The region’s businesses have praised the “positive tone” of Chancellor Jeremy Hunt’s Spring Statement but admit they are disappointed with the lack of mention for the South West.
Devon & Plymouth Chamber of Commerce welcomed the news that the Government plans to close the labour skills gap, but pointed out that details were lacking in specifics to help SMEs and also questioned no mention of rising costs for business, particularly when it comes to energy.
Other key points included the announcement of 12 new investment zones which will offer government funding and favourable business rates to stimulate growth in economically challenged areas. However, there was again no mention of the South West.
The Chancellor also announced that the UK will not enter a technical recession this year, saying that the Government is looking to “half inflation, reduce debt and get the economy growing”. Mr Hunt said that he expects inflation to fall from 10.7% in the first quarter to 2.9% by the end of 2023.
At an event organised by the Devon & Plymouth Chamber, in partnership with Westcotts Chartered Accountants & Business Advisers, we reviewed the impact of the Chancellor’s Spring Statement, with county business leaders gathering to react to the news as it developed.
Our expert panel featured Shona Godefrey, Managing Partner at Westcotts; Mark Tibbert, Partner at Westcotts, specialising in tax advice; James Peterson, Partner at GA Solicitors who heads up the company/commercial team; Jabo Butera, Managing Director of Diversity Business Incubator (DBI), and Jordan Kennedy, Senior Surveyor and Head of Business Rates Consultancy at Vickery Holman.
Watch our experts have their say on the Chancellor’s Spring Budget
Stuart Elford, CEO of the Devon & Plymouth Chamber and Chair of British Chambers of Commerce South West, commented: “The Spring Budget had a positive tone and there certainly weren’t any shocks, which of course business was not wanting because of the severe economic shocks caused by the last one.
“However, I didn’t see anything particularly specific for the South West. There was some good news about closing the labour skills gap, although that was phased. Overall, a positive tone but nothing to get too excited about.
“There were no specific benefits for the South West at all, and that was disappointing. The Chancellor did mention floating offshore wind and we have huge opportunities for that in the Celtic Sea that could come ashore in North Devon. But again, nothing now and nothing specifically now for Devon and the wider South West.
“There are two big things that are challenging business at the moment. One is rising costs, particularly energy but we didn’t see anything on that. And the second is closing the labour gap – there just aren’t enough people in the workplace.
“So, these measures look good about incentivising people – those with childcare responsibilities and the over-50s coming back into work – but they are phased, and the proof of the pudding will of course be in the eating.
“There are no huge amounts of money coming to our region. There were schemes that, on the face of it, will encourage and incentivise investment, especially around R&D and the Annual Investment Allowance, which is in effect scrapped and made a no-cap, so all investment can be capitalised. On the face of it, this is a really, really good thing, although it may only benefit larger businesses.
“Before the budget started, I wanted to see help with energy prices. We haven’t seen anything there for business, although we have for individuals; measures to tackle inflation, there were a couple in there, and the Chancellor’s prognosis for the economy was positive, but again nothing specific. Also measures to close the skills gap and incentivise people to get back into work. That was where we saw some tangible things, but they are phased over time.
“Our region is particularly strong in the creative industries, which the Chancellor mentioned, and in the digital industries, so potentially some excitement there but again, lacking specifics and I’ll believe it when I see the money.”
Reaction from business leaders
Financial and tax reaction
Mark Tibbert, Partner at Westcotts, specialising in tax advice, said: “The main tax takeaways from the Chancellor’s Budget was full expensing of capital expenditure, the abolition of the super deduction that was due to expire at the end of the month from 130%, and the Annual Investment Allowance on the full million-pounds.
“It is being replaced by what the Chancellor has called full expensing, effectively as an extension of the Annual Exemption Allowance, in simple terms, but without any cap. So, businesses will be able to get 100% relief on their qualifying capital expenditure – essentially expenditure on machinery and equipment.
“Certain types of expenditure where they previously only qualified for 50% relief are still going to continue. It’s positive news for businesses and is there to encourage investment and ensure that you get 25% tax relief on what you’re spending.
“The only other big announcement around company tax and businesses is a slight extension of the Research and Development Scheme, an increase in the amount of relief for loss-making businesses that are very intensively involved in R&D.
“The Chancellor has mentioned those that have qualifying spend of at least 40% of their total expenditure, will now get a 24% rebate for every £100 they spend instead of where it currently is at 18.6%.
“What has to be borne in mind, though, is that’s against the backdrop where they were restricting the relief for many businesses, especially SMEs, a lot of which those changes come in from 1st April.”
No mention of business rates
Jordan Kennedy, Senior Surveyor and Head of Business Rates Consultancy at Vickery Holman, said: “The Chancellor did not mention business rates today, which I’m definitely not surprised about due to the swathe of measures that were introduced in the Autumn Budget, and most likely due to the fact that we have a national revaluation beginning in just over two weeks.
“So, the lack of mention of business rates will be offering some stability as we approach the revaluation.”
Jabo Butera, Managing Director of Diversity Business Incubator (DBI), said: “Overall, the Budget was a good tone and there is a lot of positivity in there. The Chancellor was talking about stability and being stable and more growth instead of a drop.
“What I would have liked to have seen more was that when he was mentioning about the growth and cutting inequalities, and giving the example that we have the most female entrepreneurs in Europe and being the best country to invest in, I would like him to have said how he was going to do that. What does he mean, in detail?
“If you are moving to England and you want to go into business and bridge that gap, how do you benefit from those measures put in place to cut inequalities? Can we have more details, and how do we celebrate that?
“It was a really positive statement, but it would be more beneficial if it was more detailed, because that would strengthen the whole Budget for everyone.”
Tourism & Leisure
Jon Stacey, Westcotts‘ Head of Tourism & Leisure, commented on the Brexit Pub Guarantee: “Clearly the extra differential is welcome for pubs and the trade in general. The unstated expectation is that this will reduce the price at the beer pump but, like the reduction in VAT during the pandemic, the likelihood of this seeing a price reduction to the consumer is low.
“This is therefore aimed to support the publicans by increasing margins rather than aimed at encouraging more use of pubs and increasing turnover.
“In terms of efficacy, it seems unlikely that this will really help the sector concentrate on business building but it will help with survival of those that are suffering from the supermarket drink lead trade reduction. I’m not sure that pubs are really going to save their way into profit on a sustainable basis.”
Cat Williams, Westcotts‘ Head of Charities, said: “Good news in the Budget, as it will help support the charity sector as many of them are facing increasing demand from those they support.
“Many are continuing to struggle with both the cost of living and also their mental health, additional funding should enable charities to increase the services they offer and the number of people they can support at a time when this is really needed.”
British Chambers of Commerce reaction
Giving her initial reaction to the Spring Budget, Shevaun Haviland, Director General of the British Chambers of Commerce, said: “The Chancellor has acted to address the unfilled jobs blighting our economy. It is especially good to see the help on childcare and for over 50s workers.
“The plans for full capital expensing are also a step in the right direction to offset the rise in corporation tax, but the jury is out on how much it will help businesses compared to the Super Deduction scheme.
“Almost half of businesses have told us they will struggle to pay their energy bills from April, and they cannot invest when they are fighting to survive. There is little in today’s announcement that will provide comfort to these firms.
“The Government also failed to reform business rates which we have repeatedly called for. If the UK’s innovative growth industries are to remain competitive on the world stage, then the Government must shift the dial further on investment, both within the UK and from overseas.”