Spring Budget 2017: Yorkshire business leaders reveal their predictions
On Wednesday 8th March, the Chancellor of the Exchequer Philip Hammond will deliver the Spring Budget to the House of Commons.
This will be the government’s first official Budget since the EU referendum and will follow on from the launch of Prime Minister Theresa May’s Industrial Strategy.
As the unveiling of the Spring budget is only days away, Bdaily has compiled a roundup of predictions from business people throughout Yorkshire, explaining what they hope to hear and why.
Tim West, head of tax in Yorkshire and Humberside at EY
Keen to push the adage that ‘less is more’ by way of tax policy, the Government had hoped and planned that the first of its two budgets in 2017 would be a low-key affair, ensuring a smooth run-up to the triggering of Article 50.
These best laid plans could be frustrated and we may see some significant announcements, not least on the thorny issue of business rates which has been the centre of intense scrutiny in recent weeks.
Elsewhere, with a review of modern employment practices already underway, the taxation of the self-employed is likely to be high on the Chancellor’s agenda.
Business rates – The ongoing furore surrounding the impact of the forthcoming rates revaluation has focused on the shifting of the current burden of business rates from some locales to others.
However, beyond a shift from one taxpayer to another, the revaluation locks in the significant increase in the burden that has been slowly introduced over time.
Much like boiling a frog, the gradual increase in business rates each year above the rise in property values has led to the burden in aggregate that started at 41.4% of rateable value in 2010 rising to an expected 48% in the latest revaluation.
In no other tax is the rate increased merely because the government wants to get the same amount of tax. VAT rates, for example, don’t go up merely because spending falls. If the Chancellor feels the need to respond to the pressure on business rates, resetting business rates back to 41.4% would seem a good place to start.
The opportunity for a more fundamental change to a different method of allocating the burden has been sadly missed in the last few years of consultation.
James Baird, CEO of Dynamic Networks Group in Leeds
I’d like to see a much more focused and coordinated approach to funding innovation in smaller businesses.
There’s a real culture of innovation and entrepreneurialism in Yorkshire, and I think Government should be making it easier, not harder, for entrepreneurial businesses to access funding that can help them get workable ideas and concepts off the ground, into production and generating economic growth.
We’re currently in the new product development cycle ourselves and we’re struggling to find a single, central port of call for advice and access to funding in the region.
Based on our experience to date, everything seems to operate in silos, with no immediately obvious starting point, organisation or team who can signpost us to the people we should be talking to.
This can only slow the pace of innovation, when in fact those companies that are committed to creating jobs, driving growth and economic prosperity in the region should be able to readily find and access all the help and support they can get.
Karan Sejpal, head of the Leeds office of UBS Wealth Management
In the Autumn Statement that followed the Brexit vote, businesses were primarily looking for reassurance on fiscal and economic policy. Hammond’s commitment to investment in infrastructure was welcomed with open arms and helped boost business confidence at a very uncertain time.
By comparison this Budget is expected to be something of a non-event. Although the UK’s fiscal position may show a modest improvement we expect that Mr Hammond will wish to keep his powder dry ahead of the forthcoming Brexit negotiations.
The local businesses we are speaking to have remained resilient in the face of Brexit and should be happy not to see any surprises from next week’s budget.
For our clients in the North, confirmation of plans to invest across the UK and to rebalance the UK economy would of course be welcomed.
However, businesses can rest assured that regardless of whether these commitments feature in Hammond’s speech, the Government has been pushing on with spending across the UK. The HS2 project, for example, just received royal approval.
Lyn Ayrton, managing partner at Leeds-based Lake Legal
I’d like to see some common sense applied to red tape and taxation. When you work hard to build a business, it seems strange to be clobbered on tax for paying for your team to have a day trip somewhere together as a ‘thank you’.
Aren’t we supposed to be encouraging small businesses?
The changes to stamp duty have seen an additional 3% charge applied in certain circumstances to second property purchases, which potentially impacts on many couples going through divorce.
Essentially, you are taxed at the higher rate if you buy a second property which does not replace your main residence.
It is far too complex, and we’d like to see a more streamlined approach taken.
Martin Mellor, managing director of Sowerby Bridge-based Mellor Financial Management
Working with a range of clients in a number of sectors amongst the SME community my biggest hope would be for greater clarity on plans to stimulate and maintain growth in the context of Brexit and the subsequent drop in the value to the pound.
How does the government plan to ensure that the UK is an attractive place to do business?
Closer to home I would also like to see further simplification of and clarity on 3 planned changes that could have a huge impact on smaller businesses -
- Review the planned business rates changes – although the suggestion any reductions could be a hit to online businesses could be just as damaging.
- Review the planned changes to the VAT Flat rate scheme which could be detrimental to the “honest” tax paying business.
- Set out a clear tax road map alongside a robust outline of how making tax digital will actually work and it’s likely impacts – this will help small and medium sized businesses to plan – something that is a challenge for them at the best of times.
Sam Risker, managing director at North Yorkshire-based Tailor Made Media
I hope the Chancellor will look to put in place measures that will help UK businesses maximise opportunities, and in particular await details around how future spending will impact on businesses in the North.
