Budget 2016: A comprehensive guide to North East business reaction
Whether you back George Osborne’s belief ‘that we’re all in this together’ or you’re behind Leader of the Opposition Jeremy Corbyn, who summed up the Chancellor’s latest announcement as the ‘culmination of the six years of his failures’, this is a Budget that’s really got us talking.
We heard Osborne talk all things from Sugar Tax, to pupils learning maths until age 18, lifetime ISA for under 40s, to business rates being scrapped for small businesses. Throw in a freeze on fuel duty, combined with Capital Gains Tax reduction from 28% to 20%, Corporation Tax Cuts and odes to devolution, there’s certainly been lots for us to process.
Want to know more?Click here for our in-depth breakdown of everything you need to know about Budget 2016 or revisit the aspirations and predictions shared by North East firms earlier in the week.
In the second Bdaily Long Read of the week, we’ve caught up with businesses from across the region to gauge North East feeling towards the Chancellor’s latest economic plan.
Transport / Infrastructure
Jonathan Walker, North East Chamber of Commerce (NECC), Head of Policy and Campaigns
“We are pleased our lobbying has helped secure a firm commitment to upgrade both the A66 and A69 which are vital links for businesses in the region. This was a key priority in our 2016 Manifesto and will help to build a more connected North East.
“However we are disappointed the Chancellor has not heeded our calls for further detail on big reforms such as the apprenticeship levy. The Government has said it is committed to stability yet doesn’t provide businesses with sufficient detail to plan for the future.”
Sean Bullick, CEO of NE1, Newcastle’s Business Improvement District (BID)
“The Chancellor’s announcement on HS3 is to be welcomed. It’s only right that the North East economy should have the same chance to boom through high-speed rail as the rest of the country.
“With extra connectivity between the northern cities, we have real opportunity to get the whole of the north working together to achieve the aims of the Northern Powerhouse.
“Not only that, but Newcastle will further benefit from tourism as visitors will have the ability to reach us quicker for a day-trip or a weekend break in the city, while the workforces of northern cities will enjoy much greater fluidity of movement. Improvements to the A66 and the A69 road network will also lead to similar benefits.”
Rob Charlton, CEO of architecture and technology business Space Group
“My views on infrastructure are that any funding for the North has to be positive. Infrastructure work will provide jobs but also confidence. It may also encourage longer term investment in the North by institutions.
“However it is very Manchester centric and the support leans towards the West rather than the East. I have a huge concern that the North East could be left behind and become a backwater. There is support for the North West, Yorkshire and connections to Birmingham, while Scotland is making its own investment which leaves the North East as a struggling region. Improving the East coast main line is a priority and potentially continuing the new link to York.”
Michael Grayson, Director at Solutions Recruitment
“This was a headline grabbing budget to appeal to the masses, with the sugar tax to pay for extra sport and longer school days, and incentives to encourage people to save. But it was a smokescreen to side-track us from the real story: both economic growth and productivity are down and debt’s rising. This leaves Britain extremely vulnerable if there’s another global economic downturn.
“My feeling is we could see a second recession, possibly after the summer when the outcome of the EU referendum is known. I don’t think it will be as bad as last time, but it would mean job losses and some already struggling businesses failing. Overall, I thought the Chancellor used the Budget to put forward his case for the EU, which was wrong. The uncertainty over whether the vote will be for a Brexit is possibly why economic growth has stalled.
“Yet Osborne failed to announce anything to boost investment. And with the news that the National Minimum Wage is going up, it’s putting even more pressure on business. It means people will hold off recruiting and there could be redundancies.
“It’s good news that we can expect relief on business rates, cuts in capital gains tax and a further corporation tax reduction in a few years’ time. But given the state of the economy I am uncertain as to how this is going to be paid for if the Chancellor hopes to push the economy back in the black by the next election.
“I wanted to hear what his plans were for the North East. But there was very little that will help the region. The HS3 rail link between Manchester and Leeds got the nod. But it’s just another sign of how Westminster seems to think the North ends at Manchester. Once again the North East has been left to do everything itself, as we always are.”
Penny Marshall, Regional Director for the Institution of Civil Engineers in the North East
“The confirmed financial backing for vital transport projects in the North is excellent news. The next step should be to underpin this commitment with an integrated plan embracing a mix of ambitious, transformational projects alongside smaller scale investments. If the plan can be developed swiftly, it will maintain confidence in the vision and enable the benefits to be felt sooner.
“While the headlines are focussed on important large projects, the upkeep of our existing infrastructure – from flood defences to local roads – should not be forgotten. We await details on any local authority cuts and the impact on maintenance budgets, and will continue to encourage a shift from reactive patch-up work towards a ‘whole life’ approach to infrastructure investment.”
Mohammed Bashir, founder of Boro Taxis
“There will be an enormous sigh of relief across the whole of the transport sector that speculation about a 2p rise in the level of fuel duty did not end up as one of the Budget’s money-raising measures.
“While fuel prices have fallen, the disproportionate amount of tax levied on petrol and diesel would have made a tax rise unjustified as well as being a real burden on those operating in the taxi, haulage and logistics industries.”
