mission of re-growth will need a significant vote of confidence in smaller businesses by the government on which that growth depends. We will want to see that confidence in smaller firms reflected in our conversations with decision makers in the coming months.”
Paul Butterworth, Interim CEO of Chambers Wales South East, South West and Mid, said:
“The Spring Budget announced by the Chancellor today is a step in the right direction for firms in the medium and long term. The announcement of a minimum of one investment zone in Wales is exciting for Welsh economic development and employment, while the ‘returniship’ scheme to reskill over 50s and reintegrate them into the workforce is a fantastic opportunity to bring skills and key experience back into the employment market.
“However, the short term for businesses still looks very difficult. Energy bills will increase in April as support is reduced, putting firms at risk; the super deduction will end; and corporation tax will rise to 25%. The announcement of full capital expensing is fantastic for businesses across the UK who want to invest in their own growth, but it remains to be seen how much this will mitigate the rise in business rates.
“The UK will not enter a recession this year and inflation is slowly reducing – this will be welcome news to businesses everywhere. However, there is still a long way to go and these milestones will be a cold comfort for SMEs without short term support.”
Lloyd Powell, Head of ACCA Cymru/Wales, said:
“Today’s announcements broadly focused on the right issues for the longer term, such as encouraging investment in net zero and expanding our labour market. However, given the months of turmoil, many firms are still likely to feel hesitant about the road ahead. While there was some welcome news on investment incentives, there was little to cheer on tax, but we do have a commitment to a review of our overly-complex tax system. While moves towards greater stability are welcome, many of these changes won’t deliver results in the short term, so it was disappointing to see the planned increase in corporation tax proceed.”
Jack Parker, Senior Executive at Bevan Buckland shares his thoughts.
“The measures announced today are not as severe as first predicted, however they will impact millions of people across the UK.
“The Chancellor’s announcement to extend the Energy Price Guarantee for a further three months will be welcome news for homeowners, who have been increasingly concerned about energy price hikes and a reduction in Government support from April.
“Energy support is also being offered to millions of people on pre-payment meters to bring their payments in line with those paying via direct debit.
“It’s also positive news for motorists with the 5p fuel price cut maintained for a further 12 months and fuel duty frozen, saving drivers hundreds of pounds.
“The announcement of £80million of investment into 12 investment zones for businesses, which could see them paying a lower tax rate while they operate within these zones, will undoubtedly give many businesses something to consider in the coming months.
“And with the end of the superdeduction for capital allowances, businesses are also set to benefit from a new Full Capital Expensing scheme over the next three years. However, this does contain some element of misdirection, as the new scheme will only be of real benefit to businesses who spend more than £1m per annum on capital expenditure.
“To combat the issue of early retirement from the NHS due to pension tax charges, the Chancellor has announced an increase in the pension annual allowance from £40,000 to £60,000 and more surprisingly, an abolition of the pension lifetime allowance.
“With Corporation Tax set to rise to 25% in April and the Additional Rate Threshold set to reduce to £125,140, the outlook is slightly more challenging for businesses and their workforce. The reduction in the additional rate threshold will see over 200,000 people paying tax at the additional tax rate.
“These announcements will affect millions of businesses across the UK and have a significant impact on their operations and planning in the years to come.”
Andy Chamberlain, Director of Policy at IPSE, said:
“It’s extremely disappointing that the Chancellor has chosen to overlook self-employment in his plans to encourage more people to return to the workforce.
“Over 700,000 people have left self-employment since 2020 – very many of them have not returned since. Whilst the measures on pension allowances and childcare will benefit some, the Chancellor’s Budget for Growth ducks the big issues preventing many more from returning to the labour market on their own terms.
“Addressing the devastating IR35 rules, raising the VAT threshold and increasing the trading allowance would have sent a clear signal that the government values self-employed workers and needs them to drive growth. The Chancellor claims he wants to encourage labour market participation, yet his Budget completely ignores the most dynamic part of the workforce – the self-employed.”
Joanna Morris, Head of Marketing and Insight at Novuna Business Finance, comments
“With the growth outlook among small businesses remaining eerily static for the past year with just a third (32%) of small businesses anticipating some form of growth this quarter, any initiative that would encourage investment and expansion is much needed and wanted. The Chancellor’s full capital expsening for IT equipment, plant and machinery, alongside the increase in Annual Investment Allowance to £1m, will make investment more attractive to a business owner. This is a positive step in the right direction.”