Spring Budget 2017: London business leaders give us their hopes, fears and predictions
In what is potentially the least-hyped Spring Budget in recent memory, the Chancellor of the Exchequer, Philip Hammond, will deliver his budget from the dispatch box this Wednesday 8 March just three months after his Autumn Statement.
Amid predictions of the first drop in Government borrowing since 2014 thanks to strong tax receipts and recent economic growth figures, doubts remain about the long-term prospects for the UK economy while the ongoing clamour regarding business rates reform is becoming an increasingly toxic issue for the Tories.
Ahead of Wednesday’s budget, Bdaily has canvassed the opinions of figures across London’s business spectrum to find out what they’re expecting to see as part of the Chancellor’s announcements.
Housing and stamp duty
Richard White, Goodlord
“Every time the Budget comes around there is a clamour from homeowners and developers for reform of stamp duty. The property industry and housebuilders says it is hampering sales: older people won’t pay out to the Treasurer to downsize, while younger people have to find tens of thousands of pounds for transaction costs, as well as a huge deposit.
“Yet renters do not see stamp duty as the biggest problem they face. There are so many more things that need to be addressed to start to put the market right for Generation Rent. Generation Rent wants to see better regulation of the sector, to force out the cowboys.
“They want to see more land released to increase the supply of housing overall and incentives for professional developers and institutions to build homes specifically for rent. Renters are receiving a second-class service from the property industry right now but fiddling with stamp duty is just tinkering with a lever that has little impact on this growing group of people.”
Christian Faes, LendInvest
“While the Chancellor will affirm policies announced in the recent Housing White Paper, we hope that he will go further to make clear that government will look for further ways to address a trio of access challenges for SMEs: finance, land and skills.
“Encouraging the British Business Bank to explore finance opportunities for property SMEs and ensuring that the recently announced £3bn Home Building Fund is deployed on time are commitments that should feature in the Budget. Similarly, reducing the tax burden on property SMEs will remove barriers to growth as they are able to reinvest capital back into development. A year after Stamp Duty changes came into effect, this Budget should consider simplification of the tax system for property SMEs.
“To address barriers to land, a priority rule for sale of public land to small businesses should be introduced. Additionally, it is essential that government seeks to increase competition in the sector. This could be achieved by a joint strategy by the Small Business Minister and Housing Minister to support the professionalisation of SMEs.”
Daniel Hegarty, Habito
“With the millions of pounds being poured into new developments across the country, it’s imperative to ensure those homes are accessible to the broadest cross-section of the population. At habito, we’ve seen a rise in both Help-to-Buy and Shared Ownership schemes, signaling a greater need for these schemes at time when house prices are at their peak.
“We need to see Chancellor Hammond put his money where his mouth is and either extend or introduce new help-to-buy or Shared Ownership schemes. It is key to ensuring the long-term homebuilding strategy reaches first-time buyers and families who have been left out of the windfall created by London’s surging valuations.
“In the Autumn Statement, Chancellor Hammond declared the government would finally abolish estate agent fees. While this is a welcome relief for generation rent, we’ve been left in the dark as to when this will actually take effect. Consumers are reasonable frustrated by having to wait for basic transparency in the housing market right, and Chancellor Hammond needs to provide clarity on the path forward.”
Paresh Raja, Market Financial Solutions
“Given that real estate contributes over £94 billion to the UK economy, it is important that investors are able to consolidate and expand their property portfolios. Research by MFS recently found that 2.57 million British adults have lost out on a property purchase despite having an offer accepted because another buyer came in at the last minute with a more attractive offer.
“The UK boasts a dynamic, globally renowned-property market offering investment opportunities across both residential and commercial properties. It is important that the Government can ensure investors are able to realise them so the sector as a whole can continue to flourish. This includes encouraging a lending market that is in a position to meet the changing demands of investors such as access to alternative finance options. I hope to see these issues addressed as part of the Chancellor’s speech on Wednesday.”
Richard Goodmon, Menzies LLP
“If [Hammond] chose to cut CGT relief again, to say 15%, the Chancellor could create the perfect excuse to abolish Entrepreneur’s Relief once and for all. Taking this approach would help to soften the blow for entrepreneurial investors whilst simplifying the tax system considerably.
“With the controversial Apprenticeship Levy due for introduction shortly and plans in place to digitise tax payments for all businesses, any steps to simplify and reduce administration would be especially popular among SMEs.
“While tax receipts are going up, the Chancellor can’t afford to act rashly at this sensitive time – just prior to the submission of Article 50 and the start of Brexit negotiations with the EU. By balancing interests carefully, however, he has an opportunity to make changes that will reassure businesses and support investment, whilst also making some sensible simplifications.”
Andrew Chamberlain, IPSE
“IPSE would welcome the Government’s consultation on the tax system for the self-employed population. The current system is too complex. However, the Government must proceed with caution.
“The freelance population contributed £119 billion to the UK economy in 2016 and the overwhelming benefits they bring should not be underestimated.
“The dramatic rise in the number of self-employed people have helped to keep unemployment rates down. Any changes to the tax system must be carefully considered or will run the risk of damaging one of the UK’s principal competitive advantages – it’s flexible labour market.
“IPSE looks forward to working with the Government to make a fairer tax system which is up-to-date with modern working practices.”
