Business Leaders React to Yesterday’s Budget
Yesterday’s budget saw the new Chancellor, Rishi Sunak, borrowing funds to invest into the UK after ten years of austerity, something he said was “the right economic thing to do” – and his announcements included a £30bn package of investment.
The Bank of England also announced a cut in interest rates on Wednesday.
Businesses across the UK have been responding to the news – we’ll be updating this page as responses come in.
120m For Flood Defences
The Chancellor announced that 120m had been allocated to repairing damaged flood defences from recent storms Ciara and Dennis, although with flooding over such a wide area, there was no indication of how different regions would be prioritised.
North Wales Web Design specialists Design Web called for North Wales to receive a share of this funding. Managing Director Paul Lyons said:
“It’s great to see that the Government announced £120m to repair flood defences. I desperately hope some of this will be allocated to North Wales, where recent floods were devastating to homeowners, sports clubs and businesses. Many, like the local football club I work with, are still struggling to recover.”
South Wales Home Improvements specialist, Centric Windows, also called for financial support for Welsh flood victims. The company has many clients in Pontypridd, where more than 500 families have lost everything:
“We were disappointed that the Chancellor didn’t take yesterday’s opportunity to offer more financial support for Welsh flood victims, many of whom have heard their insurers will not pay out. The Welsh Government has offered £500 to uninsured families, but that is like a drop in the ocean. We and other local businesses are doing what we can to help support local homeowners, but Westminster has not followed suit. Coronavirus is not the only emergency in 2020 and we would like to see our taxes being used to support Wales in our time of need.”
£27Bn for Roads and Infrastructure in England – None in Wales, but Wales to receive extra £360m
The Chancellor announced £27bn for roadbuilding and infrastructure in yesterday’s budget, but this does not cover roads in Wales, which are managed by the devolved Welsh Government. This £27.4bn will be spent between 2020-25 to “pay for work on over 20 connections to ports and airports, over 100 junctions, 4,000 miles of road”. Many are now waiting to see if the Welsh Government will use some of the £360m to repair and upgrade the Welsh road network.
“We run construction projects across the whole of South Wales, from Newport to Carmarthen, and it’s incredibly frustrating when our operatives get caught in traffic jams on the M4. Frequently traffic reaches a complete standstill. If Wales is to compete, the Welsh Government needs to match England’s announcement of investment in roads and bring Welsh roads up to scratch.”
Coronavirus and public services
The Chancellor announced a £30bn package of measures to tackle the coronavirus pandemic. With the phase expected to move forward to the delay stage today, business leaders concerns turned to how businesses can continue to function through the crisis
Tania Bowers, Legal Counsel at the Association of Professional Staffing Companies (APSCo), expressed concern at potential staff availability issues in the public sector:
The fact that SME members will be able to reclaim the cost of statutory sick pay due to Coronavirus absences up to 14 days will be welcomed by smaller companies. This was one of many measures, along with a Coronavirus Business Interruption Loan Scheme, and £2.2 billion grant scheme for small businesses that will help the country continue to thrive in challenging circumstances. However, while there are lots of indications as to how public services may be assisted, it is yet to emerge how sufficient staff will be sourced.”
Charles Alberts, head of health management at Aon, said:
“It’s projected that up to 1 in 5 people could be off work at any one time due to Coronavirus (COVID-19). From an employer’s perspective, this presents a range of challenges including business operations, additional cost and risk.
“As a minimum, employers will need a system in place to identify how many people are off due to COVID-19 and their expected return date. They need to consider how they’ll record all absences, who will do so, where this data will be stored and how accessible it will be to HR and other stakeholders, how to ensure timely and accurate recording and how reliable the data will be for the different Statutory Sick Pay rules that apply.
“It’s positive that businesses employing less than 250 people will be supported by Government for up to 14 days of individual employee absence due to COVID-19. These measures further illustrate the case for a proactive approach to absence management. No matter what size the business, unplanned absences have a detrimental impact and therefore there is an imperative to manage all cases proactively to minimise the impact.”
