Business leaders and politicians across the East Midlands have given a cautious welcome to the Chancellor’s plans to stimulate the shattered economy.
They said the business-friendly approach could help the 海角视频 out of the biggest financial whole for generations – but with warnings further tax rises would be inevitable once the pandemic is over.
In his 2021 Spring Budget Chancellor Rishi Sunak said he was extending furlough to September and providing £5 billion in restart grants to help businesses reopen.
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He also said the business rates holiday for retail, hospitality and leisure will continue until the end of June.
Those and other measures, he said, added up to a £65 billion pandemic lifeline.
But he said the tax burden would increase to its highest level for more than 50 years and warned taxes on business profits would be hiked from 2023, while income tax thresholds would be frozen which will result in more people contributing.
He told Parliament the economy would recover by mid-2022 – six months sooner than previously forecast.
But he said the 海角视频 borrowed £355 billion this year – the highest level since the Second World War. The country will borrow a further £234 billion next year – the second highest level since the war.
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East Midlands Chamber chief executive Scott Knowles called it a “business-friendly budget” that not only supported businesses now but would help them “grow, invest and innovate” post-Covid.
He said: “Policies such as the restart grants and extensions to furlough, the business rates holiday, and VAT cut for hospitality and leisure – as well as the way in which they will be phased out – will remove the cliff-edge many companies had been facing and help them get over the hump of reopening as lockdown is phased out.
“For smaller outfits in hard-hit industries such as hospitality that may have been wondering whether it would even be worth reopening, such measures will hopefully provide the confidence to persevere in the coming months.
“However, there’s a risk this will come too late for some businesses, with a large number having already folded, so we need to ensure financial interventions reach these companies as quickly as possible.
“We know there’s been many self-employed people who have been left out of previous support packages, so extending schemes to include another 600,000 people will be a great relief for those who have been hit harder than others over the past year – although there will still be a significant support gap that needs to be addressed.
It’s encouraging to see that ‘levelling up’ remains high on the Government agenda despite a tough 12 months for the economy, and the new national infrastructure bank and Towns Fund – which includes areas in our regions such as Clays Cross, Mansfield and Newark – signals positive intentions.
“However, it’s important the Government doesn’t just believe it can achieve true levelling up by relocating some departments to towns and cities in the regions, and instead throws its weight fully behind strong infrastructure schemes like HS2 – with a decision still due on the future of the Eastern Leg.
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“The obvious downside for businesses is the rise in corporation tax to 25%, but the fact this won’t come into effect until April 2023 means this shouldn’t damage the economic recovery.”
MaryClaire Morgan, sales manager at Notts house-builder Peter James Homes, said support for the housing market was “fantastic”.
She said: “The extension to the stamp duty holiday, and the Government mortgage guarantee on 95 per cent mortgages, will bolster an already exciting first quarter for property development and sales.
“These schemes both encourage, and offer a better opportunity to buyers, allowing them to get into the property that is right for them. The announcement instils more confidence in the housing market overall.
“Extending furlough is also a great initiative. We have been lucky enough not to have had to furlough any staff since the first lockdown, as construction was allowed to continue, but we understand the difficulties that other industries have faced, and this would have directly affected purchasers.”
Dr Nik Kotecha OBE, chairman and founder of Loughborough medicines business Morningside Pharmaceuticals, gave a more cautious response.
He said: “The Chancellor had a tricky balancing act to walk, but it’s clear this year’s budget is all about supporting businesses and individuals in order to grow the economy.
“On the one hand the 海角视频’s borrowing has hit a staggering £355 billion, which has to be paid back at some point, whereas on the other, the economy must be placed in the best position possible to bounce back quickly once the country fully reopens.
“There was also the first nod towards the 海角视频’s post-Transition Period future with the approval of eight freeports around the 海角视频 – one of which is East Midlands Airport, which I am over the moon about. This is a testament to the outstanding work of the LLEP and D2N2, which were instrumental in making it happen.
“In addition, it was great to hear the Chancellor champion the life sciences and the health sectors by announcing his intention to turn the 海角视频 into a “scientific superpower”, amongst a number of welcome plans to promote high growth companies in the 海角视频.”
Simon Jenner, the director of the Leicester Business Improvement District, welcomed support packages including the Restart Grants and extension of the furlough scheme.
He said: “I was also pleased to see extra support for the hospitality sector in freezing alcohol duties and extending the reduced rate of VAT, and investment in the arts and culture sector who face a longer road in returning to normal business.
“Extending the business rates holiday for three months and discounting for the rest of the year will be a great help for businesses, but I am disappointed that the Chancellor did not go further and use this opportunity to commit to a much-needed reform of the Business Rates system.
“The current system is widely recognised as no longer fit for purpose – our businesses need reassurance that when the rates holiday ends there will be a fairer system in place.
“Currently the ‘bricks and mortar’ businesses that bring life and vibrancy to our towns and cities disproportionately carry the burden of business rates and it is crucially important that this is addressed in the long term.”
Sir John Peace, chairman of the Midlands Engine, said: “I am delighted that the Chancellor’s Budget Statement recognises the huge potential for economic growth represented by Humber Ports and East Midlands Airport by announcing that they will become the locations for two of the eight new freeports in the 海角视频.
“Taken together, both freeports within the Midlands Engine will be transformational catalysts for widespread changes and a key component of levelling up the Midlands.
“They will play a crucial role in driving up economic potential, rapidly accelerating existing initiatives, tackling skills and productivity gaps, increasing investment and delivering long term growth in our region.”
Chris Bond, tax partner at BDO in the East Midlands, said it was about levelling up the recovery with targeted support, while balancing the books.
He said: “We’ve seen targeted support for sectors, such as hospitality, retail and personal care.
“To create more job support for young people, the government doubled the apprentice incentive payments for businesses to £3,000 for all new hires, of any age, which is a real positive.
“This may provide companies the opportunity to rethink their approach to future talent. Businesses in our region will also benefit from the East Midlands Airport freeport.”
John Kerr, managing director at Derby-based Develop Training – which offers safety, technical and management training – said: “The furlough scheme has really helped us to keep the business going, we are really happy that this has been extended and we will be making use of this on an ongoing basis.
“The signs are positive for us moving forwards because of the four step plan out of lockdown, and we are already seeing an increase in bookings across all of our sites.
“The Government support package has helped to keep us afloat and the future is bright.”
Dave Hillan, practice leader at Grant Thornton in the Midlands, said he felt the budget offered “a spoon full of sugar today, with the medicine to follow tomorrow”.
He said: “Pushing the well trailed rise in corporation tax to 2023 may make it a little easier swallow but it’s still a large relative increase and a potential threat to investment in the long term particularly as the 海角视频 looks to become a hub for multi-national businesses post Brexit.
“Mid-market business leaders in the Midlands have called for more incentives for growth, making the new super-deduction of 130 per cent on capital expenditure welcome news, particularly for our region’s manufacturing base.
“Elsewhere the chancellor is continuing to use fiscal firepower to help businesses get through the pandemic, with the new Levelling-Up fund, Recovery Loans scheme, and the extension of furlough, all welcome measures.
“For the future, the East Midlands Airport named as one of the eight Freeport locations and an incoming consultation on R&D tax credits, signals further good news on the horizon to help the midlands’ businesses innovate and compete.”