West of England business leaders have given many of the measures in today’s Budget a warm welcome – especially the previously-trailed furlough extension – but there was also concern over the delayed Corporation Tax increase.
Business West, which runs Bath Chamber of Commerce, said businesses would welcome the extension of the full range of Covid-19 support measures, with the timescales longer than many were expecting.
The Institute of Directors South West said Chancellor Rishi Sunak’s efforts to “combine life support for the economy with measures to turbocharge growth” was the right call.
Business West managing director Phil Smith, pictured right, described it as “another extraordinary Budget from the Chancellor”, reflecting what was an extraordinary time for the UK economy.
“The extension of the furlough scheme, an extended and more targeted self-employed scheme, a new tranche of business grants and a new recovery loan scheme will all continue to provide a safety net for businesses through to the autumn,” he said.
“There will be disappointment, however, that limited company owners appear yet again to have been forgotten.
“Overall, given the uncertainty that still hangs over the ending of lockdown, the Chancellor’s approach makes good sense and contrasts favourably from the ‘stop-start’ approach to previous business support extensions.”
He said the Chancellor’s pledge to ‘continue doing whatever it takes’ would put businesspeople at ease, many of whom still face extremely challenging times ahead.
“Nevertheless, there was a sting in the tail – with the Chancellor setting out a path to repairing the public finances,” he added.
“Rather than targeting the broader public, the weight of tax rises will fall on the private sector – most notably with a rise in corporation tax to 25% in 2023 – a higher level than many were expecting.
“There is some tapering for companies with very low profits. There was however a big, short-term incentive for firms to invest in new plant and machinery via a ‘super deduction’ at 130% over the next two years, and more loss flexibility for struggling businesses.
“Many businesses recognise that the government’s generosity has to be repaid – but will worry that it will fall on a relatively narrow set of wealth creators, making the tax base more vulnerable to changes in economic circumstance and reducing our international attractiveness.”
Chair of the Institute of Directors South West Muir Macdonald, pictured right, said many firms have used the furlough scheme to support their cashflow while restrictions have eaten into their revenues. Without it, jobs losses would be even higher.
“By extending support until the end of September, the Chancellor has given many businesses an extra cushion as they attempt to re-scale and re-hire when the economy reopens,” he said.
“Hospitality and the leisure industry has been particularly hard hit in the South West and needs all the help it can get to rebuild.
“Widening the eligibility for self-employed income support is also welcome step, as many have gone without significant earnings for almost a year, but the Chancellor missed a trick by not providing grants for company directors who continue to be left out in the cold.
“The Chancellor’s efforts to combine life support for the economy with measures to turbocharge growth is the right call. Vouchers for SMEs to invest in technology, and provisions for management training, will help address the UK’s longstanding productivity problems whilst also boosting businesses' ability to bounce back.”
He said while the recovery loan package would offer a helping hand to many firms, more needed to be done to catalyse equity investment in cash-starved start-ups and scale-ups.
“Retraining and rehiring will be uplifted by reforms to the Apprenticeship Levy and further financial support for both apprenticeships and traineeships,” he added.
“An improved visa route for the high skilled will foster innovation, as will steps to review R&D tax credits.”
While the prospect of higher taxes would bite for many firms that were still tending to wounded balance sheets, delaying and tiering the corporation tax rise was a pragmatic approach – though adjustments to the plan should remain on the table, he said, as a clearer picture of the recovery emerges.
“Overall there is much for businesses to get behind in this Budget, and the Treasury should remain prepared to extend support if the roadmap goes off course, whilst building on its stimulus package today to drive long-term growth well beyond our immediate recovery,” he added.
CBI South West deputy director Ben Rhodes, pictured above, said the Budget succeeded strongly in protecting the economy now and kickstarting recovery and the Chancellor had gone “above and beyond” to protect UK businesses and people’s livelihoods through the crisis and to get firms spending.
“Firms across the South West will be relieved to receive support to finish the job and get through the coming months,” he said.
“The Budget also has a clear eye to the future; to ensure finances are sustainable, while building confidence and investment in a lasting recovery.
“The Chancellor has taken a welcome, broad view on how to stimulate growth from the new Infrastructure Bank, to Help to Grow and incentives to take on apprentices.
“The ‘super deduction’ should be a real catalyst for firms to greenlight investment decisions. The boldness of the Chancellor on this measure is to be admired.”
He said the government must now have a laser-like focus on the UK’s competitive position in the round, including fundamental reform of the “unfair” Business Rates system.
“The UK must remain attractive for every type of business, from innovative, high-growth UK homegrown firms to the global firms investing in the UK. We look forward to working with the government to achieve this,” he added.
Lloyds Bank South West regional director David Beaumont, pictured right, said: “Hospitality and leisure businesses remain the backbone of the region’s tourism economy and it’s encouraging to see the Chancellor’s commitment to extending the reduced VAT rate for a further six months and prolonging the business rates holiday.
“Many firms are continuing to navigate through the ongoing lockdown restrictions and finding innovative ways of working and the news today will put them in a stronger position to reopen their doors later this spring.
“Today is a positive for firms and, coupled with government’s roadmap to recovery, will go some way to helping them build back in the months and years ahead.”
Sam Holliday, West of England development manager for the FSB (Federation of Small Businesses), pictured, said the Budget contained some positives, but with the “obvious – and glaring – omission of the much-needed support for company directors”. He added:
“The extension of furlough, the lengthening of business rates exemptions and the new one-off Restart grant to help retail and hospitality are all to be welcomed.
“The decision not to impose extra corporation tax burdens on smaller firms is also a relief and, looking forward, the commitment to help businesses take on apprentices, to upskill and to invest at reduced tax rates are positive signs.
“The FSB had asked for this to be the most ambitions pro-business Budget in modern history and although it certainly wasn’t that at least there was some acknowledgement that our amazing local small businesses will be the ones that drive the recovery and they can only do it by being supported now and not being saddled with extra taxes or restrictions.”