Award winning serial-turnaround CEO & Business Coach, Peter Ryding, founder of VIC Your Coach welcomed the funding but called for CEOs to remember to delegate if they are to survive the crisis:
“I welcome the Government’s announcement today that it will be delivering extra funding for small to medium sized businesses. However, I have been shocked at how so many, even well-known companies, are making basic mistakes because they have not adopted the right mindset and are not having the right discussions. Unless they wake up and smell the real Corona issues soon, they may not survive long term, even if they do get through the short-term crisis.
“Cashflow and people will remain key – which means working with your Financial Director and your HR Director. They are experts in their respective areas – and a wise CEO knows when to delegate. Once you have ensured your cashflow and your people are both taken care of, you can decide how best to steer the business. Right now, a focused CEO is the strongest asset a business can have in the Coronavirus crisis.”
Alex Gibbs, Co-Founder and Director of Built Asset Management (BAM) said:
“It goes without saying that small-to-medium sized firms in particular are incredibly concerned about the potential impact of Coronavirus without the man power to simply ‘carry on’ should the workforce be affected, so today’s announcement of funding set aside to specifically limit the financial hit is a welcome reassurance in what is a very turbulent time for business.
It’s both pragmatic and refreshing for the Government to recognise SMEs as potentially some one of the worst affected should the virus take hold in a similar way to what’s been seen in Italy and further afield. Attention often jumps to share prices and public company indexes; people forget that SMEs account for around three fifths of the employment in the UK private sector. Specific funding in place to negate this impact may well prove to be necessary to mitigate what could be a catastrophic impact on the UK economy.”
Personal taxation, wages and pensions
Ed Gibson, head of financial services at Shaw Gibbs, accountants and business advisers, felt the tapered annual allowance thresholds should have been scrapped:
“The change in the tapered annual allowance thresholds will indeed take most of the NHS consultants out of the tax trap, but only by making the taper system largely irrelevant because of how few people will now be affected. By retaining a piece of complicated and poor legislation, Sunak bottled it when he should have just scrapped it.”
Neil Pattison, Director at the UK’s biggest hospitality jobs board, Caterer.com, welcomed the news that the Government will exempt businesses from paying National Insurance Contributions if they hire forces veterans. He said:
“Hospitality is already very active in helping veterans back into work and with an anticipated 1.2 million hospitality vacancies by 2024, there is plenty of scope for restaurants, pubs and hotels across the country to help veterans re-enter civilian life while also tackling the labour shortage. The potential positive impact these individuals can have on hospitality businesses is significant. Our latest research shows that 1 in 2 customers would be more likely to visit a restaurant if it hired veterans. Our sector has proved that, with the right programmes in place and support from charities like Only A Pavement Away, businesses have a lot to gain from employing veterans. We hope that the Chancellor’s announcement will encourage more employers to follow suit.“
Reduction in Entrepreneurs Relief
Entrepreneurs’ relief (ER) is a UK tax scheme designed to incentivise people to grow a business by reducing Capital Gains Tax (CGT) to a flat rate of 10%, rather than the higher rate 20%, on the first £10m of gains from selling a company. Yesterday’s budget saw the maximum relief cut from £10m to £1m.
Mike Lebus, co-founder Angel Investment Network said many business leaders expected the scheme to be scrapped entirely. He said:
“It’s understandable that the government was looking at entrepreneurs’ relief, as it costs them between £2bn and £3bn per year, and there is no solid evidence that it has done anything to increase the number of startups created. The good news for small business owners is that entrepreneurs’ relief hasn’t been scrapped entirely.
“However, the government still needs to find new ways to incentivise British entrepreneurs to create start-ups and attract overseas entrepreneurs to the UK, as small businesses play such a vital role in generating growth in the local and national economy by creating jobs, developing innovation and generating income for the government through corporation tax, business rates, national insurance and VAT. I also think the government should be doing more to encourage startup growth by providing incentives at the beginning of their life rather than at the end.’
The unpopular IR35 plans were announced despite pleas from business for a delay.
