Partner Article

Spring Budget 2017: London’s business leaders give us their snap reaction

The Chancellor’s Budget announcement today was always going to be one dominated by the impending EU divorce proceedings – a low-key Budget to steady the Brexit ship with few surprises for UK businesses.

From business rates relief to national insurance hikes for the self-employed, much of what Philip Hammond announced had already been predicted by commentators and analysts.

But does the £300m fund for business rates relief go far enough? And has the Chancellor shot himself in the foot by going in so hard on the self-employed?

Bdaily London has canvassed some snap reaction from across the capital’s business spectrum.

R&D tax relief

Karen McCormick, Beringea

“It was encouraging to hear the Chancellor outline measures to simplify the existing programme of R&D tax relief. Innovation is the key driver of success for technology companies, but too many technology companies — in particular startups — have been missing out on this vital support, and the breathing room it gives them to pursue research and development, because they lack the resources and expertise to handle the significant administrative burden and complex processes involved.

“It is also high time the R&D tax relief programme more explicitly supported digital innovation as well as things you can physically touch. Oxford Economics figures suggest that 46,000 jobs and £12 billion of economic value will be generated by London’s digital businesses.

“The UK R&D tax relief system may, in the Chancellor’s estimation, remain globally competitive, but that forecast will only come to fruition if those businesses are given the freedom to keep working on their latest innovations.”

Digital infrastructure investment

Lee Wade, Exponential-e

“Today’s budget from the Chancellor was a start, but it still does not go far enough to address the network infrastructure of the UK. Yes, we have seen £200 million has been set aside to help deliver broadband across the country, but more still needs to be done.

“The government shouldn’t be applauded for solving the country’s broadband crisis just yet.

“There is still a long way to go to sort out the perilous state of our digital infrastructure which, as pointed out by the Trade Union Congress, was ranked second last out of all OECD countries for ICT infrastructure. As one of the richest countries in the world – and a country dubbed by Forbes as the fifth best country for business in 2017 – this is a very low amount to be pledging towards something so vital.”

Business rates

Luke Davis, IW Capital

“By erring on the side of caution, the Chancellor is still playing his cards close to his chest – while the Spring Budget brought some positive news for small businesses in the form of business rates reform, there was little in the way off long-term policy initiatives targeted specifically at Britain’s bustling community of scaling businesses.

“With Brexit negotiations set to kick-off sometime over the next couple of weeks, Philip Hammond has delivered a conservative and disciplined budget that ensures the country is in a position to address any economic issues that may arise over the course of talks with Brussels.

“The Government is clearly taking steps in the right direction, but it is important that these transitional steps cater to the demands of the private sector, particularly for scaling businesses with immense growth potential.”

Simon Hill, Wazoku

“As a business owner and one who is looking to move offices in 2017, I was most interested in any news that might add some more certainty, confidence and maybe even some extra support for UK scale-ups. There wasn’t much to cheer, however!

“The business rates debacle wasn’t really given any extra clarity and this seems to penalise scale-ups more than anyone else. I am fully in favour of supporting the UK high street, not 100% sure why local pubs (much as I love them) got special attention, but what about the high-growth, high-potential businesses that seem to be the focus in so many other areas? As we look for a new office (for Wazoku) in London during 2017, the rates hike is a real headache and is making that move even harder. The budget shed no real light on this and gave me no extra confidence that this will be any clearer for us from April 1st.”

Alex Marsh, Close Brothers Retail Finance

“Today’s announcement by the Chancellor that small businesses facing rate hikes will receive direct relief from the government in the form of an extra cap, as well as discretionary relief through their local authority, is a step towards supporting small retailers, many of whom have serious concerns as they struggle to factor in the rate rises.

“With more than a quarter of all retail SMEs in the UK citing high business rates as a one of their biggest challenges in competing with larger retailers – a figure which jumps to 38% among London-based retail SMEs – SMEs need to use all of the tools at their disposal to offset the cost of increases.

“On top of business rate increases, inflation is creeping back up and is adding a further challenge for retailers. Using customer data to increase loyalty and better tailor products and services to consumer needs has never been so critical and UK retailers must respond to this if they want to survive, let alone thrive.”

Skills and education funding

Petra Wilton, Chartered Management Institute

“For the UK economy to punch above its weight post-Brexit we need to start ramping-up the number of young people entering the labour force with work-ready higher skills. That’s why CMI welcomes the Chancellor earmarking £500m a year to support 16-19-year olds in technical education.

“According to our research, one-third of 16-21-year olds in the UK aren’t confident of finding a job in the next few years. Alongside championing the Government’s apprenticeship agenda, we support this transformation of technical education that will lay clearer career paths for those leaving school.

“But to deliver the highly skilled workers we’ll need to compete post-Brexit, these technical routes must be developed with employers and aligned with the new breed of apprenticeships.”

Stamp Duty

Jeff Doble, Dexters

“Current stamp duty levels are a tax on free movement in London and it is massively disappointing that the Chancellor has chosen to ignore this.

“Families who want to buy a family home in London, perhaps moving from one area to another to buy a larger home for a growing family or to be closer to schools or work, are being penalised and many are opting to stay put to avoid paying punitive stamp duty in the £1.5m to £3m price bracket.

“The upper price brackets of a family home in central London, between £5m and £10m, are being hit with an aggregate of 15 per cent. This has reduced transactions substantially, impacting on the level of tax collected by the Government and is therefore damaging the economy.

