Welsh Government will get an extra £740m in funding due to the Budget announcements from Chancellor Rishi Sunak today.
The 海角视频 wide measures announced included that furlough and self-employment support schemes and the 5% reduced rate of VAT would be extended for six months to September 30.
There will then be an interim VAT rate of 12.5% for another six months.
Meanwhile the Super Deduction will allow businesses to claim 130% of their new machinery cost as a tax cut for the next two years. Corporation tax will increase from 19% to 25% by 2023 - although this will not impact firms with profits lower than £50,000.
Mr Sunak also announced recovery grants for businesses in England - with up to £6,000 for non-essential retail and up to £18,000 for hospitality businesses.
海角视频 Government will continue with the 100% business rates holiday through to the end of June - and discount rates by two thirds for closed businesses for the next nine months. The £500,000 nil rate band for Stamp Duty will be extended three months to June 30.
These measures mean a Barnett consequential for Wales of £740m.
Welsh Government must now decide how it allocates those funds in Wales.
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They could match the business rates move by 海角视频 Government or potentially follow Scotland's lead and scrap rates for sectors likes retail and hospitality for 12 months - but would need to top this up with other funds to enable this.
Welsh Government has only just announced extra funding for sectors closed by lockdown but will now have additional money to offer extra grant support for struggling businesses.
The Budget also confirmed the funding that was trailed earlier in the week.
It included:
- Accelerated funding for the Swansea Bay, North-Wales and Mid-Wales City and Growth Deals. This is not extra money but will bring forward investment. Accelerating these deals will help to deliver projects faster.
- £4.8m in 2021-22 for the Holyhead Hydrogen Hub: a green hydrogen demonstration project which will create 30 new high-skilled green jobs in Anglesey, indirectly support 500 jobs, and bring further investment into the area.
- Up to £30m for the construction of a Global Centre for Rail Excellence in Neath Port Talbot, which will see up to 120 skilled jobs at the new rail and infrastructure testing facility
The city and growth deal forward funding of £58.7m is not additional money, but the acceleration of already approved funding. This means the 海角视频 Government's backing for the deals is being shortened by five years.
The Swansea Bay Region City Deal, which has been running for a number years with investments already made, as well two separate and emerging growth deals for North and Mid Wales, have approved financial backing from both the Cardiff Bay and Westminster administrations running into hundreds of millions of pounds.
Both governments has worked together on the approval of deals in Wales.
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On whether the Welsh Government will now follow suit by bringing its funding commitment forward for the deals, a spokesperson said: “Alongside the other city and growth deal partners, we await further details from the 海角视频 Government on what this means for Wales. It is disappointing that the 海角视频 Government has not seen fit to engage respectfully with partners on this matter ahead of their announcement.
“We remain committed to providing the funding the deals need to succeed and at the time they need it.”
Chancellor of the Exchequer, Rishi Sunak said: "Throughout the pandemic, the 海角视频 Government has stepped in to support millions of lives and livelihoods across Wales.
“The Budget bolsters that support – ensuring our Plan for Jobs continues through the next stage our recovery.
“We are also investing millions in Welsh towns and cities, key infrastructure and green industries that will be vital to long-lasting economic growth.”
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Secretary of State for Wales Simon Hart said: “The continuation of furlough, self-employed and business support, the Universal Credit uplift, the hospitality VAT cut and the fuel duty freeze will provide vital certainty of people and businesses in Wales in the months ahead, while the announcements of the Centre for Rail Excellence, hydrogen hub and investment in growth deals will bring thousands of high-skilled jobs, signalling Wales’s place as a centre for innovation and the industries of the future."
The Chancellor also outlined direct local investment to towns and communities across the 海角视频 to improve town centres, high streets, local transport and cultural assets through the £4.8bn Levelling Up Fund, the £150m 海角视频-wide Community Ownership Fund, and Community Renewal Fund.
Fuel duty will be also frozen for the 11th consecutive year, while alcohol duties will be frozen across the board – only the third time in 20 years, saving drinkers £1.7 billion. This will save 2p off a typical pint of beer in Wales.
Mr Sunak announced eight new freeports in England and said they would work with Welsh Government to establish at least one freeport in Wales.
However, the Welsh Government has expressed concerns over their overall economic impact, particularly the issue of displacement with them attracting investment and jobs from elsewhere in the economy. The 海角视频 had freeports between 1984 and 2012.
