Autumn Budget 2017: Yorkshire businesses reacted to the Chancellor's statement
As Chancellor Philip Hammond has now delivered his first Autumn Budget, we now have a better idea of what the Government expects from the UK economy in the coming years.
So what did we learn? To kick things off the Chancellor allocated £3bn to prepare for Brexit and pledged to provide further funds if necessary.
Borrowing is forecast to be to £49.9bn this year, and the OBR also forecast that another 600k people will be in work by 2020’s.
We were also informed that there are plans to deliver three million apprenticeships starts in the next several years, and starting from April, the National Living Wage is set to increase to £7.83 per hour.
But as the business community of the North has been calling for more investment in transport and infrastructure, it was perhaps most welcomed that the Chancellor announced a £1.7bn boost for Transforming Cities Fund and a further £300m to be invested in HS2 infrastructure which will help improve Northern Powerhouse rail improvements.
However, it is now time to hear the reactions of the people of Yorkshire. Bdaily has compiled a collection of reactions for the region’s business community in an array of sectors, to determine how the region is feeling following the Budget.
Transforming Cities Fund
Chris Hearld, KPMG’s North region chair
Investment in infrastructure has long been the foundation upon which the growth of our regional cities, and improvements in our productivity, will be built.
That half of the new Transforming Cities Fund is to be shared amongst those cities with metro mayors is good news for the two thirds of the Northern Powerhouse that has secured devolution deals.
Indeed, it’s particularly pleasing to see the massive strides that are taking place in the North East which will be no doubt buoyed by pledges of investment in the Tyne & Wear Metro and the Redcar steelworks.
However, once again the people of Yorkshire are left counting the cost of their region not being able to get its devolution act together. Being left to compete for its share of investment against the rest of the UK must surely increase the risk of it becoming a straggler in the race for economic growth.
Richard Flint, Managing Director of Sky Betting and Gaming
A lack of progress on devolution means Yorkshire is missing out on its share of the new transport funding.
It is time to press ahead one way or another with deals that are achievable and start making use of the money the government is putting behind metro mayors.
Suzanne Robinson, Yorkshire Senior Partner at EY
The £1.7bn Transforming Cities Fund to improve transport does underline the Government’s commitment to improving connectivity across the Northern Powerhouse.
However, it is striking that half of the total fund is allocated to the six combined authorities with elected metro mayors. This puts those cities that have agreed devolution deals in a much stronger position and means that our Yorkshire cities are left in competition with other English cities for the remainder of the cash.
Transport connectivity remains vital to increasing productivity across the whole of the North and all regions across the North should be encouraged to work together, and not see themselves as in competition.
The £300m commitment to future-proofing HS2 infrastructure for HS3 is of course most welcome.
But there was also a recognition that connectivity and productivity is also about digital infrastructure and that productivity gains can be made in other ways. I was heartened by the £30m the Chancellor announced to trial solutions to improve mobile and digital connectivity on trains on the TransPennine route.
Indeed, the Chancellor’s speech had a strong digital theme throughout, recognising that investment in digital skills is essential to keeping the UK competitive.
The Government’s investment in both training computer science teachers and digital skills in general is very welcome at a time of rapid change both in the UK and across the globe. The extra funds are vital to building the right infrastructure, workforce and new technologies that can ensure the country remains competitive on the world stage.
Phil Sugden of Portal Group
We welcome the Chancellor’s renewed commitment to funding economic growth across the Northern Powerhouse and the Midlands Engine, with the promising £1.7bn ‘Transforming Cities’ fund.
However it is clear that, in such uncertain times and as we prepare to leave the European Union, we believe that far better clarify is required if we are to continue to attract inward-investment and both celebrate and drive innovation in our regions.
Paul Stokey, head of office for Shoosmiths Leeds
Infrastructure investment and strong transport links to increase mobility and ensure talent can be drawn from all corners of the North is essential to the success of businesses based here; it has certainly played a central role for Shoosmiths Leeds during our first 12 months of operation.
Therefore, having greater clarity around the level and nature of investment that cities in the region will be allocated from the £1.7 billion Transforming Cities fund is exceedingly important in assuring the region that it remains a Northern Powerhouse priority.
We are pleased to hear the announcement of £30m to trial new solutions on the TransPennine route to improve mobile and digital connectivity on trains, adding some credence to the Government’s pledge to level North/South economic disparity and boost connectivity. However, this is a drop in the ocean and more must be pledged to ensure the region’s continued prosperity.
We now hope that Monday’s Industrial Strategy White Paper will add further momentum to the Northern Powerhouse agenda.
Cllr Susan Hinchcliffe, West Yorkshire Combined Authority Chair
The Chancellor’s announcement that the Office for Budget Responsibility has downgraded the UK’s forecast growth figures makes it even more important that all parts of the country including West Yorkshire and Leeds City Region are able to play their full part in supporting the country’s economy, as we set out in our £200m Budget Submission.
