Welsh business leaders have reacted with optimism to Chancellor Philip Hammond’s 2017 Spring Budget and its implications for Wales.
However, there was some disappointment that the expected confirmation for the Swansea Bay City Deal was not forthcoming. Although not giving the final go-ahead for the project, the Budget did say “good progress” had been made, an announcement that pleased many.
Liz Maher, president of the South & Mid Wales Chambers of Commerce, called it a “disappointing budget for Welsh businesses” with no announcement on the Swansea Bay City Deal or Tidal Lagoon.
“Businesses had been advised to expect minimal change, rather than a blockbuster Budget, and Philip Hammond did not disappoint” she said.
“Many of the Chancellor’s announcements were specifically for England and while supporting businesses in England may have a knock-on effect in Wales, the £200m boost to the Welsh Government finances over four years is nothing to get excited about.”
The British Chambers of Commerce have also commented:
Giving his full reaction to the Budget, Dr Adam Marshall, Director General of the British Chambers of Commerce (BCC), said:
“Businesses had been advised to expect minimal change, rather than a blockbuster Budget, and Philip Hammond did not disappoint.
“Short-term support for firms hardest-hit by business rates rises will be welcomed, along with commitments to technical education, digital connectivity, easier R&D tax credits, and a one-year delay to digital tax reporting for the very smallest firms. Conversely, hikes to dividend taxes and national insurance for the self-employed will be viewed far less positively by entrepreneurs.
“While businesspeople appreciate a steady hand on the tiller, the government is sending mixed signals by holding investment largely steady at precisely the time that it is exhorting British businesses to double down. More needs to be done in the coming months to improve infrastructure, promote international trade, and encourage lagging business investment to ensure the UK is Brexit-ready.”
On Business Rates, the top campaign priority for Chambers of Commerce at the Spring Budget, Marshall said:
“The business communities hardest-hit by this year’s business rates revaluation will breathe a little easier thanks to the Chancellor’s decision to offer a package of transitional reliefs.
“We now challenge councils across England to use every penny of the new funding announced by the Chancellor to offer relief to the hardest-hit businesses in their areas, without excuses and without delay.
“However welcome, measures that mitigate the short-term impact of business rate rises are little more than a sticking plaster. The radical changes needed to improve the broken business rates system will have to wait for another day. The campaign for radical reform – and an end to punishing levels of business property tax to ensure the Treasury raises enough to fund local services – continues.”
“The decision not to bring forward the switch in indexation from RPI to CPI will cost firms billions – bills they can ill-afford when taken together with other policy costs like the Apprenticeship Levy, pensions auto-enrolment and higher tax on insurance premiums.
“The government had an opportunity to re-visit the detail of reform to the appeals system but has not addressed the serious concerns ratepayers have. This will mean that more businesses seeking to correct an erroneous bill could go without redress.
“In the longer-term, fundamental change is needed, including stripping plant and machinery from rates assessments that does so much to discourage business investment.
On investment in technical skills, Adam Marshall, said:
“Business communities across the country tell us that improved technical education and stronger workplace experience are needed to help them fill the skills gaps they face.
“These announcements represent an important step in the right direction over the coming years. Ensuring that businesses of all sizes, and in all regions, have an input into the design of the new system will be crucial to its success.
“Business, educational institutions and government need to work together over the coming years to ensure that parity of esteem between academic and technical education is achieved. The cultural and funding bias towards academic routes that pushes young people toward A-levels and university still needs to be addressed.”
On ‘returnships’, Adam Marshall, said:
“Encouraging people back to work is crucial for providing businesses with the skills and talent that they need. Companies across the UK are facing skills shortages, and will welcome efforts to help those who have taken career breaks get back into business.”
On international trade, Mike Spicer, Director of Research and Economics, said:
“There was a noticeable and disappointing absence of any new support for exporters, or measures to encourage international trade in this Budget. As we begin the Brexit process, it’s more important than ever to get UK businesses trading their goods and services with the world. The government must do more to incentivise and promote companies to be ambitious and trade to new markets.”
On research and development, Mike Spicer, said:
“Reducing the cost of accessing the tax credit will encourage investment in research & development which should boost the UK economy at a time when productivity growth remains weak. However, to ensure that UK firms remain competitive on the global stage it is vital that greater investment in research and development is supported by retention of our intellectual property.”
On digital infrastructure, Fiona Krasniqi, digital spokesperson at the BCC, said:
“We welcome the announcement on full-fibre broadband connection vouchers as businesses need faster and more reliable connections, that also offer impressive upload and download speeds. The governments focus must now be on rural areas and existing business parks that still do not have superfast connections. The private sector will invest where there is a demonstrable return on investment and we would urge that the scheme is communicated effectively to the business community and providers.”
On 5G strategy, Fiona Krasniqi, said:
“We have long-called for the UK to lead the world in developing 5G technology, so we are pleased to see the groundwork for this finally begin with the new National 5G Innovation Network. It is positive to hear that strategy will explore how to improve coverage on road and rail routes as businesspeople must to be able to work successfully and without interruption whilst on the move.”
On the Making Tax Digital scheme, Suren Thiru, Head of Economics, said:
“The temporary deferral of making tax digital for firms below the VAT threshold is a welcome step. However, while this will help to ease some of the administrative burden for our smallest businesses, there continues to be serious reservations about HMRC’s ability to deliver such a major undertaking. HMRC must ensure that the move to digital tax accounts does not create new burdens for businesses, and must work closely with the business community, accountants and other stakeholders on their plans for implementation.”
On changes to the tax system for the self-employed, Suren Thiru, said:
“Many entrepreneurs and sole traders will be disappointed to see significant rises to their National Insurance bills over the coming years. Ministers need to ensure that these business people, who make a significant contribution to the economy, also get the recognition and benefits that correspond to their contribution.”
On the reduction of the dividend allowance, Suren Thiru said:
“Whilst the reduction is relatively small, this will come as a blow to many small business owners. Alongside changes to the tax system for the self-employed, the government risks undermining the UK’s entrepreneurial spirit.”