Budget 2016: North West business leaders react
Yesterday (March 16) the Chancellor gavehis eighth Budget since the Conservatives came to government back in 2010, and while many were expecting somewhat lacklustre announcements (the Financial Times even forecast it to be his ‘most boring’ yet) it turned out to be one of Osborne’s most ambitious to date.
Will the changes announced, which covered everything from commercial stamp duty reform to the east-west HS3 rail link between Manchester and Leeds, be enough to see the UK achieve its now-modest growth outlook?
Here, we’ve collected Budget reactions from some of the top voices in the North West’s business community.
Transport, infrastructure and the Northern Powerhouse
Tony Kearns, Manchester-based operations director for rail with professional services firm WSP | Parsons Brinckerhoff
“The Chancellor’s backing of HS3 is fantastic news for the region. This commitment to the project, alongside other major railway investments nationwide, gives the engineering sector the confidence to recruit in preparation and develop the skills the industry needs to deliver these ambitious schemes.
“We now need the education sector to play a role in encouraging more young people into engineering to help us produce more high quality rail engineers if we’re going to fulfil these development projects, which are needed to modernise our railway infrastructure. Initiatives like the HS2 Rail Academy in Doncaster are playing a part in addressing this issue, but companies like WSP | Parsons Brinckerhoff, which have expertise in this field, also have a key role to play in inspiring and cultivating the next generation of home-grown engineers.
“We’ve hired more than 50 staff to our rail team since September last year, and backing for HS3 will play an important role in recruiting as well as retaining this talent.”
Ken O’Toole, managing director of Manchester Airport
“Today’s Budget highlights how a programme of investment in new road and rail projects (including HS3), will improve the North’s infrastructure and subsequently drive economic growth.
“We look forward to seeing these announcements being progressed by Government and Transport for the North over the coming months, as recommended by the National Infrastructure Commission.”
Joanne Thompson, CEO of Penrith-based software company Penrillian
“There were only six mentions of the Northern Powerhouse in the budget, a noticeable drop from the Autumn 2015 budget and statement, where it was mentioned over 20 times.
“It is also interesting to see that the British Business Bank has specified support for the Midlands but not the Northern Powerhouse. It is possible that Northern Powerhouse support is wrapped up in the Help to Grow scheme, but the absence of specific support for SMEs in the Northern Powerhouse is both disappointing and concerning.
“As I mentioned in my budget predictions, without support for our SMEs to harness and drive growth in the North, the Northern Powerhouse won’t reach its full potential.
“As with all budgets the devil is in the detail, and the practicalities and conditions may be hidden in the 145-page document, or in supporting documentation that we haven’t seen yet. We need to analyse the detail to fully understand the impact that this budget will have on the North and wider economy.”
Keith Griffiths, co-founder of the UK Northern Powerhouse International Conference & Exhibition
“This is excellent news for our region, and we are delighted that the Government is serious about listening to the north’s businesses and creating a powerhouse that can deliver more growth, jobs and prosperity in the north of England.
“Improved road and rail links to better connect the north were a clear priority for the business leaders attending the UK Northern Powerhouse Conference.
“For too long London has seen the lion’s share of transport investment whilst vital infrastructure in the north has been left to fall behind, despite serving around 15m people – around 6m more families and young people than the capital.
“Now we have the green light, it’s time for action and to deliver these new projects quickly. We are running out of time if today’s generation is to see the benefits. We urge the Chancellor to do everything in his power to make sure these projects are delivered without delay.”
Daniel Keighron-Foster, MD at Manchester-based tech startup Steamhaus
“As a tech startup in the North, there should have been plenty of issues for us in today’s budget – faster broadband connections, better transport links and, perhaps most importantly, an update on the progress of the Northern Powerhouse.
“Aside from some discussion around HS3, there was nothing very tangible. There seemed to be a lot of ‘we’re looking into it’ and ‘we’re building the roads’ but generally, nothing we haven’t heard before.
“I couldn’t help but feel that the topic of Northern Powerhouse had been wedged into the chancellor’s announcement as a bit of a ‘tick-box.’ Unfortunately for Mr Osborne, this contrasted with his claim that ‘we are all in this together’.
