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Jeremy Hunt, the current chancellor, delivered a ‘Budget for growth’ yesterday afternoon, which he insisted would provide support for people amid the cost-of-living crisis, bring down inflation and introduce a pathway for economic growth.
However, the food and drink sector was left feeling somewhat let down by the announcement, as small businesses weren’t included as part of the plans for growth.
Key measures included an extended energy price cap, meaning average household bills will stay capped at around £2,500 a year, rather than increasing to £3,000 as planned, a freeze on the 5p fuel duty cut which has been extended to April 2024, and 30 hours of free childcare.
To boost economic growth, the chancellor also announced a new investment zone scheme where eligible areas will get £80m of funding each to use for skills, infrastructure, tax reliefs, and business rates retention.
Small wins in a ‘boring budget’
In comparison to previous chancellor Kwasi Kwarteng’s explosive economic announcements last year, Jeremy Hunt’s announcements have been labelled ‘boring’ by the industry.
According to ParcelHero’s head of consumer research, David Jinks, there were a few wins amongst the announcements, despite no groundbreaking measures.
One of these wins was the freeze on fuel duty, which will benefit both consumers and retailers with delivery vehicles. David explained, “Many working drivers will be delighted by the news that there will be an extra £200m spent on filling in the UK’s thousands of potholes. The announcement that fuel duty will remain frozen and the 5p reduction will be maintained for another year will also be welcomed by many owner-drivers.
“As well as being the ‘boring budget’, this was also the ‘back to work’ budget”, he added. “Retailers and other businesses will be pleased to see several measures around increased childcare that will help parents afford to return to employment. The launch of so-called ‘Returnaships’ (apprenticeships for more mature workers, focusing on flexibility and previous experience) will also help boost the number of people available to work.”
Small businesses left out
However, small businesses seemed to be left out of the equation, with more focus on big businesses and major investment zones.
As Andrew Goodacre, CEO of the British Independent Retail Association, commented, “The chancellor was upbeat about the economy in that we are likely to avoid a recession and forecast growth is better than expected. We wanted to hear about plans for growth and we were told about new investment zones, increased capital tax allowances for business investment and £200M in local regeneration.
“These are positive measures but long term is not necessarily addressing the challenges faced by businesses on the high street today.
“We hope that the better economic forecasts, and more people returning to work will improve consumer confidence – often the key driver for high street economic growth. Unfortunately though, there was nothing to ease the fears of indie retailers dealing with the pressures of today.”
With independent retailers still struggling with high costs and reduced footfall in the high streets, the measures announced simply don’t go far enough to help.
“The pressures of inflation, high energy costs and energy support set to reduce by 95% in April, and wages set to increase by 9% in April. This budget may improve consumer confidence, but it does little to boost the confidence of businesses on the high streets throughout the UK,” Andrew added.
This is something national chair of the Federation of Small Businesses (FSB), Martin McTague, also felt as he argued, “The distinct lack of new support in core areas proves that small firms are overlooked and undervalued. Budgets are about tough choices, and with today’s billions of pounds being allocated to big businesses and households, 5.5 million small businesses, and the 16 million people who work for them, will be wondering why the choice has been made to overlook them.”
The FSB also said there was a clear lack of understanding of the role that SMEs will need to play in economic recovery. “Trickledown economics here simply does not work,” Martin insisted, referring to the £27bn given to big businesses.
Despite there being very little to wake up high street retailers in this budget, with no new moves to reduce business rates or boost other retail initiatives, David did identify one silver lining. “High street hospitality businesses will want to raise at least half a glass to the chancellor for freezing the cost of a draught pint. From 1st August, the duty on draught drinks in pubs will be up to 11p lower than the duty in supermarkets.”