Chancellor makes progress on business rates, but inflation and tax clouds gather, say small firms

• Budget not enough to meet ambition for high-growth, high-productivity, high-wage, low-tax economy

Responding to the Chancellor of the Exchequer Rishi Sunak’s Budget address, Federation of Small Businesses (FSB) National Chair Mike Cherry said:  

“This Budget has delivered some measures that should help to arrest the current decline in small business confidence.

“But, against a backdrop of spiralling costs, supply chain disruption and labour shortages, is there enough here to deliver the Government’s vision for a low-tax, high-productivity economy? Unfortunately not. Where inflation and forthcoming tax hikes are concerned, the clouds are gathering.    

“It’s good to see the Chancellor embrace our recommendation for business rates reform: changing the system so it stops hitting small firms that invest to make their premises more sustainable with higher bills.  

“That said, much more will be needed to support small employers in the months ahead. Our call for an increase in the Employment Allowance to £5,000 would have made a real difference to efforts to increase wages, retain staff and create jobs as we head into the critical festive season.  

“Wider rates reform is positive, especially the promise of a substantial discount on bills for the hard-hit retail, leisure and hospitality industries, alongside cancellation of an increase in the rates multiplier.    

“Ambitious investment in skill development is much-needed, and should rightly go some way to putting vocational training on a par with academic qualifications.  

“We look forward to more detail on how funding for T-levels, apprenticeships, bootcamps and lifelong learning will reach the smallest businesses that make the biggest impact when it comes to creating opportunities within local communities.

“Vital too is expanded funding for the British Business Bank, empowering it to extend the reach of its work and add to its thousands of existing success stories across the UK.

“We’ve always said that it doesn’t make sense for those travelling overseas to pay less in air passenger duty than those who choose to support UK holiday destinations. Today’s reforms to the levy mark a victory for common sense.

“Reform OF R&D tax credits is needed – expanding eligibility to cover productivity-enhancing intangibles, not least cloud computing, marks a step forward. We hope the adjustments announced today lead to more small firms benefiting from reliefs that many have, to date, found a challenge to access.  

“If the OBR’s concerning inflation forecasts come to pass at the same moment when national insurance contributions and the living wage rise significantly, many small firms will be considering their futures – we’ve already lost close to half a million over the last year.

“National insurance contributions serve as a jobs tax, one which threatens to seriously hamper our economic recovery over the coming months if the planned increase to them is left unaddressed.”   

Initial reaction from, Cornwall's FSB Development Manager Ann Vandermeulen;

“Some good snippets of news for local drinks producers, pubs, retail, leisure and hospitality. Fuel duty frozen, alcohol duty sensibly reformed and some useful measures around business rates and support for museums and cultural sectors too. All positives for a rural area with all of those sectors being prevalent. Support for regional airports, fuel and HGV are counterintuitive to the green agenda. However, in a rural area, with little alternative on getting goods, services, employees and visitors around, we do need to welcome that for now but the transition to that net zero future needs more investment to provide alternatives. Although, very welcome on the sustainability agenda is the fact that the Chancellor has taken FSB’s suggestion on allowing improvement to buildings to be temporality discounted from business rate hikes, with an emphasis on green improvements.

The promise that EU funding will be replaced and that there will be money for infrastructure projects is great mood music but how much exactly and when, are the crucial bits of information missing right now. The north had lots of placename checks so it has still left me wondering about our G7 legacy. It sounds like a lot of pro-business announcements but this is a far cry from the bigger measures that we asked for and might only just serve to keep some from sinking completely. With business confidence low in the south west this budget could have made a bigger impact, so disappointing from that perspective and we need our MP’s to keep Cornwall much higher up this governments financial agenda.”