“In addition, there is an entire eco-system built around moving house, from removals companies to furniture suppliers, from interior designers to painters and decorators. All these businesses are being hit by the Government’s refusal to reform stamp duty.”

Henry Smith, Aitch Group

“Another golden opportunity to address the ‘elephant in the room’ has gone amiss. The government has yet again chosen to ignore the effects of a stamp duty levy which is damaging the UK property market.

“Reduced transaction volumes and a slower rate of housebuilding have come to define a policy that prevents the housing industry from performing its role effectively. We are already seeing the 3% surcharge on additional homes impacting the Build to Rent sector and investor confidence, and the effects are being disproportionately felt in the capital where prices are much higher than the UK average.

“Whether it’s developers, agents, architects, contractors or investors, the negative impact of stamp duty is having an impact across the industry and it is no surprise that leading figures and bodies are demanding a change.”

Stuart Lucas, Asset Match

“In times of transition, it is important to deliver balanced reforms that cater to the long-term demands of the economy. The Chancellor has done just that through his announcement of tailored reform directed at specific industries and sections of the workforce. This measured response is something that should be welcomed by both investors and businesses at this important time of transition.

“That being said, it was unfortunate to see the omission of Stamp Duty reform on private share transactions. With 16% of British private equity business investors stating that they would like to invest in high-growth companies but feel trapped in their existing shareholdings, the Government must reduce the amount of financial constraints hindering private sector investment.”

Rising inflation

Katherine Chapman, Living Wage Foundation

“Low paid workers will be the worst hit by the rise in inflation set out in today’s budget forecasts. Even with the welcome increase in the minimum wage to £7.50 on 1 April this will still leave people a pound an hour short of what it costs to live a decent quality of life in the UK, and two pounds an hour short for those living in London.

“That’s why we encourage more businesses who can afford it to join the 3000 Living Wage employers who are paying a real Living Wage.”

Tax avoidance clampdown

Richard Flax, Moneyfarm

“This wasn’t a Budget for savers who are facing rising inflation and record low interest rates. In the absence of real returns on many cash savings products, investments in financial markets are now a more attractive option for savvy Brits.

“The Chancellor’s continued clampdown on tax avoidance in today’s Budget suggests that Brits will be best served by continuing to focus on simple and transparent investment solutions like Stocks and Shares ISAs.

“Particularly given the more than 30% increase to the annual ISA allowance from £15,240 to £20,000, which is coming in to effect in April. Today’s Budget provides a timely reminder for people to maximise their ISA, both before this year’s allowance expires on 5 April and also to get a plan in place for next year.

“The government has now placed the onus on the individual to make the most of allowances available to them.”

NI hike for the self-employed

Alice Weightman, The Work Crowd

“With figures showing that 50% of the workforce is looking to work independently by 2020, I’m sure it’s a focus for the government. However, let’s get this right. Research has shown that 8 out of 10 economically inactive people, such as carers, retirees, stay-at-home parents and those with health or mobility issues, would re-enter the workforce if they could do so flexibly. Self-employment and particularly freelancing allows them to do so, working from home and with hours that suit them.

“Freelancing also has the potential to bring new employment opportunities to diverse areas across the country, with technology enabling individuals to work from anywhere, serving businesses all around the world.

“The rise in National Insurance contributions will make freelancing a more difficult option for these people, potentially pushing them out of work. After all, the self-employed are already missing out on maternity pay, employee benefits and the job security that permanent employees enjoy. There’s also the danger that it could drive the freelance economy out of the UK altogether, making it too expensive to make a living here. For many, freelancing is the first step on the ladder towards starting a fully-fledged business, employing staff and driving our economic growth.”

Shola-Mos Shogbamimu, Women in Leadership

“Chancellor Hammond has contradicted Theresa May’s initial plans to implement policies and increase incentives for self employed individuals and business owners. Announcing an NI increase, quite dramatically isn’t benefitting anyone but the tax man and Government. This decision won’t encourage self employment, rather discourage and blocks out the chance of new business development and wealth creators.”

Chris Bryce, IPSE

“When you look at the additional support offered for business rates it appears as if the Chancellor is supporting SMEs by hitting entrepreneurs and the smallest of businesses.

“Adding in the reduction in Dividend Tax allowance, whether you work as a sole trader or through a limited company you will be facing higher bills. The Chancellor shouldn’t forget that growth in self-employment has driven our labour market in recent years and punitive rises in tax will make many people have second thoughts about striking out on their own. “It’s entirely right for the Chancellor to look at taxation of the self-employed, but changes should only come after a thorough consultation with the business community, which has not taken place.”

Hayley Smith, Boxed Out PR

“We are told that self employment and entrepreneurship is needed to boost the economy, yet we are offering no incentive. This isn’t bridging a gap between employed and self employed, it is furthering it and limiting growth and development. Brexit is already making it difficult for businesses to grow and function, and this suggested increase will be a further deterrence. The Government need to think carefully about leverage and what is needed to offer in terms of benefits.”

Nicki Rodriguez, PR consultant

“We are told to constantly encourage innovation and self employment, and telling people they can do anything. Yet we are limiting what they can do and the resources they have to do it. Time and effort should be spent investigating larger companies in tax avoidance schemes, rather than increasing tax rates that many small businesses simply cannot afford. Being self employed has its own unique set of problems and these problems need to be addressed, with solutions from the Government. But instead, limitations and barriers are put in place. Britain is certainly not open for business!”

Looking to promote your product/service to SME businesses in your region? Find out how Bdaily can help →