George Rafferty, Chief Executive of NOF Energy
“The Chancellor’s announcement demonstrates the importance of the UK oil & gas industry to the British Economy. Halving the supplementary charge and effectively removing the petroleum revenue tax should send a message to the international operator community that the North Sea is still viable location for investment.
“With between 12 and 24 billion barrels of oil still to be extracted from the UK Continental Shelf, the North Sea remains an important part of Britain’s energy mix. This improved investment environment, supported by the industry’s own efforts to improve operational efficiency and the supply chain’s commitment to developing technology-led solutions, has the potential to bring real benefits to companies operating in the sector and the wider UK economy.”
Anthony Andreasen, director of corporate tax at Gosforth-based RMT Accountants & Business Advisors
“Tax breaks for the oil and gas sector will provide a much-needed boost for an industry which plays an important roll in the North East economy, and the upgrades promised to the A66 and A69 will help to address the long-standing transportation challenges that regional businesses served by them have faced.”
Mark Stephenson, Head of Public Affairs for Newcastle-based Invicta Public Affairs
“The Government has cut support for CCS as well as a range of renewables technologies. Not only will this increase bills and stifle investment in renewables, it endangers jobs in energy intensive industries in areas like the North East. This budget was a missed opportunity to support industry and investment from Teesside to Tyneside, where energy use is among the highest in the UK.
“CCS could lower industrial emissions by as much as 90% and support thousands of jobs. Offshore we have the opportunity to invest in wind farms such as Dogger Bank but policy uncertainty has cost the North East and Humber over £2bn in investment and over 70,000 jobs owing to the downsizing of investment pipelines.
“Government must understand that there are areas of the country that want and need energy as well as development, the North East is one such area. Unfortunately, 2015 demonstrated the brutal reality of what can happen when uncertainty in policy and poor market conditions collide. It is a huge injustice to those who lost jobs at the likes of SSI that these lessons haven’t been learned.
“It is not just energy generators that are set to suffer. Businesses across a range of sectors rely on local investment to grow and create employment. Our manufacturers, transport and logistics businesses, including our two biggest ports, stand to gain hugely if the Government can plan further ahead and provide sufficient policy stability that investors aren’t pushed out of the UK market. It is important now that the government looks ahead and takes action to reassure investors and employment in these key areas of our economy.”
Kelly Lee, managing director of KF Training
“The decision to cut corporation tax to 17% was very welcome, although why wait until 2020 to implement the measure? It could be done much earlier than that.
“The tax breaks for digital entrepreneurs is also a great way of stimulating investment in such an important sector for North East industry.
“The freezing of fuel duty for the sixth year in a row is a clever move by the Chancellor. It will significantly reduce transportation costs for small businesses in all sectors at a time when the economic outlook is uncertain.”
Graham Robb, North East chair of the Institute of Directors
“This was a good budget for business and the self-employed, the cuts to small business rates will be welcome as will the reduction in corporation tax for all firms. In the North East the energy supply sector will be pleased that support is being offered to the oil and gas sector and businesses with delivery and transport costs will be pleased that the Chancellor wasn’t tempted to increase the rate of fuel duty.
“The Northern Powerhouse has also taken some steps forward, the HS3 project has always found favour with IoD members and upgrading east west road links is a priority we want to see addressed as soon as possible. Both these transport priorities were addressed in the Budget as was the important acknowledgement that educational gaps need addressing, we hope that the £20million being committed to meeting educational challenges is spent effectively.”
Ted Salmon, North East Regional Chairman at the Federation of Small Businesses
“In a Budget constrained by both the need to reduce the deficit and the economic outlook, the Chancellor has listened to our calls for the tax system to be made simpler for small businesses and the self-employed and taken important action on business rates.
“In particular, our members have campaigned hard to make Small Business Rates Relief permanent, and expand it – and the Chancellor has heeded our calls, taking many small firms out of the system altogether. The combined measures announced on business rates – the single biggest tax cut in today’s Budget - will be viewed by our members as a welcome and important step on the road to fundamental reform. In addition, online retailers will benefit from steps to secure a level playing field for smaller online businesses on VAT.
“Freezing fuel duty will be universally welcomed by small businesses right across the country. Furthermore, the new devolution deals, alongside increased investment in roads, rail, and flood defences, should give a much needed boost to the UK’s infrastructure. Altogether, these measures should help to drive productivity and boost small business confidence levels, which have faltered recently in the face of a number of domestic policy and global economic challenges.”
Amanda Vigar, Managing Partner at V&A Vigar & Co (Darlington) LLP
“Entrepreneurs and smaller enterprises form the lifeblood of the UK economy and, therefore, it was important that there were reliefs to establish a more sustainable economic base to support the small business community.
“An extension of the business rates relief for small companies, a reduction in company Corporation Tax and the abolition of class 2 National Insurance contributions will help bolster a spirit of enterprise and help people who have the courage and flair to be self-employed.”
Stephen Paul at Valued Accountancy
“As the dust settles and we reflect on the Chancellors Spring Budget statement, I think there is something in there for everyone. For many of our sole trader / small business clients – I think they will be slightly more reassured by this budget. The relief or reduction in business rates for many small businesses is a welcome measure, particularly new business start-ups, those trading on the high street or competing against internet companies to help them remain competitive and creating a more sustainable economy.
