Autumn Budget 2017: North West business leaders reveal hopes and predictions
Autumn Budget week is here. This Wednesday (November 22), Chancellor Philip Hammond will deliver his big economic speech in the Commons to outline the Government’s next lineup of financial forecasts and tax changes.
With pressure building on Whitehall to plan for the fiscal impact of a potential no-deal Brexit, here at Bdaily we spoke with business leaders from across the North West to gather views on what the region wants and expects from the announcement.
Ming Yeung, managing director of YPG (Liverpool)
“Collaboration between the private sector and the council is creating invaluable employment opportunities: from gold-collar roles in the Knowledge Quarter, to the vibrant workforce supporting Liverpool’s buoyant leisure and tourism industry.
“But a growing workforce needs a fair, functioning and affordable housing sector, along with the transport infrastructure to connect the city region with the rest of the country.
“The PM’s recent £2bn pledge to support local authority housebuilding nationally is a welcome start. The Chancellor now needs to develop this this with further fiscal support, and progressive policy announcements to enable meaningful regeneration across the devolved city region.”
Sara Lawton, director of the Construction Impact Framework (Liverpool)
“The government must present an equitable budget that is more than just ‘moving’ figures from one spreadsheet column to the next.
“During this time of government imposed austerity there is no room for corporate or personal greed, nor a government that does not do all within its power to combat tax avoidance.
“Personally, I would love to see a budget that looked at closing current tax loopholes. Imagine a world where everyone paid 10% corporation tax, surely this would not only genuinely fill huge the budget deficits but would also help SMEs across the North West and beyond.
“Political parties are currently fighting for their reputation with scandal after scandal unfolding; people want and deserve a government that governs in the people’s interest and that means ensuring taxation and pay are fair across the board. Those of us who sit ‘in the middle ground’ are sentenced to a life of taxation in order to fill the gaps; business people understand the need for taxation but taxes should be paid by ALL to ensure that the small business that are propping up the country are crushed by an unfair system.
“Supporting the economy will result in organic, sustainable job creation providing opportunities for future generations helping the North West evolve into an economically active region for years to come.”
Gavin Twose, operations director at Language Insight (Kirkham)
“In terms of a business-only view, we must balance the needs of not actually incentivising small to medium sized companies through a balanced budget, against the need for sustained growth. This is particularly relevant today in the face of Brexit. There is little point in negotiating the best open trade agreements in the history of trade agreements, if British business is not in a position to trade.
“It is the small to medium sized businesses, that have not yet or have only recently started trading internationally that are the future of a post Brexit United Kingdom. At Language Insight, we understand first hand the importance of international trade, especially considering our service, translation.
“Having recently opened an office in New York City, we understand the importance of international trade and working closely with our US clients. From the outside, looking in, it’s easy to say “why should any business get a break”, or “business’ should pay more”.
“I don’t disagree per say, businesses do pay, especially small to medium sized, but if those same businesses were able to reinvest back into that business, it could create employment, investment in technology and investment in training. British business must be in a stronger position than they currently are and a favourable budget to business would be just one of those ‘enablers’ required.”
Caroline Norbury, chief executive of Creative England (Salford)
“The creative industries are hugely important to the north west’s economy, with more than 14k businesses, employing 64k people. We see the confidence and innovation in the creative clusters around us in Manchester, Liverpool, Crewe, Chester, Warrington and Wigan.
“One of the most pressing needs is to increase investment in education and training, ensuring that we have a workforce with 21st Century skills; particularly as we enter the ‘Fourth Industrial Revolution’, a phase of rapid, wholesale technological transformation which is changing the nature of work faster than at any other point in history.
“Creative companies are at the heart of many of the innovations driving this new revolution and I hope the recognition for the creative industries, as set out in the government’s Industrial Strategy Green Paper, is backed up by real financial commitments in the Chancellor’s Autumn Budget.”
Mark Jones, independent financial adviser at Assured Wealth and Estate Planning (Warrington)
“Currently savers can contribute up to £40K a year into a pension and receive full tax relief on this amount, at 20% or 40% depending upon their annual taxable income. A quick win for the Government may be to reduce this to £30K a year and raise around £9bn in the process for HMRC, according to The Pensions Policy Institute.