Richard Mort, a director at Edge Testing Solutions said now the announcement was made, at least this would end uncertainty for clients and contractors:
“The chancellor’s confirmation of the go ahead of IR35, is the biggest change to affect the tech sector since GDPR.
“Hopefully after today, uncertainty within the market will reduce, from both clients and contractors. For contractors, frustration, confusion, and uncertainty seem to be overriding reactions. Contractors don’t just fear the monetary aspects and losses of IR35 coming into effect. They also have a fear of being forced into permanent roles where they lose the flexibility and choice which they previously had over future engagements. For contractors that don’t want to be tied to one company, roles in consultancy companies are an option many more may now be considered, where their own personal IR35 risk is removed, so they can continue to engage and work with a variety of companies.”
James Poyser, CEO of inniAccounts added:
“There’s plenty of good news for business – more cash for R&D and big investments in transport and digital infrastructure. But sadly, IR35 has not been delayed. And there’s a paradox: these large investments are project based, and need to be delivered by a flexible expert workforce and small consultancy firms who can roll on and off projects as needed. But, even before April, the disastrous IR35 reforms have already decimated the UK’s flexible workforce. The right thing would have been to announce wider reforms to make the self-employed valued first-class citizens, with employment rights, and allow them to play their part in ‘getting it done’.”
Dominic Harvey, Director at CWJobs said:
“Yesterday, The Chancellor confirmed that private sector firms will soon have to judge whether their contractors fall under IR35 or not. As of four weeks’ time this new regulation echoes the announcement directed at public sector companies in August 2017. With the tech industry largely reliant on contractors, IR35’s extension to private sector companies means that those not aware of this new law will be caught out; something that may further extend the current skills gap.
“It is vital both businesses and trade institutions across the industry help educate one another around the IR35 ruling and do all they can to understand the legislation. This is particularly the case as many contractors likely to be impacted by IR35 frequently opt to work remotely. Additionally, businesses need to work closely with their contractors to ensure operations continue as normal from April onwards. As we saw with the introduction of GDPR, whilst tech firms are given notice over these rulings they must now ensure they are up to speed to guarantee a smooth transition through the Treasury’s ‘light touch approach.’”
Sustainability and Climate
David Goatman, Partner, Head of Energy and Sustainability EMEA at Knight Frank welcomed the announcement of a £500m investment in rapid EV chargers, saying:
“The plan is that drivers should be no further than 30 minutes away from a charger. This new investment is welcome. However, the bigger question is whether we have the grid infrastructure to accommodate the EV revolution we need?
“The challenge ahead for the grid as our vehicles move from fossil fuel to electrification is huge and affects not only cars, but the vans, trucks, and fleets that serve our e-commerce economy. £500m is the tip of the iceberg.”
40 New Hospitals
Jane Ho, Director of Health at HKS Architects, said:
“Of course it’s great to hear that work will start on building the 40 new hospitals promised by the government. However, questions remain over whether we have the processes in place to procure major acute facilities and it will obviously be a number of years before we see patients treated. It’s therefore vital the government also continually invests in improving the hospitals as well as local community health services we already have to ensure they are up to scratch for the demand. They also need to ensure there is enough funding left in the pipeline to maintain the hospitals once they are built, and adapt them as needs change in the future. The current climate of a global epidemic has really shone a light on the need for new hospitals to be flexible and easily adaptable, not just spatially but with its infrastructure, so we can, for example, insert isolation lobbies and quarantine spaces on a temporary basis.”
Investment in Skills
Lisa Lyons, Leadership and Workforce Transformation Practice Lead at Mercer said:
“We wholeheartedly welcome the Government’s new £2.5 billion National Skills Fund, and especially the reference to training and retraining over the course of a lifetime. We expect to see considerable workforce upheaval in the coming decade, as job requirements change more quickly. The race is on for all of us to stay up-to-date and relevant.
“Organisations should take action to identify their future skills requirements. This includes both technical skills such as, cloud computing, analytical reasoning and soft skills like, creativity and collaboration. Where organisations see less demand for certain roles and increased demand for others, they should look to identify people with transferable skills and provide re-skilling opportunities to enable them to move to new roles.”