Summer Budget 2015: Yorkshire businesses react

On Wednesday afternoon the Chancellor of the Exchequer, George Osborne, delivered the first Tory Budget since 1996, which he said was a “budget for working people.”

Although this should be a positive outcome for Yorkshire businesses, as Osborne claims the budget will create a “lower tax, lower welfare” country, many are still concerned about the government not making a ‘Northern Powerhouse’ a top priority.

This concern was amplified late last month when the government decided to‘pause’ a £500m project to electrify the Midland Mainline - including routes from London to Sheffield through the East Midlands - which will make journeys to and from the capital much faster.

Since the summer budget has now been delivered, Bdaily wanted to ask business leaders and business owners throughout Yorkshire for their reactions.

Jon Pulford, Lloyds Bank Commercial Banking

Jon Pulford, area director for SME Banking in the East Midlands and South Yorkshire, Lloyds Bank Commercial Banking, said: “Transport and infrastructure investment is absolutely key to the future prosperity of Yorkshire.

“The Northern Powerhouse project in particular has the potential to be a catalyst for the kind of long-term growth that can help balance the UK economy, and it is reassuring that the chancellor seems determined to make sure that the project stays on track.

“The proposed Intercity Express Programme includes plans for 140mph trains from Newcastle to York, cutting journey times drastically, while HS3 will connect Liverpool to Hull via Manchester and Leeds.

“The projects will accelerate economic development, but the government must commit the cash that is needed to upgrade the rail infrastructure without undue delay.

“Yorkshire businesses are poised to take advantage of new growth opportunities and Lloyds Bank is committed to supporting them in achieving their full potential and helping Britain prosper.”

Nick Houghton, J.M. Glendinning

Nick Houghton, the managing director of J.M. Glendinning insurance group, said: “Personally and commercially, the outcome of the budget was a great result. I’m glad to see that British people voted from a commercial perspective. Accountants, lawyers and insurance businesses like ours have a lot to look forward to over the next five years.

“But talk of a Northern Powerhouse makes me nervous. We have to be careful what we wish for. One of our great strengths as a United Kingdom is that we have a competitive advantage going back centuries. We are in danger of damaging that for good if we start to splinter. Whilst I think there is some merit in giving greater powers to people locally who understand the region and its challenges, we need to be careful about how far we go. We are a small nation. As a business, we have far more in common with other insurance companies doing the same things we do – irrespective of their geographical location.

“On a more positive note, we have welcomed the government’s announcement to double the amount of subsidised childcare for working families from September 2017. Many of our team has young children, and we want to encourage parents back to work by removing some of the financial cost. I firmly believe that this will incentivise people who otherwise may have had to reconsider their career choices.

“We are also greatly encouraged by the government’s plans to create three million new apprenticeships by 2020. We have just taken on our second apprentice, who will work across different departments in the company over the next two years before deciding where to specialise. This gives young people a step on the ladder – a chance to earn money as they learn, rather than saddle themselves with thousands of pounds of university debt before they have seen their first wage.

‘Some employers fear they will be forced to pick up a greater share of the training bill and the apprenticeship scheme will have a financial impact on their business. That’s a very short sighted view. If you invest in people from the start, they will grow with you. You have an opportunity here to shape your workforce, and to instil your company’s values in them from the beginning. Make the most of that opportunity; young people are your insurance for the future.“

Rob Peers, EY

Rob Peers, Tax Partner at EY in Yorkshire: “The Chancellor resembled ‘Michelangelo’ as he re-sculpted the UK tax system, taxing dividends, proposing changes to pensions, adding a new tax on banks, cutting corporate tax rates and restricting interest relief on buy-to-let investments.

“The Chancellor went well beyond what many expected, spanning the whole tax regime, from non-domiciles to Vehicle Excise Duty. He may not have listened to Lord Lawson’s argument on abolishing the 45% income tax rate, but he clearly wanted to emulate his reputation as a man of principle and principled reform.

“Businesses were left with mixed messages from today’s budget. The promise of cuts in corporation tax rate from 2017/18 was tempered by large business being the biggest funder of the Chancellors’ budget through the requirement to pay taxes 3 months earlier. This measure alone gave the Chancellor almost £4.5bn in 2017-18 and echoes the change that Gordon Brown introduced in his first Budget, back in 1997.

“On a positive note, this cash flow raid also allowed the Chancellor to fund the rise in the Annual Investment Allowance to £200,000.”

Peter Sleigh, Sleigh & Story Accountants

Peter Sleigh, co-owner of Sleigh & Story Accountants in Brighouse said: “The interesting points to me are the compulsory increase in living wage to £9 an hour for all ages 25 and above. We’ll see this starting to be implemented next year by an introduction of £7.20 an hour.

“This will be a big cost to employers, and while this is counteracted by a cut in Corporation tax from 20% currently to 19% in 2017 and 18% in 2020, I worry about the effect it will have on employment in traditionally low paid areas such as catering/hospitality and manufacturing. Effectively people who are on minimum wage now will see their pay increase by 50%….will this price them out of the market? While I’m a big supporter of people being paid a decent wage but I do wonder whether this may be a step too far.

“I do welcome the cuts in Corporation tax and Employment allowance.”

Chris Hearld, KPMG

Chris Hearld, chairman for KPMG in the North, said: “Once again we have seen the Northern Powerhouse being a key plank to the Chancellor’s Budget announcement.

“We have always maintained that for the Northern Powerhouse to succeed, all parts of the region need to be brought on board, so it was encouraging to hear that following the lead set by Manchester, devolution deals are in the pipeline for the likes of Leeds, Liverpool and Sheffield.

“However, it was incredibly disappointing that no further announcements were made regarding investments in our regional transport infrastructure. While the introduction of an Oyster card system across the North is a nice gesture in principal, it will do absolutely nothing to alleviate the lack of capacity and very little to improve the connectivity on our region’s ever-crumbling rail network.

“Businesses across the North are becoming increasingly impatient, and are chomping at the bit to play their part. But their role must be underpinned by dramatic improvements to the transport infrastructure across the region to ensure our businesses, people and resources are better connected. Without this, the Northern Powerhouse will not take off.”

Jonathan Kinsey, CBRE

Jonathan Kinsey, Executive Director at CBRE Rating said: “The Chancellor is sticking to his devolutionary guns, announcing that Sheffield City Region, Liverpool City Region, Leeds and West Yorkshire are all on the road to receive similar autonomy to that recently awarded to Greater Manchester.

“If this translates into the power to retain business rate revenues above and beyond any growth in the levy, it should beef up local authority coffers, enabling them to respond directly to local needs.

“Enhanced business rates retention should be a positive move for business if Councils use the additional funds to encourage and support further growth, but there remains a risk that local councils will be increasingly reluctant to grant important rate relief to businesses, for example where part vacant properties are concerned. The only way businesses are going to get a fair deal, is if the business rate review levels the playing field for those being unfairly charged, and sets out a clear roadmap for further devolution, ensuring that the relevant governance and controls are in place.”