Reaction from the business community in Wales:
Ian Price, CBI Wales Director, said: “This Budget succeeds strongly in protecting the economy now and kickstarting recovery. It leaves open the question of 海角视频 competitiveness long term.
“The Chancellor has gone above and beyond to protect 海角视频 businesses and people’s livelihoods through the crisis and get firms spending.
“Thousands of firms will be relieved to receive support to finish the job and get through the coming months. The Budget also has a clear eye to the future; to ensure finances are sustainable, while building confidence and investment in a lasting recovery.
“The super deduction should be a real catalyst for firms to greenlight investment decisions. The boldness of the Chancellor on this measure is to be admired.
“But moving Corporation Tax to 25% in one leap will cause a sharp intake of breath for many businesses and sends a worrying signal to those planning to invest in the 海角视频.
“The government must now have a laser-like focus on the 海角视频’s competitive position in the round. The 海角视频 must remain attractive for every type of business, from the innovative, high-growth 海角视频 homegrown firm to the global firms investing in the 海角视频. We look forward to working with the government to achieve this.
“With a significant Barnett consequential delivered, local businesses will be looking to the Welsh Government to use these funds to extend business rate reliefs offered to counterparts in other parts of the 海角视频. That additional breathing space will undoubtedly protect jobs and livelihood across the country in the weeks and months ahead.”
Robert Lloyd Griffiths, national director of the Institute of Directors in Wales, said: "This was a Budget for recovery and rightly so. Lives have been fundamentally altered over the last 12 months and it is the Chancellor’s job to protect jobs and keep businesses afloat if we are to recover from the damage that Covid-19 has caused.
“This Budget delivers a solid platform for many businesses to relaunch as the economy reopens with welcome news for Wales in the form of accelerated funding for the Swansea Bay, North-Wales and Mid-Wales City and Growth Deals which will enable projects to be delivered faster, creating jobs and supporting economic growth. Our contribution to Net Zero will be supported through £4.8m for the Holyhead Hydrogen Hub: a green hydrogen demonstration project which could create 30 new high-skilled green jobs in Anglesey, indirectly support 500 jobs, and bring further investment into the area. And, in addition, the Chancellor has confirmed up to £30m towards the Global Centre of Rail Excellence in Neath Port Talbot, alongside investment by the Welsh Government, which will see up to 120 skilled jobs at the new rail and infrastructure testing facility and showcase Wales as a hub for R&D investment and rail technology.
"The extension to the furlough scheme will provide a vital cushion to support jobs as restrictions unwind and firms begin the costly process of rescaling. Restart grants and ongoing business rates relief give a cashflow boost to many firms that will struggle to make full productive use of their properties as restrictions linger. Widening income support for the self-employed is a step forward, but the Chancellor missed a trick by not providing grants for company directors who continue to be left out in the cold.
“The Chancellor’s efforts to combine life support for the economy with measures to turbocharge growth is the right call. Vouchers for SMEs to invest in technology, and provisions for management training, will help address the 海角视频’s longstanding productivity problems whilst also boosting businesses' ability to bounce back from the pandemic. The recovery loan package will offer a helping hand to many firms, but more needs to be done to catalyse equity investment in our cash-starved start-ups and scale-ups.
"Retraining and rehiring will be uplifted by reforms to the apprenticeship levy and further financial support for both apprenticeships and traineeships. An improved visa route for the high skilled will foster innovation, as will steps to review R&D tax credits.
“Of course, the Chancellor’s commitment to doing whatever it takes comes at a price and he is right that we cannot allow debt to keep rising. It’s a balancing act and we all have to play our part. The prospect of higher taxes will no doubt bite for many firms that are still tending to wounded balance sheets. Delaying and tiering the corporation tax rise is a pragmatic approach, though adjustments to the plan should remain on the table as a clearer picture of the recovery emerges.
“Overall there is much for businesses to get behind in this Budget, and the Treasury should remain prepared to extend support if the roadmap goes off course, whilst building on its stimulus package today to drive long-term growth well beyond our immediate recovery. The Chancellor has given us hope and optimism; giving businesses much needed certainty and the promise of a better future economy. Meanwhile, as signatories of the Armed Forces Covenant, I was particularly pleased to hear of the extra £10 million for mental health support for veterans. They’ve protected us and it’s our duty to make sure we protect them, now more than ever.”