“This was reinforced by comment from Jeremy Corbyn who highlighted that 97% of the senior staff working on the Northern Powerhouse have been outsourced and are based in London – hardly inspiring.
“It wasn’t all bad news however, with plans to double small business rate relief from £6,000 to £15,000. This could save businesses like ours up to £6,000 a year which is definitely a step in the right direction.”
Paul Kenyon, co-founder and co-CEO at software firm Avecto
“Infrastructure improvements will pave the way for a stronger, more competitive regional economy. Avecto is proud to be headquartered in Manchester with a global reach and any transport link improvements from the city can only bring positive change.
“We have to be realistic though. Major infrastructure projects can and often do take decades to come to fruition, and in the meantime we still need to ensure the North is well-positioned to compete not only in Europe but on the global stage.
“Therefore I strongly support the proposals announced in the budget and hope to see some noticeable and much-needed improvements to road and rail links in the next couple of years.”
Andrew McFarlane, director and head of North West at the Manchester and Liverpool offices of real estate advisory firm Colliers International
“As the Chancellor’s vision of a Northern Powerhouse becomes a reality by developing from a brand into a product, his commitment to implement the recommendations of the National Infrastructure Commission has to be welcomed by all throughout the North West, Yorkshire and the North East of England.
“As prospects for the global economy continue to weaken, it is all the more important for us to create transformational infrastructure that improves the economic performance of the North by connecting people and places more effectively and quickly.
“Together we are stronger and by acting as one, the great cities and towns of the North can become an effective economic counterweight to London, something which could not be achieved if acting independently of each other.”
Vaqas Farooq, the head of law firm Shoosmiths’ Manchester office
“It was absolutely crucial that we saw a solid commitment on Northern infrastructure investment from the Government today. With our city economy growing but at a slower rate than previously, this type of financial injection is essential to maintaining momentum and encouraging investment.
“The announcement of £300m funding into HS3, trans-Pennine tunnel plans and the acceleration of upgrades to the M62 will also re-energise Northern Powerhouse engagement in the region – bringing it to life with tangible targets and plans.
“If cities in the North are to compete with London and, indeed, leading international cities, our transport infrastructure needs to be transformed and only large-scale investment will achieve this. The funds announced today are significant, no doubt, but, when you consider the costs attached to HS2 alone to-date, which run to billions, we still have a long way to go. We hope to see ongoing commitment, in financial terms, from the Government after this very welcome initial investment.”
Education and skills
Mike Hamilton, director at Leigh-based education provider Commando Joe’s
“I welcome the fact the Chancellor is placing emphasis on the education system.
“Providing incentives to schools which dedicate time to sport and extra-curricular activities will be a way of encouraging more children to take part, which is a positive thing. These activities help to develop teamwork, leadership and organisational skills as well as helping to build character and resilience in pupils – all things that will help them realise and reach their potential in later life.
“Schools are under real pressure but even those that are short on resources will be able to provide these services since this funding could also be used to bring in the help of external providers.”
Michelle Gray, education lead at North West law firm berg
“The Chancellor’s call today in his Budget speech for all schools to convert to academies, or have official plans in place to do so, by 2020 will be met with a mixed response. However, regardless of which side of the argument you sit on, it is vital that the right amount of professional support is provided to schools and local authorities.
“Many schools end up in serious debt from the process, while others struggle to get a real grasp of the legal implications of converting. We hope the government’s budget allocation is sufficient to cover this, or we risk seeing a lot of schools falling into trouble.
“Further, in response to the Chancellor’s comment about there being a new focus on school performance in the North of England, we would welcome any move to improve the performance of schools generally, not just in the North, but again this comes down to more than funding.
“Schools need to have the correct frameworks, strong governance and robust recruitment and retention processes in place to make them fully effective.”
Dr Peter Simpson, director of the N8 Research Partnership
N8 Director, Dr Peter Simpson, added: “A modern infrastructure is a necessary though not sufficient enabling condition for the region’s renaissance.