“The lifetime allowance, the amount that you can have in your pension has been lowered over the past few years from £1.8m to £1m now and changes to this level would hurt high earners and most doctors within the NHS whose final salary plans are already forecast to be in excess of that level. The impacts for tax on their income for these individuals is already pushing some out of their final salary (Defined Benefit – DB) schemes.
“There is an annual increase to the £1m limit in line with Consumer Price Index (CPI) from next April, could these see a freeze for a period of time, instead of a headline cut?
“Would the Chancellor dare to cut the 25% tax-free lump sum savers are allowed to take from pensions when they draw benefits at the age of 55? The jury is still out on this, as it would no doubt form a huge revolt similar to the proposed changes to self-employed people in the last budget.”
Tony Medcalf, head of tax at MHA Moore and Smalley (Preston)
“There’s been talk about the Chancellor using this budget to woo younger voters, perhaps by offering some form of tax break to younger people. There’s been suggestions that this could be something around National Insurance Contributions, but we’ll have to wait and see.
“I think Mr Hammond will want to be seen to be increasing public spending. Therefore, we might see some announcements relating to increased funding for housing and the NHS and, perhaps, some relaxation of public sector pay caps.
“With the continued uncertainty around Brexit, the Chancellor will want to be saying that ‘Britain’s open for business’. However, he’s still walking that tightrope of being accused by Labour of offering tax cuts to big business, so I don’t think he can afford to be too over the top. The better than expected Q3 GDP figures will probably have eased the pressure on the Chancellor to intervene on business taxes. As a result, I think it’s unlikely we’ll see corporate tax rates going any lower than they are already.
“I don’t expect any major structural changes to the headline tax rates. Any alterations are likely to be tinkering. Despite the recent drop in government borrowing, I still think any tax giveaways would likely be funded by tax clawbacks elsewhere.”
Philip Brennan, head of Businesscomparison.com (Chester)
“Recent budget measures have had a big impact on the small business community so it’ll be interesting to hear what the Chancellor announces.
“Investment in infrastructure is crucial for North West businesses and this includes the HS3 rail line which has the potential to create a more prosperous north.
“Finance is a key issue for small and medium sized businesses with many feeling the strain of changes to business rates and the new dividend tax system.
“Both need reviewing. Gig economy and self-employed workers across the North West require more government support and there should be a focus on their employment rights particularly as we move towards Brexit.”
Gareth Smyth, group managing director of Hilton Smythe (Bolton)
“I would like to see the Chancellor extend Entrepreneur’s Relief to all small business owners. As many company sales are completed as an asset sale, which are not eligible for the relief, many sellers are missing out on it.
“If it were to be extended, this would encourage more of an appetite to buy and sell, rather than choosing to close their business down as the only viable exit strategy, which would maintain economic activity and protect thousands of jobs every year.
“I would also like to see the Government address business rates for digital firms to bring them in line with what small businesses, such as high street retailers, pay.
“The Chancellor has already stated that there needs to be a better way to tax digital enterprises, and I’m inclined to agree. In my experience, businesses on the high street are already paying their fair share, and the lower rates that tend to be applied to digital firms penalises those looking to set themselves up in prime locations, boosting the local economy.”
Tim Holt, director and owner of Plastic Card Services (Macclesfield)
“I hope to hear Philip Hammond confirm his commitment to the Northern Powerhouse, and reconfirm that the investments the government committed to in 2014/15 shall be honoured. In 2014, his predecessor George Osborne stated that this was the centrepiece of his 2014 Autumn Statement, and was as a long-term plan not a short-term soundbite.
“Therefore, Philip Hammond would be wise to confirm the government’s position and indeed highlight what we have achieved in the short term and what to expect in terms of ongoing investment moving forward.”
Damian Hanson, co-founder of CircleLoop (Rossendale)
“As a Northern Powerhouse partner, we hope to see an increased focus on Northern Powerhouse going into 2018, especially as there are now over 100 partners signed up.
“The election earlier this year naturally slowed progress for a few months and the concept has been absent from the public eye in recent times. However, following a recent meeting with Northern Powerhouse Minister, Jake Berry we’re confident progress will now happen.
