Welsh business groups have been reacting to the Chancellor Jeremy Hunt’s Spring Budget announced in the House of Commons today.
For a full summary of what the Budget means for Wales, click here .
FSB Wales
Ben Francis, FSB Wales Policy Chair said the Chancellor was “playing a long game” with little to address “the immediate pressures plaguing small firms such as extending support for sky-high energy bills”.
He added: “One area that has caused considerable concern for small businesses is the planned rise in fuel duty, in 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.
“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.”
Chambers Wales South East, South West and Mid
Paul Butterworth, Interim CEO, 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.”
Bevan Buckland LLP
Jack Parker, senior executive at Welsh independent accountancy firm, Bevan Buckland LLP, said: “The measures announced today are not as severe as first predicted, however
they will impact millions of people across the UK.
“The announcement of £80m 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 super deduction 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.
“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.”
Starling Bank
Swansea-born founder and CEO of Starling Bank, Anne Boden, said: “London’s success as a fintech hub should enable it to spread the love - the wealth and jobs - throughout the UK, including to Greater Manchester and to Wales, both areas with a deep pool of tech talent. We’re pleased to see the Chancellor recognise this in his 12 new investment zones.
“Everybody deserves a second, third or fourth chance in life. We already operate a form of returnership at Starling and have found that this helps us grow a diverse and inclusive team, while at the same time offering support to those returning to the workforce after an extended break. Everybody wins. We welcome the new scheme for over 50s introduced in this Budget.
“Allowing companies to write off the full cost of qualifying plant and machinery, including IT equipment, will give businesses a significant incentive to invest and will support additional job creation.”
Institute of Chartered Accountants in England and Wales
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.”
ACCA Cymru/Wales
Accountancy body ACCA welcomed the direction of the Chancellor’s statement but warned key ingredients of tax reform and HMRC improvements were missing from today’s announcements.
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.”
British Chambers of Commerce
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.”
Association for Consultancy and Engineering
Chief executive Stephen Marcos Jones said: ““There were very few surprises in the Budget with regards to climate, with many of the announcements focused on industrial clusters, and carbon capture. However, details on capital allowances are significant and will be an important step in supporting net zero projects.
“In the days leading to the Budget, we issued a warning that the UK’s reputation for delivering large-scale construction and infrastructure projects is on the line, following the decision to delay construction of significant aspects of HS2 by two years. The focus on reducing inflation in today’s Budget hopefully means a rethink to the delivery of major projects in the medium and long term."
Quantum Advisory
Sarah Garnish, a Consultant at Quantum Advisory, said: “The low Lifetime Allowance cap has been discouraging higher paid earners who took early retirement during Covid from returning to work, and also preventing older, often highly experienced and skilled professionals from working longer, through fear of being faced with substantial tax charges. The abolition of the LTA will benefit a considerable number of people and is likely to keep NHS doctors and other professionals working until later in life.
“Pensions annual allowance statistics from HM Revenue and Customs (HMRC) show extensive increases, since 2012/13, in the number of workers who have been stung by the AA cap.
“This considerable increase of £20k per annum will provide workers who have been limited by the cap for the past few years with headroom to catch up on any missed pension savings, and in conjunction with the abolition of the LTA may even encourage some highly-skilled workers who have reduced their hours or taken early retirement back to work.”
