Business and political leaders in the North East have given a lukewarm response to Jeremy Hunt’s Autumn Budget as the Chancellor moved to reduce the tax burden in the run-up to the next General Election.
Mr Hunt announced a two percentage point reduction in the main rate of National Insurance, which he said would save someone earning £35,000 more than £450, with the change benefitting 27m people. The Chancellor also confirmed that a tax break allowing firms to cut their bills if they invest in new equipment will be made permanent, in what he claimed was the “biggest business tax cut in modern history”.
But the region’s largest business membership group said that “North East businesses will be left wondering if there’s enough here to heal the pain they’ve felt over many years” while the two leading candidates for next year’s North East mayoral election criticised the lack of attention in the statement to the region.
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John McCabe, chief executive at the North East Chamber of Commerce, said: “This was supposed to be an Autumn Statement for growth but once you get beyond the well-trailed headlines, North East businesses will be left wondering if there’s enough here to heal the pain they’ve felt over many years.
“The main measures – cuts to business taxes including maintaining some business rate reliefs and an increase in the National Living Wage – were a positive start. Making full expensing of investment costs permanent was an important win for the British Chambers of Commerce network and especially medium and larger businesses. But after two years of challenging inflation, which is still a long way from the Bank of England’s 2% target, it remains to be seen if the Chancellor’s plans will deliver the long-term boost needed for every business across the region.”
And Stephen Patterson, chief executive of business group NE1 Ltd, said: “It remains a challenging environment for the city’s businesses experiencing rising costs, and stagnant market conditions. This is a budget with one eye firmly fixed on next year’s General Election rather than one which incentivises investment and creates the best possible conditions for growth.”
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North of Tyne mayor Jamie Driscoll said the Government should be devolving more powers to the North East, while mayoral candidate Kim McGuinness complained that “the North East didn’t even get a mention in his hour long speech”.
Mr Hunt said his autumn statement package would “raise business investment, get more people into work, reduce inflation” and increase gross domestic product, a measure of the size of the economy. But while the Office for Budget Responsibility (OBR) has upgraded its GDP growth forecast this year, it has downgraded the figure for subsequent years.
Mr Hunt said universal credit and other benefits will increase by 6.7%, in line with September’s inflation figure, ending speculation the Government could have used the cheaper October figure. Mr Hunt also confirmed the triple-lock formula for state pension rises would be implemented as usual.
But he confirmed plans for a tougher welfare regime, saying it was “wrong economically and wrong morally” that every year more than 100,000 people were signed onto benefits with no requirement to look for work because of sickness or disability.
The Chancellor said: “We will reform the fit note process so that treatment rather than time off work becomes the default. We will reform the work capability assessment to reflect greater flexibility and availability of home working after the pandemic. And we will spend £1.3bn over the next five years to help nearly 700,000 people with health conditions find jobs.”
The decision to raise benefit payments was welcomed by the North East Child Poverty Commission, but its interim chair Michele Deans said: “We are deeply concerned about the rhetoric around forcing people into work and threats to remove financial support. This could have a disproportionate impact on our region, with higher rates of people who can face significant barriers to work. We must focus all of our efforts on supportively removing those barriers, not threatening to make life even harder for families already on a very low income. The potential impact of this on babies, children and young people is unthinkable.’