Chancellor Rishi Sunak will deliver his second Budget of the year to the commons on Wednesday, October 27.
He is expected to end the year-long public sector pay freeze for more than five million public sector workers and raise wages for people on low incomes from £8.91 to £9.50 an hour.
But Labour critics have said the recently announced hike in National Insurance Contributions to 1.25% and a freeze to the personal income tax allowance could leave some worse off.
Business minister Paul Scully said on Tuesday the economy was going through a “difficult time” in terms of cost-of-living pressures.
“The 6.6% increase is quite a substantial increase of the national living wage. It is still keeping us on target to end low pay by 2024," he told the BBC.
“But it has to be balanced by businesses themselves because if we choke off the recovery then that’s going to reduce the number of jobs, reduce the number of opportunities for people on low pay.”
But what would the business community like to see from the Autumn statement? We spoke to senior leaders and business organisations from the South West about what’s on their wishlist.
'Covid support must match business needs'
Claire Ralph, policy manager of South West chamber of commerce Business West, said the government needed to make sure its Covid support matched business needs, especially if restrictions to trading are reimposed on public health grounds.
“Businesses remain vulnerable, with depleted cash reserves, high inflationary pressures and paying down Covid-incurred debt such as bounce back loans,” she said.
She also called on the government to make sure it provided the South West with its “fair share” of funding as part of its so-called ‘levelling-up agenda’.
“Key issues like investment for local transport, investment in flooding defences, particularly for central Bristol where it is currently holding up several big redevelopment decisions, and money to help Bristol Temple Meads complete its long overdue overhaul, are all critical things on the local wishlist here.”
'Business rates badly need to be reformed'
Ms Ralph has also called for reform of the business rates system, which she said was continuing to act as a “real drag” on the region’s high streets, dampening growth and investment.
“Budget day always gives a profile to the popular spending announcements the chancellor wants to claim credit for,” she said.
“But, given the tougher fiscal environment due to the battering of Covid, a squeeze in other areas is more likely. Business will be keeping an eagle eye out for any unwelcome surprises.”
Phil Smith, managing director of Business West, said he had seen “little to excite business” so far in the preliminary Budget leaks.
“The government seems to be exhorting business to invest but at the same time taxing them next year,” he said. “Business rates badly need to be reformed but there is no sign of that happening.”
'Business needs help to lead the recovery'
Tim Jones, Chairman of South West Business Council said that the business community recognises that the public purse 'has been stretched beyond imagination' and that it is now very much in the hands of the business community to lead the recovery.
He said: "There is a huge appetite to take on this challenge, indeed, many have taken the opportunities given by Covid and Brexit and the market shift this has created to explore new international opportunities. There are four areas where Government encouragement would assist in this process:
- Digital Skills Education and Training from Primary School through to mature employees.
- Recognition that the transition to Net Zero will be challenging and costly. Some of the interim steps needed to achieve this, such as, work-based parking charges or the reintroduction of the fuel price escalator, have a disproportionate effect on rural areas.
- VAT. Differential levels of VAT should be part of the toolkit to assist businesses to refinance and grow. This has been a crucial element in assisting the hospitality tourism and leisure sector. Leaving rates at the lower level would yield significant returns and tax revenues from other sources.
- Firing up start-up businesses and the appetite for self-employment are key to the future of the South West economy. Our experience over many previous economic shocks, show that it is these “green shoot” entrepreneurs who are nimble enough to respond to changes in market demand and who can drive sustainable economic growth and wellbeing.”
'Skills funding boost welcome'
Mr Sunak is expected to announce £1.6bn to roll out new T-Levels for 16 to 19-year-olds, and £550m for adult learning in England as part of a plan to boost skills.
There will also be £830m extra funding announced in the Budget as part of a five-year-scheme to refurbish colleges.
Mr Smith said the funding boost for colleges would be welcomed by higher education institutes. He said: "It will hopefully enable colleges to look at more re-training for the displaced over-50s from furlough.”
Sara-Jane Watkins, principal of South Gloucestershire and Stroud College, agreed. She said with businesses finding it hard to recruit, colleges were playing an “important” role with apprenticeships - and called for an increase in the base rate for 16-18-year-old learners.
“A base rate increase is the only way of recruiting and retaining quality vocational delivery staff who are so needed to inspire the next generation-especially in areas of digital, construction and health.”
'Net Zero must be more carrot than stick'
Stuart Elford, Chief Executive of Devon & Plymouth Chamber of Commerce and Chairman of British Chambers of Commerce South West said that businesses hit by Brexit, the pandemic and subsequenbt price rises and falling revenues will be watching this budget with apprehension.
"Of course businesses want to do all they can to reduce their environmental impact, but the focus on Net Zero must be more ‘carrot’ than ‘stick’, incentivising and helping business rather than penalising firms that are doing their best.
"The South West with its blue/green economy will be especially keen to see what levelling up means for the region. Specifically we will want to see a level playing field for funding, with the criteria and metrics the government will use published in advance and not after political decisions have been made.
"Finally, in this tight labour market, with a shortage of employees hampering productivity, it is a specific ask that the Annual Investment Allowance is extended to include skills.”
'Increased support not additional taxes'
Dorset Chamber chief executive Ian Girling said it was “crucial” the chancellor made the “right decisions” on investment, tax and support.
He said the Ƶ was at a “critical point” in its economic recovery from the pandemic.
“Helping businesses survive and get back to growth is critical to the nation’s hopes of economic recovery and long-term prosperity,” he said.