“There also needs to be a key focus on skills and transportation in the region to ensure that we have an adequate talent pool and adequate transport links. The two are intrinsically linked. With improved transportation links between major employment hubs, we’ll see an increase in population, creating a larger, skilled talent pool for organisations to hire from.
“The success of businesses in our region hinges on the skills and expertise with our workforces so this is absolutely key to ensure the region continues to contribute to economic growth.”
Nigel Wilcock, owner of Mickledore (Warrington) and executive director of the Institute of Economic Development
“For the good of the North West economy we need clarity on the structures and budgets for elements of the Industrial Strategy; clarity on how Structural Funds will be replaced for regions and clarity on local authority funding – how the business rate retention mechanism and re-allocation system will work.
“We ask for commitments to transport infrastructure that equalises expenditure per head between regions, greater recognition of the social care costs falling on local authorities and funding for state aid interventions for business.
“We recognise that National Insurance contributions from employers need to be looked at – it is an important economic issue that variations in different types of employment contracts are allowing corporations to be avoiding contributions when the economy is at full employment. The tax take of the economy is increasingly disconnected from the level of activity.”
Jo Sellick, managing director of Sellick Partnership (Manchester)
“A drop in business rates is expected to be included in the Budget and this would be welcome news, but Philip Hammond must extend this kind of action to make a noticeable improvement to our nation’s employers.
“The whole business rates system is in dire need of an overhaul, not to mention the level of investment required in the wider economy to get things moving again and boost productivity.
“Other areas for improvement include a general loosening of fiscal constraints, which would certainly be welcomed by business leaders.
“What has happened to the progress promised regarding the Northern Powerhouse? Infrastructure improvements have come to a standstill and the region does not seem to be moving at the speed in which the government intended when it laid out its plans a number of years ago.”
Maggie O’Carroll, co-founder and chief executive of The Women’s Organisation (Liverpool)
“Given the huge uncertainty regarding Brexit, the Budget needs to set out a comprehensive package of investment in large scale in capital programmes ranging from transport, housing, energy, digital and technology, as the UK economy will remain sluggish, if not decline, without decisive measures.
“Indeed, further support for SMEs will need to be rolled out so they can meet the future choppy Brexit waters.”
Neil Kirkham, director at commercial property consultancy CBRE (Liverpool)
“One of the biggest issues for Liverpool’s economy right now is the shortage of grade A space and the knock-on effect this has on the city’s ability to attract inward investment. What Government can do is support us to create the right conditions to attract companies from outside of our region. Key to that is having the right infrastructure - both physical and digital.
“A commitment in the Budget to funding major transport improvements, such as the proposed ‘Crossrail for the North’, as well as better digital connectivity in the Liverpool city region would underpin the efforts being made on the ground to attract new businesses.
“There has been lots of discussion around the Northern Powerhouse and what we need to see now are real signs of commitment to this initiative, with public expenditure to improve connectivity.”
Peter Taaffe, managing partner of accountancy firm BWM (Liverpool)
“Sandwiched between Brexit and his dogmatic determination to plough on with the austerity programme, Chancellor Philip Hammond has very little room for manoeuvre in his 2017 Autumn Budget.
“Under pressure from an opposition with the wind in its sails, the Government has pledged more resources for policy areas such as education, transport and housing - but where will the money come from?
“There could be a long-expected raid on pensions or he could launch a Labour-lite raid on the wealthy. Certainly there was a degree of public anger over the recent revelations of offshore tax avoidance. Closing a few of those loopholes would be a popular move and may even generate some extra revenue for the Exchequer.
“If there are extra spending commitments we would hope the North would get its fair share.”
Mike Perls, regional chair for the Institute of Directors, North West
“Business leaders in the region want to see a recommitment to the Northern Powerhouse initiative – particularly with a focus on developing our infrastructure and transport links as well as further investment in our growing science, energy and technology sectors.
“Representing the views of our members here in the North West, the IoD has called on the Chancellor to prioritise tax changes to boost entrepreneurial companies when drawing up his forthcoming Budget. This includes raising the Annual Investment Allowance cap to £1m, and relieving restrictions on reliefs for investing in start-ups and growing companies. This is essential to enable the continuation and further growth of the many pioneering and exciting start up businesses in the region.
