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Lloyd Powell, Head of ACCA Wales Comments on Yesterday’s UK Budget

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Much of yesterday's UK-wide Budget was leaked, but confirmation of various policy announcements is good news for the Welsh economy and business recovery.

A green recovery

‘The extra funds for the hydrogen production centre in Holyhead, and the money for City and Growth deals are welcomed, targeting spend in innovation and areas that will see a benefit.

‘This ties in with last week’s Welsh Government Resilience and Reconstruction plan which places investment in a green recovery and accelerating adaptation as two of its five beacons. Ongoing and ambitious support for a green and inclusive recovery must remain a priority.  The greening of the economy across Wales and the UK to deliver a climate resilient and more equitable future for all will need consistent and ongoing support that can enable sectors to transform at the speed and scale required and high-quality jobs to be created to deliver on net zero aims.’

Employment

‘Looking at employment, we also welcome the extension of the furlough scheme which provides much needed help for workers and the businesses who employ them. As announced in the Welsh budget earlier this week, £200m extra spend has been set aside to support businesses, and today the Chancellor also announced a new scheme to replace Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loans.

‘It is also good to see the self-employed covered in today’s Budget with the next edition of the Self Employed Income Support Scheme (SEISS), available from next month. This means more will be eligible for the payment through HMRC.

‘The Chancellor is looking to rebuild public finances by asking businesses the government has supported to pay extra, rebuild communities and take on risk, but that will also affect those freelancers and directors that have been ignored and not received assistance. Why are they ignored and once again left out of the support packages?’ These people have been forgotten by policy makers, yet again, and we will continue with our campaign with the FSB, #Forgotten Ltd and Re Legal Consulting Ltd for a Director’s Income Support Scheme to help them survive.’

Tax changes

‘The freeze on a basket of taxes and duties for 2021 / 22 – VAT, income tax and duties on beer, spirits and wine – somewhat softens the blow for the rise in corporation tax in 2023. This will be UK-wide, and while the increase from 19% to 25% might raise extra money, in the long term only greater economic growth is going to pay off Covid debts.

‘We are pleased that SMEs, many of which fall within the transitional profit relief have been given some relief from this change but this move does see a return to a more complex tax system in the years ahead. The rollercoaster of rates and changes in recent years have not helped businesses to plan.

‘We would prefer a system that included tax relief for smaller enterprises and for ones in the hardest hit sectors, such as hospitality, events and retail, for a period while the whole of the UK stabilises from the effects of the global pandemic. This would support as many SMEs as possible to survive and get back on their feet.

‘We await the Welsh Government’s response to the Chancellor’s announcements on Stamp Duty and Business Rates and how these continued reductions will be approached in Wales.’

The Welsh Budget

Commenting on the Welsh Government’s budget which was finalised earlier this week, Lloyd Powell adds: ‘In Wales, the government has allocated £17bn to spend in the next financial year with ministers confirming plans to spend an extra £1.1bn. It’s been reported that 2021/ 22 will see £224m spent on infrastructure including schools and housing, alongside very much needed spend for councils and the NHS of around £630m.  Additional funding of £740m will also be due to the Welsh Government through the Barnett formula following the UK Budget today.

Lloyd Powell concludes: ‘While this is deemed the final budget for 2021 / 22, due to Covid-19 and the economic turmoil this has caused, we envisage more to come in the months ahead.’