“Jim O’Neill has identified the importance of skills and innovation for Northern growth, and we concur with this. We believe that further targeted investment can unlock the regions potential for innovation-led economic revitalisation.
“The first wave of Science & Innovation Audits announced today, which include Greater Manchester with Cheshire East, and Sheffield City Region with Lancashire, will further strengthen that evidence base.
“So N8 continues to encourage the government to accelerate this economic transformation through further investing in the world-class researchers and facilities in the North.”
Peter Birkett, CEO of North West IT services company adept4
“The North West is one of the fastest-growing tech clusters in the UK and its key that we have the infrastructure in place to build upon this great base and tackling the skills shortage is key to that.
“The number of jobs left empty because employers cannot find people with the skills to fill them has risen by 130% since 2011 and we’d like to see more investment in focused training systems which helps to more closely align training and education provision with industry needs in specific areas.
“This would ensure that young people are being offered training which matches the skills gaps in their local areas. This is crucial to ensure we’re creating a training infrastructure which will equip the workforce of the future and ensure we remain competitive.
“The planned increase in wages for apprentices is a step in the right direction, and we look forward to seeing more policies like this.”
Paul Austen, the Managing Director of Cheshire-based accountancy firm Paul Austen Associates
“The Chancellor has his back against the wall this year trying to keep the peace with his own back benchers, keeping as many pro EU voters on side as possible and at the same time trying to balance the books of UK Plc against a backdrop of a slowing world economy!
“Small businesses appear to be the ‘winners’ from this budget, of course it is all relative.
“The increased directors loan tax (the so called Section 455 charge) from 25% to 32.5% is no surprise as otherwise it would have left wide open an opportunity to take directors loan rather than dividend to avoid the new higher divided tax rate of 32.5% so a preventative measure rather than a new tax raising measure.
“Further planned reductions to corporation tax to 17% are welcome but this is by 2020 and prior to that we have increased costs for things like auto enrolment and compliance changes so no real benefit, at least not for a while.
“Small business rate reliefs have been extended and made permanent which should help if you are a small business that owns or rent a commercial premises.”
Adam Burke, director rating at the North West offices of real estate advisory firm Colliers International in Manchester and Liverpool
“It’s only when rateable values are published in September 2016 that will we know whether businesses will be better off. It is too early to say whether the move to CPI and changes to Small Business Rates Relief are going to offer the actual reductions Osborne claims.
“Today’s announcement is a clear admission that delaying the revaluation was a mistake. Colliers’ Manifesto for Business Rates Reform called for Government to ‘act now to avoid paying later’ with three-yearly revaluations so that this tax is properly linked to values.
“Pilots for 100% retention of business rates for Liverpool, Manchester and London will sharpen minds. But we do not want a two tier system with wildly different multipliers.”
Matt Roberts, CEO of Manchester-based recruitment company Nonexecutivedirectors.com
“Businesses have urged the Chancellor to deliver a radical overhaul of business rates in this week’s Budget to save firms billions over the next five years. Today we have seen huge cuts to taxes which will impact many small and medium enterprises.
“Changes to stamp duty and reforms to business rates will mean 250,000 will have their rates cut from April 2017. It is great to see small businesses recognised in the budget which will hopefully improve the outlook for those looking to start up.
“As a fast growing digital business we also welcome the announced ‘digital tax break’ which is looking to help those who work selling online.”
Philip Whitehurst, partner at North West law firm DTM Legal
“We were expecting a budget with a few more stings in its tail, so this afternoon’s announcements have come as a welcome relief to thousands of SMEs across the North West who are facing rising costs in other areas of their businesses (unless they are involved in the production of soft drinks).
“The Chancellor ticked many of the boxes which would have been high on their wish lists, including increasing the small business rate relief threshold, reducing commercial stamp duty and reductions in corporation tax.
“But, when it comes to seeing the real impact of the Chancellor’s announcements, it is still early days. It would have been nice to see him go a little further on business rates and to have, perhaps, included measures to encourage skills training and apprenticeships, where the costs are often disproportionate for small businesses.”