“Naturally, many businesses are concerned by the political turbulence of the last eighteen months. IoD surveys show that pessimism about the economy as a whole had been growing since the beginning of the year, worsening since the General Election. Therefore it is vital that other pressures on the Exchequer are not allowed to crowd-out measures to boost investment at next week’s Budget.”
Helen Griffin-Booth, director at Bluerow Homes (Liverpool)
“The number of homeowners under the age of 45 in England has dropped dramatically since 2010. Many young people feel locked out of the housing market due to sky-high costs, with stamp duty being a key contributor to this.
“Stamp duty land tax can add thousands on to the cost of buying a home and makes many people reluctant to move.
“Scrapping or even going some way to reduce stamp duty would help aspiring first-time buyers address one of the biggest obstacles to entering the market – raising a deposit.
“Stamp duty has a knock on effect for the housing market as a whole, not just for first-time buyers. Growing families who wish to move also have to pay the levy, so in turn this prevents people from moving up the property ladder and slows down mobility at all levels.
“Although stamp duty is a cash cow for the government, netting almost £12 billion in the 2016/17 tax year, I hope the government see this as an opportunity to address not only the housing crisis but the wider economy in general.”
Peter Done, founder and group managing director of Peninsula (Manchester)
“There have been hints from the Treasury that IR35 rules will be extended to the private sector. These rules currently require public sector employers to deduct tax and National Insurance contributions from contractors’ pay, treating the contractor as if they were an employee for tax purposes, even though they are offering their services through a service company.
“These rules are complex and many public sector employers have struggled with the practical application of these since they were introduced in April. Extending the rules to the private sector would remove the unequal treatment between the sectors.
“One key area Peninsula clients are keen for more clarification on is Brexit and any indication on how they should be prepare for the UK’s exit from the EU would be welcomed.
“Lastly, the Budget usually indicates the minimum wage the government would like to achieve by a certain year – this has previously been aimed at reaching £9 per hour for over 25s by 2020. While increased wages for employees is welcomed in these rising inflation times, employers who are already struggling with rising wage costs, pensions, and the uncertainty over increased costs because of Brexit, may wait to see if the Chancellor will reduce the pledge or increase the time taken to get there.”
Steve Eccleston, managing partner at Kuits (Manchester)
“For the good of the North West economy the Budget needs to ensure that infrastructure is in place for entrepreneurs to reach the world stage, as it currently is in London and the South East.
“There is a need for more national head office functions and leadership so creation of incentives in the region such as stamp duty reductions, for the purchasing of commercial property, would have a positive impact.
“Also a decrease on airport tax would assist in making the region a more attractive proposition for international businesses to set up.”
Mike Parkes, technical director at GoSimple Software (Oldham)
“At GoSimple Software, we will be keeping the closest eye on the announcements that are likely to have the biggest impact on our users.
“The first is likely to be a reduction in pension relief for those who are earning £45,000+ and are paying a higher rate of tax, as their tax liability will increase. However, I predict it is more likely to be around the 30-33% mark, as opposed to 40%.
“The second is increasing National Insurance for the self-employed. This development is likely to be back on the agenda again, but I believe they are now more likely to confirm a smaller increase, of around 1%, instead of the initially proposed 3% rise. HMRC’s ultimate aim is to simplify tax and align the rates of the self-employed to employees, therefore this is one development we’ll be watching closely.
“In terms of general predictions for the Budget, it looks like stamp duty will either be increased or reduced for older homeowners to encourage them to sell or downsize. The same will go for first-time buyers too, in order to make it easier them to take their first step onto the property ladder. The Enterprise Investment Scheme (EIS) will also potentially be reduced from 30% down to 20%.”
David Carmichael, partner at Fieldfisher (Manchester)
“In terms of what to prioritise, Brexit is creating increased uncertainty for business and the Chancellor needs to create as much clarity as possible by publishing a clear industrial strategy which helps business to identify what skills are needed, the training necessary to support growth, and where capital investment should be made.
“What needs to happen for the good of the North West economy? Improved infrastructure especially the connectivity of the Port of Liverpool as the focus of trade moves away post Brexit from Channel coast ports to Liverpool and trade coming in from North America and further afield.
