North west business leaders urge chancellor to keep region at heart of upcoming budget

Prime minister Boris Johnson’s majority government is preparing to deliver its 2020 Budget this week.

Not only is it the first from new chancellor Rishi Sunak but also the first since the ��Ƶ’s decision to formally leave the EU at the end of the current transitional period.

And business leaders in the north west are urging him to put the region at the heart of his upcoming budget.

Transport for the North members want to see reforms to the way funding decisions are made and are urging the chancellor to provide a dedicated “Northern Budget” so they can provide significantly enhanced opportunities for the region’s people and businesses.

They say that overhauling the Treasury “Green Book” approach to investment decision-making can rebalance the ��Ƶ economy by ensuring vital Northern infrastructure projects are funded.

They have written to Rishi Sunak MP to reiterate the calls first made last summer for three core “asks”:

- Commitment to build the £39bn Northern Powerhouse Rail network in full by 2040

- Commitment for a £7bn Northern Infrastructure Pipeline of road and rail projects in the early 2020s

- Commitment of £1bn for TfN over the next three years so it can deliver on this vision

Chancellor Rishi Sunak wuill deliver the budget on Wednesday (Image: PA)

Barry White, Chief Executive at Transport for the North, said: “Our work clearly shows that alternative approaches are not only viable but offer a transformational view of infrastructure investment that would enable the “levelling up” of our region.

“We believe we’re on the path to devolution, and that by setting out a dedicated Northern Budget the Chancellor can empower the North to make the most of our ambitions.”

The Confederation of British Industry (CBI) has also published its wishlist and has called for the government to use the Budget to launch a comprehensive review into the ��Ƶ’s business rates system.

The CBI also urged the government to carry out a review of the current Apprenticeship Levy, which it believes is ‘holding back skills investment and adding costs’ for businesses.

Additionally, the CBI has called for an increase in the R&D tax credit to ‘spur investment and launch a consultation into widening its scope’.

“At the start of this new decade, firms are feeling more optimistic and want to invest,” said Carolyn Fairbairn, Director General of the CBI.

“Backed by a pro-enterprise Budget for skills, infrastructure and innovation, business can help kickstart a new decade of growth and job creation.

“And it is investment that will enable all regions of the ��Ƶ to share in rising prosperity. It will put the ��Ƶ on track to lead the world in innovation, clean growth and the industries of the future, from AI and robotics to agri-tech and life sciences.”

Covid-19 could have an impact on this week's budget (Image: Getty Images)

Noam Handler, North West Tax Partner and National Markets Tax Leader at EY, said the chancellor ‘has two bites of the Budget cherry’ this year.

He said: “We’re calling on Mr Sunak to use the opportunities to implement sensible tax reform to redress the geographic economic imbalance that exist in the North West.

“Traditionally, the first Budget of a parliament is a tax raising one, but factors like the growth of Covid-19 and the fact he’ll have another chance to raise money later in the year may mean that the Chancellor decides to keep some of his powder dry this week, with a view to making the November Budget a far more expansive fiscal event.

“Whatever he decides, we’re looking to the government to use this week’s Budget as an opportunity to play its part and outline plans to invest in the North West and help spread the wealth and prosperity right across the region for the benefit of everyone.

“EY’s recent Regional Economic Forecast not only highlighted the North – South divide but also the growing disparity between the North West’s core cities like Manchester and Liverpool and some of its key towns like Preston, Blackburn and Lancaster.

“The Chancellor is, to some degree, constrained in what changes he can make to regional taxation rules for the North West but there are certain tax levers he can pull, like increases in R&D tax credits, that help to regenerate and promote growth in the Northern economy.

“Support for enterprise zones, and increased funds for HS3, coupled with a sensible approach to policy-making around business rates and planning regulations will also be welcomed by businesses in the region, as well as continued investment in skills and the development of our labour market.”

John Webber, head of business rates at real estate advisors Colliers International, said the 2020 Budget ‘could be a real opportunity for the Government to look hard at the business rates crisis and implement some immediate quick win measures to help businesses.’

He said: “Obviously, we would still need to look at some long-term alternatives to help fund local government finances, such as perhaps some kind of sales tax to help level the playing field between physical and internet retail, or even taxing deliveries from internet providers - which would have environmental benefits too.

“But there are things that can be done now.

“It looks like the Government might call for some kind of review, but our fear is that this will only be kicking things into the long grass yet again. The Treasury Select Committee made some sensible recommendations last autumn, after six months of brainstorming between experts in the industry and businesses.