Ben Francis, FSB Wales Policy Chair, said: “Today’s budget marks an important moment in our national economic recovery from Coronavirus in Wales. Without the right action being undertaken by 海角视频 Government and Welsh Government, our economic recovery could be under threat.
“Thousands of small businesses are on the and thousands more are suffering from low confidence as cash reserves dwindle. They will welcome both the extension of flagship support schemes that have kept them going over the hardest year they have ever faced, as well as confirmation of new support measures."
On business rates Mr Francis said: "FSB Wales has campaigned on the issue of business rates for those most affected by the pandemic, and wrote to The Minister for Economy, Transport and North Wales earlier this year calling for Welsh Government to extend 100% business rates relief for retail, hospitality and leisure firms. This remains our ask of Welsh Government. Business rates and how they are handled in the coming months will play a fundamental role in how businesses are able to recover and reopen successfully, and it is our belief that a longer period of support is needed."
On the super deduction scheme, Mr Francis said: "The new super deduction option sounds very promising, and we look forward to further detail on the investments it will cover – it should be made accessible to the smallest firms. It is our hope that this initiative supports those businesses who have an ambition to grow and likewise grow Wales stock of ‘missing middle’ firms – an issue which FSB Wales has been leading for some years now."
And, on Barnett consequential funding, Mr Francis added: "Welsh Government needs to think about how to use the £740 million for Wales in order to restart our economy. Smaller businesses will want to see measures in Wales which are aspirational and accommodating of the recovery of those firms and the communities in which they’re located. Re-growing the economy can only happen if our SMEs are in a healthy and profitable state."
Lloyd Powell, head of ACCA Wales, said: "‘Much of today’s 海角视频-wide Budget was leaked, but today’s confirmation of various policy announcements is good news for the Welsh economy and business recovery.
"The extra funds for the hydrogen production centre in Holyhead, and the money for City and Growth deals are welcomed, targeting spend in innovation and areas that will see a benefit.
"This ties in with last week’s Welsh Government Resilience and Reconstruction plan which places investment in a green recovery and accelerating adaptation as two of its five beacons.
"Ongoing and ambitious support for a green and inclusive recovery must remain a priority. The greening of the economy across Wales and the 海角视频 to deliver a climate resilient and more equitable future for all will need consistent and ongoing support that can enable sectors to transform at the speed and scale required and high-quality jobs to be created to deliver on net zero aims."
On Employment Mr Powell said: "Looking at employment, we also welcome the extension of the furlough scheme which provides much needed help for workers and the businesses who employ them. As announced in the Welsh budget earlier this week, £200m extra spend has been set aside to support businesses, and today the Chancellor also announced a new scheme to replace Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loans.
"It is also good to see the self-employed covered in today’s Budget with the next edition of the Self Employed Income Support Scheme (SEISS), available from next month. This means more will be eligible for the payment through HMRC.
"The Chancellor is looking to rebuild public finances by asking businesses the government has supported to pay extra, rebuild communities and take on risk, but that will also affect those freelancers and directors that have been ignored and not received assistance. Why are they ignored and once again left out of the support packages?’
"These people have been forgotten by policy makers, yet again, and we will continue with our campaign with the FSB, #Forgotten Ltd and Re Legal Consulting Ltd for a Director’s Income Support Scheme to help them survive.’
On the tax changes, Mr Powell added: "The freeze on a basket of taxes and duties for 2021 / 22 – VAT, income tax and duties on beer, spirits and wine – somewhat softens the blow for the rise in corporation tax in 2023. This will be 海角视频-wide, and while the increase from 19% to 25% might raise extra money, in the long term only greater economic growth is going to pay off Covid debts.
"We are pleased that SMEs, many of which fall within the transitional profit relief have been given some relief from this change but this move does see a return to a more complex tax system in the years ahead. The rollercoaster of rates and changes in recent years have not helped businesses to plan.
"We would prefer a system that included tax relief for smaller enterprises and for ones in the hardest hit sectors, such as hospitality, events and retail, for a period while the whole of the 海角视频 stabilises from the effects of the global pandemic. This would support as many SMEs as possible to survive and get back on their feet.
"We await the Welsh Government’s response to the Chancellor’s announcements on Stamp Duty and Business Rates and how these continued reductions will be approached in Wales."