“Such connectivity would of course extend to a commitment to start the HS3 rail project. The North West has terrific examples of advanced manufacturing but this work would be boosted by establishing a facility in the North West like the Francis Crick Institute in London for the biomedical scientific research, but aimed at advanced manufacturing and materials allowing for the cross fertilisation of ideas to support innovation – it would be a sort of Super Graphene Institute.”
Lynn Sedgwick, managing director of Clayton Recruitment
“Without doubt, the Chancellor needs to prioritise employment, infrastructure and housing in the Budget. The North West is booming – in fact the latest Lloyds Bank Regional PMI report indicates that business activity in the North West is the second highest of all UK regions.
“It is also the largest regional economy outside of London and the South East. However, the success of businesses relies on the skills and expertise available in the market and more needs to be done to not only attract people to work in the region through the provision of strong housing stock, adequate education and good transport links, but also retain them so skills shortages are not exacerbated.
“These are key areas that need to be addressed by the Government to ensure the long term success of the region as a whole.”
Peter Dobson, managing director of PMD Business Finance (Oldham)
“At PMD Business Finance, we will be keeping a close eye on the Budget, as there is a high likelihood it might include some incentives for investing in capital, with potential increases in the rates of capital allowances or the Annual Investment Allowance.
“Business owners will also be keen to see how the rise in interest rates will affect them. While we have seen some increases in rates across the asset finance marketplace, a large majority of funders have chosen to absorb this themselves, and as such, SMEs remain largely unaffected.
“Asset finance funds a third of UK investment and the appetite from our panel of lenders remains as strong as ever.”
Chris Sanger, head of tax policy at EY
“With all the uncertainty, whether from the delayed implementation of the post-election Finance Bill, the complexity of the legislation being introduced to deliver on the G20/OECD Base Erosion and Profit Shifting (‘BEPS’) project, or just Brexit, businesses are looking for some stability.
“We can expect the Chancellor to update on the Business Tax Roadmap, this time perhaps adding a bit more detail to how he wants the tax system to look at the end of the five year parliament.
“The Coalition Government identified four elements of tax competitiveness: tax rate, tax base, tax policy making and tax administration. We can expect the Chancellor to focus on all four areas, reinforcing the message that, at 19%, the UK’s corporation tax rate is the lowest in the G20 and that BEPS is leading to an alignment of tax bases across the world.
“The move to the single fiscal event (moving the Budget to the autumn and stopping the new Spring Statement from being a mini-Budget) will feature on the policy making side, with greater focus on engagement and rigour in policy making. Finally, on tax administration, the consultation on business risk reviews and the focus on cooperative compliance will feature.”
The North West Business Leadership Team (Warrington)
“The North West Business Leadership Team (NWBLT) is delighted the Government has made it clear that it will be implementing an industrial strategy. In regards to the budget, we would like to hear of investments taking place to implement this strategy. This would underscore the seriousness felt by the Government in implementing the strategy.
“There are some crucial components of the industrial strategy that we believe, by pledging investment in this budget; the Government would send a strong and clear message of its support.
“One of the most important aspects of the industrial strategy is the incorporation of digital technology into all aspects of the economy. Over 10 years industrial digitalisation could boost UK manufacturing by £455bn, increasing sector growth up to 3% per year; creating a net gain of 175k jobs whilst reducing CO2 emissions by 4.5%.
“The North West has been chosen as a pilot for digitalisation. To gain the full potential of digitalisation it is necessary for government to work with business in helping to create future prosperity as the pilot runs, and then later as the programme is adopted nationwide.”
Lee Dentith, CEO and Founder of Now Healthcare Group (Manchester)
“I am eagerly anticipating the Autumn Budget will give more clarity around Brexit and just who is to pay for exactly what, as so far this is unclear.
“I’d be disappointed to see an insurance premium tax increase, as this is not good for the PMI industry. I would like to see all employers paying employment national insurance contributions right from a part-time 5 hour a week employee, up to the board level.
“I don’t see why major employers in this country avoid this tax due to them only employing part-time employees. Now is the time to put some burden on employers, because profits for large companies are looking very positive and they should be made accountable.”
What do you hope to see in the Chancellor’s Autumn Budget? Let us know by tweeting to me at @ScouserJourno, or alternatively use our main handle @BdailyNorthWest
Be sure to check back on Wednesday (November 22) for our roundup of reactions from the region.
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