Phil Foster, MD of Bolton-based Love Energy Savings
“It is safe to say that this has been one of the more promising Budgets for small businesses. Reform of the corporation tax alludes to a Robin Hood style approach being taken by the Chancellor, and an increase in the business rate relief threshold is bound to be welcomed by the smallest of our nation’s businesses.
“His desire to ‘light the fires of enterprise’ and continue with his ‘devolution revolution’ sound very exciting in theory, but it will be interesting to see if measures are this dynamic in practice. What about those localities that lack a vibrant business population and what if investment is limited? These are the important questions that the Budget failed answer.”
Jane Parry, managing partner & head of tax at Lancashire-based PM+M
“Changes to Corporation Tax were widely expected. The Chancellor is trying to tread the fine line between making the UK attractive as a base for global businesses whilst making sure that those businesses actually pay a fair amount of tax in the UK.
“A range of measures to do this, along with a further planned reduction in the rate of corporation tax to 17% by 2020 should go a long way towards that. It will also be interesting to see how the changes will affect medium sized companies over the coming years, as that remains unclear and there is a danger that the reduced tax rate becomes outweighed by the burden of ever increasing complexity of the tax compliance burden for those businesses.”
James Blake, CEO of Manchester-headquartered big data analytics firm Hello Soda
“We welcome the measures to support small businesses through rate relief and corporation tax cuts. However,as a start-up, we would have like to see the Chancellor introduce greater tax relief for staff hires.
“When you’re growing fast you need people. However, 25% of staff costs are tax which means that we can’t hire as fast and therefore aren’t just growing slower but aren’t creating the jobs that our economy needs. For us, this is just short sighted.
“It’s good to see more focus on upskilling young people with compulsory maths until the age of 18 which is hugely important as it will help to facilitate a pipeline of talent for the future of the growing FinTech industry.”
Rachel Marsdin, tax partner at accountancy and business advisory firm Moore and Smalley
“George Osborne pulled more than one rabbit out of the hat on business taxes, announcing that corporation tax would be reduced further, falling to 17% by April 2020 – a further percentage point than previously announced.
“The announcement that small business rate relief would be more than doubled permanently, moving from £6,000 to £15,000, should help some of the smallest businesses, but for many medium-sized, owner-manged businesses it won’t make any difference.
“Another surprise measure was a sliding scale for commercial property stamp duty coming in from midnight tonight and this will help businesses who are planning on buying their own premises, saving potentially thousands of pounds.
“It was also announced that the government would abolish class 2 National Insurance Contributions for self-employed people from 2018 and this will also be welcome news for sole traders in the region.
“Another surprise move was the cut in Capital Gains Tax which will be reduced from 28% to 20% per cent and from 18% to 10% for basic rate tax payers. This was unexpected as some had predicted that Capital Gains Tax might actually increase. This is good news for those in the region looking to benefit from the sale of assets, such as businesses, though this lower rate does not apply to residential property.”
Karen Campbell, North West head of tax with professional services firm Grant Thornton
“Osborne showed his commitment to the Northern Powerhouse, by promising to improve road and rail links, including £60m to draw up plans to introduce high-speed rail in the north. All of these measures are welcome but until we see the full details its difficult to assess their potential impact.
“When it comes to the UK’s existing tax regime, according to our research, 45% of businesses put simplification of the tax system at the top of their wish list for this budget. “However, if anything, it looks as though we have been given an even more complex tax system.
“We already have a 20,000 page tax code. Judging by the amount of information coming out of today’s budget, this is only going to get bigger, making things more difficult for businesses and slowing down their commercial decision making processes.
“The widening in the scope of entrepreneur’s relief for investors is certainly pro-enterprise, serving to encourage investment into privately owned entrepreneurial businesses to drive innovation and economic growth. This can only be good news for northern businesses.
“The reduction in headline tax rates to 17% from 2020 will give the UK one of the most attractive corporate tax rates for businesses in Europe. This will be a real boost in attracting businesses into the UK and the northern economy.
“At first glance this seems to be an encouraging budget for businesses in the North.”