“Scrapping National Insurance (class 2) for the self-employed and Corporate Tax cuts is also encouraging for our SME’s. The Chancellor claims that his budget was ‘a budget for a nation of shopkeepers’ but I think most SME’s will be assured by this statement, at least for the time being.”
Chris McDonald, CEO, Materials Processing Institute
“The Chancellor’s downward revision in the growth forecast is not unexpected, but this did seem to be a Budget that would help SMES. Through our SME Technology Centre and the Materials Catapult proposal we are discussing with Government, the Materials Processing Institute is supporting the growth of technology driven small businesses and we understand the barriers to growth that exist.
“The Chancellor’s announcement on business rates and on the future reduction in Corporation Tax will leave more funds available for small business to invest and grow their enterprises.
“The further news on tax allowances for micro businesses and start-ups should encourage greater entrepreneurial activity. It can create clusters of technology-focused micro-businesses that can grow around, and be supported by regional research and development facilities.
“We see this as positive for the materials, processing and energy sectors that we support and for the Tees Valley region, where we are working to attract and grow more SMES in these fields.”
Entrepreneurs’ Forum Chairman Nigel Mills
“I am pleased to see no changes to schemes that encourage investment in small business like SEIS and EIS. On the whole, this Budget delivers a number of opportunities for small and growing businesses, it is now up to the business community to take these and run with them. Business Rate reform will be a big help to smaller businesses, while the cut in Corporation Tax are an opportunity for all North East companies to scale up and create employment.
“The new £1,000 allowances for property and trading income could give some people the incentive they need to take their first step into the world of entrepreneurship. The Chancellor’s decision not to increase fuel duty a positive too, as it is estimated that this will save small businesses hundreds of pounds a year.”
Joel Marks (above left), Opencast Financial Founder
The founder of financial services firm Opencast Financial, based in Newcastle, has welcomed the Chancellor’s new measures to encourage saving. George Osborne announced new incentives to encourage those under the age of 40 to start putting money away towards retirement along with getting onto the property ladder. The measures, set to kick in from April 2017, mean anyone who saves in a new Lifetime ISA will get £1 from the Government for every £4 they save.
“These are sensible measures to encourage savings and investment. Anything that encourages long-term savings is to be welcomed.
“The complexity of the pensions system has been incredibly off-putting for many. Chopping and changing of policy and lots of headlines about how lifetime allowances are being reduced means many people have decided they aren’t going to put any money away at all either because they don’t understand it or they don’t feel they would be getting enough to see them through their retirement.
“While this new ISA does nothing to cut through the pensions’ confusion, what it does do is encourage some much-needed simple long-term financial planning.”
Steve Urwin, Managing Director Sales and Marketing at Newcastle Building Society
“Any encouragement that can be given to people to save for their future needs is to be welcomed, and the rise in the ISA limit from £15,000 to £20,000 will enable people to keep more of the interest that they earn on the money they save.
“The introduction of the Lifetime ISA for the under 40s, the £1 annual Government bonus that will be given for every £4 saved, and the option offered to roll any Help To Buy ISA into it could make a considerable difference to the finances of a generation of people in the North East.
“The decision to shut down the Money Advice Service is something of a cause for concern, as we firmly believe in the importance of practical guidance being available to help people understand and manage their finances. Focusing only on helping those actually in financial difficulty is simply shutting the stable door when the horse has bolted
“Offering face to face advice to help people make considered and more complex financial planning decisions is a core part of our offer, and something that we make available through all our branches. We’re also investing in opening two new face-to-face advice centres in the near future. There remains a real need to provide help, education and advice to help people plan a better financial future.”
Colin Fyfe, Chief Executive of Darlington Building Society
“Anything that encourages people to save for the future is to be welcomed and the Chancellor announced a number of interesting schemes. The new lifetime ISA is a simple mechanism for younger people to save for their first home, their retirement and anything in between. The Government ‘bonus’ of £1 for every £4 saved should act as a real incentive.
“This, together with the raising of the limit for ordinary ISAs and the savings scheme for lower-paid workers, makes it a good Budget for savers.”
Darren Hankey, Principal at Hartlepool College of Further Education
“The Chancellor announced a top up to employers’ apprenticeship levy by 10%. However, as with a lot of information related to the reforms of apprenticeships, more information is needed.
“The apprenticeship levy will apply to circa 2% of organisations and more information is also needed with regards to the 98% who won’t pay the levy. The Chancellor also announced changes to employers’ pensions contributions which will lead extra costs for colleges.
“Recently, Hartlepool’s MP and Chair of the BIS Select Committee, Iain Wright, said that further education should be at the heart of business and skills policy. This budget clearly underlined the fact that it isn’t, and for a sector that returns £20 to the economy for each £1 invested, this is a shame.”
How do you feel about the Budget?
Is North East business set to benefit? Does the government care about the region’s needs? Is enough being done? We want to hear your views. Join the debate by commenting below or take part in our poll above.
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