“Will Budget 2020 implement these? Or will we see another brushing off of the issue and just some extra reliefs to small retailers and pubs, as we’ve seen in recent Budgets? Only time will tell. But I’m not holding my breath!”

Richard Roberts, partner and head of retail at Brabners, said a reform of business rates was at the top of the Budget wish list for many firms – particularly bricks and mortar retailers in northern English towns ‘who have felt the pinch more than most.’

“The new chancellor has supported reform in the past so the sector will be holding onto a slim hope that change is coming,” he said.

“Hopes of reform are likely to prove optimistic given the government rejected all but one of the recommendations from October’s Treasury Select Committee inquiry into business rates.

“Westminster has promised a full review but has set no timeframe for doing so – it seems the can is being kicked down the road once again.

“Boris Johnson bound his political future to the North when he broke Labour’s ‘red wall’ in the election and is now obliged to rebalance spending and address the issues facing the region.

Crippled high streets have been a feature of northern towns for too long so a redressed taxation system is needed desperately for the region to prosper."

Budget 2020

Businesses in Liverpool will be hoping that the Government announce proposals that match the ambitions firms in the city are showing for the future, according to a small business champion.

Toby Harper, whose business Harper James Solicitors supports many firms in both Liverpool and Manchester, said he will be paying close attention to reported plans to scrap entrepreneurs’ relief.

Mr Harper said: “Entrepreneurs who do well in this city and succeed should be rewarded.

That really lies at the heart of what I and many others running businesses simply want to see in the��budget: policies that help us. Not ones that hold us back or make us pause for breath.

Every year my company supports more than 1,000 clients based here in the north and across the country.

“I’ve already picked up a real sense of optimism during the first part of this year. But for that optimism to remain, we need a��budget��that doesn’t leave businesses worrying about the future.

"How about we reward companies for being environmentally aware: tax breaks for the greenest firms are an investment in our future. And what about more relief for those companies hiring apprentices? I know this would be welcomed by many small businesses and start-ups."

Businesses in the North West want the Chancellor to make road improvements his infrastructure priority in his first��Budget, according to insight from the Lloyds Bank Commercial Banking Business Barometer.

The survey, which questions 1,200 businesses monthly and provides early signals about ��Ƶ economic trends both regionally and nationwide, revealed 77% of the region’s firms want the Government to prioritise improvements to highways and roads under its plans to improve ��Ƶ infrastructure.

North West firms also say they’d like to see commitment to Northern Powerhouse Rail (56%), improvements to local stopping rail services (54%) and greater devolved powers for city regions to run their own transport routes (38%).

Meanwhile, investment or incentives to promote decarbonisation was cited by only 4% of firms as the one key priority that would benefit them the most.

Speaking more widely about the Chancellor’s plans, firms were also keen to see reform of business rates (17%) and greater investment in apprenticeships (15%).

Glenn Bemment, regional director at Lloyds Bank Commercial Banking, said:��“Recent weeks have seen North West confidence lifted by announcements to improve local infrastructure and a further commitment from the Chancellor to improve the region’s highways and road networks, will bring a welcome boost to prosperity in the North West.”

Jenn Hazlehurst,��office managing partner at��EY in Liverpool, said the new Chancellor has "two bites of the��Budget��cherry" – the first when he delivers his speech this week and another later in the Autumn.

She said: "We’re calling on Mr Sunak to use the opportunities to implement sensible tax reform to redress the geographic economic imbalance that exist not just in Liverpool but across the North West.

“Traditionally, the first��Budget��of a parliament is a tax raising one, but factors like the growth of Covid-19 and the fact he’ll have another chance to raise money later in the year may mean that the Chancellor��decides to tread more cautiously this week, with a view to making the November��Budget��a far more expansive fiscal event.

“Whatever he decides, we’re looking to the government to use this week’s��Budget��as an opportunity to play its part and outline plans to invest in the North West and help spread the wealth and prosperity right across��Merseyside and The Wirral��for the benefit of everyone.

“EY’s recent Regional Economic Forecast not only highlighted the North – South divide but also the growing economic disparity between the North West’s core cities like Liverpool and Manchester, which are thriving, and some of its key towns like��Preston and Lancaster, which are still missing out on this level of investment and growth.

“The Chancellor is, to some degree, constrained in what changes he can make to regional taxation rules for the Liverpool city region but there are certain tax levers he can pull, like reductions in corporate tax rates and increases in R&D tax credits, that help to regenerate and promote growth in the Northern economy.

“Support for enterprise zones, and increased funds for HS3, coupled with a��sensible approach to policy-making around business rates and planning regulations will also be welcomed by businesses in the region, as well as continued investment in skills and the development of our labour market.”