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Addressing the cost-of-living crisis, the new chancellor Jeremy Hunt set out a raft of economic measures yesterday morning.
These included a promise to soften a blow for businesses on business rates with an almost £14bn tax cut on business rates, which will benefit about 700,000 businesses, employment allowance to be retained at a higher level of £5,000, and the minimum wage for over 23s to be raised by 9.7% to £10.42 next year.
But how did the industry react?
A sensible statement
After the previous chancellor Kwasi Kwarteng introduced a mini-budget that caused the pound to plummet, the industry has regarded Jeremy Hunt’s plan as a sensible one.
As Emma Jones, founder of Enterprise Nation, explained, “This was ultimately a sensible statement. There were no shocks for small businesses with VAT thresholds and employment allowances remaining as are, although changes to capital gains and dividend taxation will have a key impact on how owners extract value from their hard work, risk and efforts.
“We have always said the role of government is to provide economic stability, sound infrastructure, and business confidence, and today’s sensible sentiment delivered on that. Reassurance on business rates will have helped.
“What it lacked in entrepreneurial ‘va va voom’, it made up for with sound moves that founders across the UK will appreciate.”
Andrew Goodacre, CEO of the British Independent Retail Association (BIRA), agreed, “Today’s Autumn Statement delivered some welcome news for independent retailers with regards to business rates.
“Next year the multiplier will be frozen for 12 months, the retail discount has been increased to 75% (from 50%) and downward transitional relief has been removed. These are positive steps to support the high street.
“BIRA has been campaigning hard to reduce the cost burden on indie retailers. We actually asked the government not to decrease the discount back in 2021, so it is great to see the chancellor listen to us this time around.”
Plans for growth
The statement also focused heavily on economic growth and innovation, stating that energy, infrastructure and innovation will be priorities, with intentions to turn Britain into ‘the world’s next Silicon Valley’.
This was welcomed by the National Farmers Union, as president Minette Batters explained, “There is much to be welcomed from today’s announcement, particularly on investment in research and development and the roll-out of gigabit broadband technology to those hardest to reach rural communities.
“While we await further clarity, these commitments would enable Britain’s farmers to be more productive and efficient, while continuing to produce sustainable food and achieve ambitious net zero goals.
“Like other businesses, it’s rocketing costs for energy - central to producing our food – as well as huge hikes in feed, and fertiliser, which is putting Britain’s farmers and growers under the most intense pressure. We expect an announcement on future support for businesses before Christmas and it is vital this new targeted approach for business beyond next April includes UK food production and the food supply chain.”
However, some small business experts also expressed disapproval that the statement focused too much on long-term growth rather than short-term support.
According to Emma, “The Silicon Valley measures announced around technology and innovation will power scale-ups and whilst we understand the need to focus policies on fast-growth companies and sectors, we call on the government to not lose sight of the millions of small businesses who are doing their best to stay ahead and require equal championing, encouragement, and trusted support.”
Not going far enough
While the industry is relatively relieved by a statement that didn’t rock the economic boat, retailers are concerned that it didn’t promise enough to help small businesses.
According to Andrew, “While the statement is good news for next year, we are acutely aware that the business climate at the moment is extremely difficult, with consumer spending declining. We would like to have seen more done to encourage more spending, especially in the run-up to Christmas and we are very concerned that disposable income will be reduced as a result of this budget.”
For Mark Kacary, managing director at Norfolk Deli, “I can only guess the statement gave us everything we expected in that some people will have to pay more, it’s going to be financially harder for most people, and whatever respite and hope people and businesses have of being buffered from the worst effects will be lessened in April.
“Those that pay themselves above a certain level will end up paying more, and those small businesses who are losing customers (because their customers can no longer afford to buy items which they will see as luxury products) are facing higher wages due to the rise in minimum income rate, forgetting of course that some owners do not pay themselves anything close to the minimum income rate.
“There will be some very hard times ahead and I can only see this having a devastating effect on the speciality fine food sector.”
These sentiments were also felt by Nick Gillett, managing director at drinks distributor Mangrove Global, as he expressed disappointment that hospitality was left out of the conversation. “What it was short of were the details around any glimmers of hope for hospitality - such as the proposed support for business rates and potential energy deals.
“These are yet to come, and I have my fingers crossed for this support to match the most optimistic commentators’ thoughts, but let’s see. Beyond that, there was precious little for anyone out there and certainly no, or little support, or incentive for those entrepreneurs or risk-takers who could perhaps tip the balance and improve the country’s finance.
“The best I can hope for is a stable environment where I can plan my resources and growth, and not be hit by unexpected tax rises. A rather underwhelming day”, he concluded.