I would also welcome guidance on how SME business owners in Yorkshire will be supported, both short and long term.
Many of our clients are from the building and construction sector and I would urge the government to focus its attention on driving long-term economic growth to attract more foreign investment and help regain stability in this sector.
Following the Autumn Statement, where Mr Hammond axed George Osborne’s key priorities, including reducing debt each year and a placing a limit on Welfare spending, I’m keen to learn if the Spring statement will provide welcome relief for small businesses across Yorkshire who have been hit by sky- high business rates.
There will undoubtedly be uncertainty as Brexit negotiations come into play, but I remain positive. Already we have seen the potential impact of Brexit open up opportunities for business, and have welcomed an increase in enquiries from businesses overseas in areas such as property development, looking to take advantage of the opportunities available to them in the UK.
Whilst I really do believe opportunities are there for the taking, as a growing digital business I’d like to see a greater commitment to support the growth of the digital sector.
This goes beyond mere broadband incentives, and must now address how we can further develop digital skillsets in young people and help secure our place as digital leaders on the world stage.
Simon Gray, a partner at Hentons
We have seen a raft changes, proposals and tweaking to pensions in recent years.
A pensions framework would help provide entrepreneurs with a roadmap and allow for better planning.
The last thing the industry needs is more knee-jerk changes to the pension regime, which often appears to be the case.
Equally, corporation tax breaks need to be firmed up post-Brexit. Schemes like R&D and Patent Box relief have a hugely beneficial impact on business growth.
Overall I’d welcome an easing of red tape for small businesses, starting with a reversal of the plan to upload business accounts to the HMRC on a quarterly basis.
Nick Houghton, managing director of of Guiseley-based JM Glendinning
I’d like to see Government committing to investing in grass roots education in the insurance sector here in Yorkshire.
The UK insurance sector is the third largest in the world, and the lack of young talent coming into the industry is a problem. Ultimately, I’d like to see insurance up there alongside the legal and accountancy sectors when it comes to the availability and promotion of apprenticeships and qualifications.
As things stand, talented young people looking at career options in Yorkshire won’t come across insurance in a college prospectus, so it’s highly likely they won’t consider it as a career. That’s a disgrace.
High level Government-led initiatives are all very well, but they have to be supported at a local level. We are so disillusioned with the lack of qualification opportunities locally in our sector that we’ve done our own thing.
We’ve recruited young talent, but not via an external apprenticeship scheme. How many other insurance businesses aren’t recruiting apprentices because it’s too difficult or because of the lack of local resources and promotion?
We should be in a position to grow our own talent here in the region, otherwise the next generation of industry leaders simply won’t be there when we need them.
Dr Peter Simpson, director of the N8 Research Partnership
The Government’s investment in a successful Northern Powerhouse is about much more than roads and rail improvements.
It needs their commitment to better fund education and skills in our hard-pressed schools and technical colleges, and resilient funding for our world class university sector.
The government should make patient capital, and enterprise and mentorship programmes, available to back in the next generation of entrepreneurs, and commit to boost funding in Northern innovation, trade and international investment.
The North’s science base should be fully exploited through governmental investment in new Catapults and National Centres of Excellence, alongside working with key Northern partners on a strategy for boosting quality of life through our cultural assets, housing and successful devolution.
Lastly however, a believable commitment to developing the North’s economy over the next thirty years does needs to get started with infrastructure. As a minimum, we are looking for the Government to finally make Transport for the North (TfN) a statutory sub-national transport body.
This will allow key powers to be transferred from central government to TfN, to make decisions for the North, in the North.
Laurence Turner, managing director of Halifax-based Investing For Tomorrow
No area of tax policy is crying out for stability more than pensions. Since 2010 a series of incremental changes have added unwelcome complexity to an already complicated system. Who would design a pension system from scratch with three versions of the annual allowance (the ‘standard’ £40,000 allowance, the Money Purchase Annual Allowance and the taper?).
The hideously complex taper on tax relief on pension contributions by higher earners, is an attempt to limit high rate tax relief, without actually abolishing it.
A serious rethink of the savage cuts made to the lifetime allowance in recent years would also be welcomed. The lifetime allowance makes it much harder for people to plan their pension savings over the long-term, and will hit many people in defined benefit or defined contribution pension schemes in order to generate extra tax revenue.
Previous reductions have only added more complexity and penalises investment success – both of which are bad for pensions.
The lifetime limit is also unfair due to the calculation methodology of the rules as it is far more generous for individuals in Defined Benefit Schemes when compared to Defined Contribution Schemes.
With Defined Contribution schemes, surely a better policy would be to control the amount put in each year but then allow the pot to grow as well as it can, without penalising it if it rises strongly.
The industry should not fear radical reform, but equally the Treasury should not pursue change unless it will make pension saving more attractive. Furthermore, any significant shift in the UK’s savings architecture should be accompanied by a commitment to stability – ideally across political parties.
Many in our profession would like the Treasury to commit to not pursuing further reform for a set period, especially as Pension Freedoms were only introduced as recently as April 2015.
Such a commitment would help to build certainty and trust back into our pensions system and encourage more people to save for their financial future.
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