Jayne O’Boyle, tax manager at Accrington-based Haworths Chartered Accountants
“Tax was high on the agenda today as George Osborne delivered his eighth Budget. He warned of ‘storm clouds gathering’ at the start of his wide-ranging speech whereby the OBR cut growth expectations. Yet, a seemingly positive caveat followed with the revelation that corporation tax would be cut by a further 1% to 17% by 2020.
“As George froze the main tax rates last year he had little room for manoeuvre, so to cut the capital gains tax from 28% to 20% for higher rate taxpayers and from 18% to 10% for basic rate taxpayers is definitely welcome news”.
“The abolition of the Class 2 National Insurance Contributions (NIC) paid by the self-employed may not be so welcome, as these previously counted towards the state pension and benefits entitlement.
“This is now to be transferred to the Class 4 NIC, currently at a rate of 9% - however there are rumours that this rate might be increased to 12% to bring it in line with the national insurance paid by employees, which would not be received lightly.
“Surprisingly, the hype surrounding proposed IR35 changes in the autumn statement last year did not rear its head, yet the £12bn crackdown on tax avoidance as predicted was announced – and the measures revealed were more than expected.”
John Lyon, managing director of Lancaster-based accountants ICS
“Another positive was the changes to personal taxation, in particular Class 2 NIC being scrapped for the self-employed. And from next April, the tax-free personal allowance will rise to £11,500, and the 40% tax threshold will rise from £42,385 to £45,000. Capital gains tax is also to be cut from 28% to 20%, and from 18% to 10% for basic-rate taxpayers.
By April 2020, corporation tax, which is currently 20%, will fall to 17%. The news that oil and gas tax rates are to be reduced will also affect the many contractors who work in that industry.“
“Surprisingly, George Osborne was silent in the areas that we were very interested in from a contracting perspective. For example, there was no mention of IR35 legislation, therefore we can only assume that there will be a consultation soon.
“As always, details are still emerging and time should be taken to fully digest the announcements that have been made today.”
Paul Brown, partner at accountancy firm HURST
“While acknowledging the potential for tough times ahead, Mr Osborne’s message was that the UK economy is ready to face those challenges and he still had scope for some welcome surprises for SMEs and their owners.
“I’m fairly confident no-one predicted that Entrepreneurs’ Relief, which allows business owners to sell their shares or assets and pay tax at only 10%, would be extended to apply to long-term, third party investors in unlisted businesses.
“Another surprise but nonetheless positive measure is the further cut in corporation tax, although a one per cent reduction in 2020 seems a long way off.
“The increases in small business rates relief had been hinted at, as was a reduction in the main rate of capital gains tax for individuals.”
Housebuilding and savings
Michael Foxford, partner at North West law firm Birchall Blackburn Law
“This is significant for first time buyers and it ought to enable people to get on the ladder.
“People are likely to start their ISAs at a younger age but it should mean they are in a position to buy their first home before they are 40 – without this that’s where we would’ve been heading.
“First time buyers need this help. It is also interesting to note that people will be able to roll their existing Help to Buy ISAs into these schemes.”
John-Paul Dennis, partner at North West law firm Kirwans
“It’s a real shame the Chancellor did not discuss plans for a fund to simplify the planning process for developers to build new housing on brownfield land as predicted.
“The anticipated £1.2bn fund could create tens of thousands of starter homes – the figures reported vary between 20,000 and 45,000.
“According to a government consultation led by Brandon Lewis, the Minister of State for Housing and Planning, from last year The Public Sector Land Programme has identified land to create 100,000 homes, which would have led to developers in the North West preparing new strategies.
“The announcement expected today would have been a welcome change for the developers I represent who often find themselves blocked by local authorities’ red tape.
“The benefit of this is huge for the housing and construction industry and, of course, for first time buyers who are increasing in numbers as the years go on.”
John Kersey, chairman of Business for Britain, North West
“The Chancellor’s plans to make £3.5bn in cuts wouldn’t be necessary if we were to vote to leave the EU in June.
“We contribute £20bn to the European Union each year and over £1.5m of this comes from the North West.
“If we left the EU we would be able to control how our money is spent and potentially make the savings that the Government needs without having to make further cuts.”
Do you want to sell more to businesses in your region? Get Bdaily Marketing's latest Media Pack now to see how we can help →