“Supply chain problems persist and severe recruitment challenges remain in many sectors while there’s huge pressure in terms of rising costs as the spectre of higher inflation continues to loom large.
“The furlough scheme has just ended and there are serious concerns about the resurgence of Covid infection rates which could trigger tougher restrictions. This cocktail of factors makes it a very difficult time for businesses.”
A spokesman for Somerset Chamber of Commerce, meanwhile, called on the government to map out a recovery plan for businesses facing the challenges of increased costs, supply chain difficulties and staffing shortages.
“Businesses need increased support, not additional taxes,” the spokesperson said.
“government must abandon plans to increase business rates in the next financial year to avoid further diminishing firm’s already limited cashflow and to prevent further damage to our high streets and town centres."
'Take action to boost exports'
Somerset Chamber also called on the government to take action to boost exports and help businesses continue to trade with the EU and further afield.
“Too much red tape, border delays and increased shipping costs are all leaving their mark. Conditions remain extremely challenging for many businesses,” the Somerset chamber spokesperson added.
“A renewed inflationary surge is expected in the coming months which will likely curb consumer spending, while VAT reductions for hospitality and tourism are due to be partially reversed. All these factors will take their toll and the government must be prepared to offer support to offset them.
'Government needs to recognise the contribution the South West can make'
David Ralph, Chief Executive of Heart of the South West LEP said that the South West is ready to deliver on the Ƶ Government's plans for Global Britain, net-zero and levelling up but first needs recognition and support.
"We want to see recognition of the Great South West and particularly its contribution to providing green energy – genuinely the Ƶ’s Natural Powerhouse and we want to see demonstrable evidence that Government sees levelling-up as material in the South West just as it does in the North and Midlands.
"We need to make sure the costs of business are low; flexibility, business rate support to High Streets for example, low VAT for energy and tourism businesses and hard pressed public services having the funding to support those in real need.
"Finally as well as a climate crisis we need to recognise we have a housing affordability crisis in the south west. This together with reducing fuel poverty and increasing energy efficiency of our homes is a real opportunity for our construction sector but Government has to provide the enabling framework – the route map to encourage the business to invest."
'Safeguard taxes and invest in skills training'
Ed Rimmer, chief executive officer at Bath headquartered Time Finance, said the survival of small businesses and the Ƶ’s continued economic recovery relied on a number of “vital measures” in the Budget.
He said the government needed to safeguard taxes on small businesses, and that further changes to Corporation Tax would be “unnecessary” given recent tax changes that are paying back into the treasury.
Mr Rimmer said he was also hoping to see an extension to the retail rates relief. He pointed out the Uniform Business Rate is set to increase for 2022-2023 in-line with the Consumer Price Index’s headline inflation of 3.1% for September.
“The revenue from business rates will grow. In my view that is reason enough to continue to give relief to those that need it most,” he said.
He also called on the government to invest in skills training. He said the government needed to ensure its National Skills Fund filled the gap in talent supply and catered to the areas of greatest need.
“I don’t think any of us envy the task at hand for the chancellor. Rebuilding the public finances will require a lot of tough decisions but there are some good signs of recovery.”
'The South West should be seen as an exemplar, not an afterthought, for levelling up'
Adele Barker, Chief People Officer of Pennon, which owns South West Water, said that as a top FTSE business in the South West she wants to see a renewed focus on levelling up and plans to support a green recovery as a truly national project.
Pennon is a leading campaigner for the Great South West Partnership which is calling for Government support and recognition for its net zero powerhouse agenda.
Pennon operates more than 60 renewable energy installations across the region, with sites using solar, hydroelectric, wind and biogas. South West Water remains on track to reduce its operational emissions by one hundred thousand tonnes to meet the first sector-wide commitment to achieve net zero carbon on operational emissions by the end of the decade.
Its Green Recovery Initiative is focused on helping the existing workforce gain new green skills, while creating up to 500 additional jobs across the region.
She said: “The South West’s potential is huge, and our region should be seen as an exemplar, not an afterthought, for leading the way in levelling up. Our region can truly point the way to a high-tech, high-growth, green British future.
“Measures supporting the next generation of talent are also important. We were one of the first companies to sign up to the Government’s Kickstart scheme providing 50 six-month paid work placements to young people at risk of long-term unemployment and have set an ambitious target of hiring 500 apprenticeships over the next five years.”
'EU funding Cornwall and the Isles of Scilly lost as a result of Brexit should be replaced'
Mark Duddridge, chair of the Cornwall and Isles of Scilly Local Enterprise Partnership, said he wants the Budget to make good on assurances that the ‘Levelling Up’ and the Shared Prosperity Fund will replace EU funding.
"It's important that happens quickly in order to ensure we can capture the opportunities we have in areas such as renewables and tech metals, which are vital if we are to make Cornwall the first net zero region.
“We’d like to see real movement on these, paving the way to unlocking investment, delivering on our goal to create high-value industries and well-paid jobs in Cornwall and ensuring we don’t miss the opportunities technologies like lithium and floating offshore wind present in enabling the energy transition.
“Having seen this week the consultation on the design of the new Scillonian, we would welcome confirmation that the region’s bid to the Levelling Up Fund is successful, thereby safeguarding vital transport links to the Isles of Scilly.
“We would also welcome a positive announcement about the Community Renewal Fund that would enable the delivery of projects identified as being key to ‘Levelling Up’ and a forerunner of greater local devolution.”
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