Jonathan Riley, Grant Thornton UK LLP
“Business rate rises, although newsworthy and headline grabbing, are merely a symptom of our archaic tax system with its roots in the 19th century.
“Our current code is fundamentally not fit for purpose. Tweaking around the edges, with a small amend here and an addition there, is not the solution.
“If we really want to create an environment and vibrant economy where businesses can flourish, the Chancellor would be well advised to instigate a root and branch review of tax legislation, and consider starting with a blank sheet of paper, helping us reimagine a framework that would address any unfairness in the system.”
David Kosky, Work/Life
“We’ll be looking to the Chancellor to provide something more specific on whether he is planning to extend small business rates relief after next year. Small businesses need to budget and working on a year by year basis doesn’t really stack up. We know that this year relief is going up to 100% on small Rateable Values but what’s happening the following year and after that?”
David Mytton, Server Density
“I am hoping this Budget will help businesses by making much needed changes to business rates. At the moment, the scaling system of business rate increases is problematic because it does not take into account business’ ability to pay.
“It’s not means tested, meaning that sharp rate rises can take businesses by surprise. The root of the problem is a failure to review the rates on a regular basis, a problem shared with council tax bands.
“In my view, the whole tax system needs major reform, not just for businesses but across the board. There are too many taxes, the system is too complex and this just results in complex avoidance schemes. It’s an arms race, and it’s unsustainable. I highly doubt the budget will include anything other than minor pacifying changes to business rates, but I hold out hope for a full-scale review of the UK’s wider tax code.”
Jerome Laredo, Lightspeed
“One thing that we would like to see is a reduction in rates for small businesses. Come April, many of our customers could face tax rises of up to 400%.
“This, as you would expect, has caused a lot of concern for retailers, especially those with a brick and mortar store. With footfall decreasing by 1.3% the chancellor has a choice to make as to whether he effectively forces businesses towards the online space where already over a third of our customers in the UK are online only.”
Luke Davis, IW Capital
“With over 6.5 million investors believing that entrepreneurs will continue to play a critical role in driving private sector growth in the UK, it is important that this group of investors are not hindered in their ability to access Britain’s bustling community of scaling businesses. Tax-efficient investment initiatives such as the Enterprise Investment Scheme (EIS) are growing in popularity and, with alternative finance thriving, it makes sense for the Government to leverage positive investor sentiment as a means for catalysing growth within the private sector.
“It was pleasing to see Chancellor Hammond’s plan to pump £400 million into venture capital funds through the British Business Bank, and with the Modern Industrial Strategy placing particular emphasis on the role of scale-ups, the Government is clearly heading in the right direction.
“It is vital, however, that this momentum is maintained. I am hoping to see a Budget that builds on current government commitments, and cements Britain’s position as a world leader in private sector innovation and growth.”
Stuart Lucas, Asset Match
“The upcoming Spring Budget comes at a critical moment for the UK’s private sector. With the Bank of England revising its GDP growth figures up to 2% earlier in the year, the resilience of British businesses during times of transition is clear to see. Next week, Chancellor Hammond has the opportunity to impart further reassurance to businesses in advance of Brexit negotiations set to begin at the end of the month with the triggering of Article 50.
“What is difficult to anticipate, however, is whether the Government will seek to catalyse investment into private companies by removing financial barriers such as Stamp Duty taxes on private share transactions. In April 2014, Chancellor Osborne made the bold decision to remove Stamp Duty on trades in eligible securities on London Stock Exchange’s AIM and High Growth Segment with great effect – research by UHY Hacker Young found that the average daily amount traded per company soared by almost 50% in the year that followed.
“What the Government deemed to be ‘growth markets’ in 2014, however, remains limited to listed companies. With Britain hosting a significant number of high-growth businesses of various sizes, the Government should embrace the opportunity to review its taxation on private investment into all high-growth companies in the UK; thereby creating an agenda that is truly supportive of Scale-Up Britain.”
Martin Campbell, Ormsby Street
“At this budget it’s quite hard to think about the day-to-day issues that would improve life for small business owners. Yes, some long overdue simplification of the tax system would be great, and some help for small businesses hardest hit by the revaluation of business rates would be welcome.
“But really there is a massive, Brexit-shaped elephant in the room. While we obviously won’t get any clarity at this budget, there is major uncertainty ahead for the UK economy and the small businesses that contribute so much to it.
“Whatever one’s thoughts on the UK voting to leave the EU, most observers on both sides of the debate agree that there will be economic turbulence, at least in the short-term.
“I suspect we could actually be in for longer term issues with a number of sectors affected, so anything that can be done to reassure small businesses that the government is looking out for them would be welcome in these uncertain times.”
Greg Smith, Global Reach Partners
“Theresa May has signalled that the Government will do more to support renters in the latest Budget by building more affordable rental properties. Given the weakness in sterling, the government will have to tread a careful line, as any support could indirectly spur on foreign ownership of UK properties.
“Mr Hammond may also use the Budget to flesh out the interim plan of spending 1.2% of GDP on infrastructure by 2020 from the Autumn Statement. Conditions at the time meant he could only achieve 0.8% of GDP, though the improved conditions could mean that he is able to commit to additional spending. This would be seen as a positive for UK companies and the currency in the same way as Donald Trump’s infrastructure plans have boosted US companies.”
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 →