Our proposals included measures to increase productivity, develop sustainable initiatives and combat the pockets of persistent deprivation that exist across our region, which are all in line with the Chancellor’s stated aims today.
We now need this government to work with us to put measures in place, including a meaningful devolution deal for Yorkshire that will enable us to use local expertise and commitment to make the decisions on policy and investment required to boost our economy and ensure our region plays its full part as a UK Powerhouse as well as a Northern one.
Richard Wright, executive director of Sheffield Chamber of Commerce
At first glance this seems a well-balanced budget and quite forward looking. Of course, the devil is often in the detail which will be published after the Budget speech and needs further interrogation.
We agree with the Chancellor’s comments that if we are ‘truly to build an economy that is fit for the future we have to get all parts of the UK firing on all cylinders’.
His backing for the Northern Powerhouse - with half the new £1.7 billion Transforming Cities Fund to be shared by the six areas with elected metro mayors – aims to give them ‘firepower’ to deliver on local priorities.
It’s a reminder of just how much our city region is being penalised by not pushing forward on devolution and not having a mayor. The figure of how much we may have got in terms of investment is unknown – but our lack of progress means we will certainly lack that ‘firepower’ in terms of spending.
He has recognised the need to invest in our wealth making capability in the future. We welcome the announcements on research and development and were reassured to see the Chancellor once again talking about learning and education – in particular in maths and sciences - after his focus on technical skills in the Spring Budget earlier this year.
We need to generate a culture of lifelong learning so the strategic direction towards a National Retraining Scheme is likely to be a real boost for the construction sector in particular.
The UK must address its skills shortage to ensure the workforce is equipped with the skills they need for the workplace of the future and keep the momentum going towards a technology-led environment.
The Chancellor is realistic in assuming a drop in future Growth Rates but still predicts monies being available for the spending announcements despite the government’s borrowing coming down further. While we could perhaps question the ‘headroom’ the Chancellor feels he might have, he at least is acknowledging the need to invest that by offering ‘a little help’ to both families and business.
As such we welcome the rise in the basic rate income tax threshold and are also pleased he has listened to the concerns of the British Chambers of Commerce about the costs of uprating business rates. We hope the switch from the retail prices index (RPI) to the consumer prices index (CPI) - and it being brought forward by two years - will save business the £2.3bn, he predicts.
Overall, we feel the Chancellor has presented a Budget that addresses a lot of key areas and issues that should help get the economy into a better position to confront the challenges of Brexit.
Mick Brant, Director of Vizulate Digital
I don’t feel there are any big changes really, but considering the uncertainty around Brexit - and the downgrading of forecasts for growth and productivity - the budget is more positive than we expected.
It contains a range of new investments which should have a positive impact for business, such as announcements around housing, transport and digital.
The business announcements specific to our digital marketing sector, such as investments in 5G mobile, full-fibre broadband and digital skills development are welcomed, and we strongly support any measure to clamp down on tax avoidance.
However, it remains to be seen how the larger digital businesses will react to the proposed tax changes and what the overall effect will be on the industry.
Adrian Kemp, director at professional services and engineering consultancy, WSP
Doubling investment for housing through the Housing Infrastructure Fund – which is targeted at those schemes where infrastructure is the only ‘missing link’ – in response to the measures set out by the Housing White Paper, will give a much needed boost to the UK’s ‘broken’ housing market.
This is absolutely key for the Yorkshire region in particular, not only to fulfil its ambitious housing targets, but also to further strengthen the argument for infrastructure investment that will support new sites that have been identified for housing, like Leeds’s South Bank for example.
The £1 billion discounted lending for local authorities to invest in high value infrastructure is also good news, but it’s a shame that neither the Leeds City Region or Sheffield City Region will receive guaranteed investment from the Transforming Cities Fund; demonstrating the need for Yorkshire to work together going forward to access vital infrastructure funds.
The Homes and Communities Agency’s extended remit will go some way in helping local authorities, such as Sheffield City Council which has been developing plans for housing city deals with the DCLG and the HCA, meet the ever-growing demand for social housing in the region.
I also welcome the extended age limit for young person’s rail cards from 25 to 30 years. This will encourage more people to use public transport, which is well timed as Leeds City Council is looking to spend £173.5 million to improve rail and bus links across the city by 2021.
Ali Akbor, chief executive of housing association Unity Homes and Enterprise
There was a clear but necessary acknowledgement from the Chancellor that the housing crisis must be tackled with much greater vigour than in recent times, which is a positive step.
The expansion of the role and powers of the HCA, already one of our primary partners, is a welcome move and confirms what has been rumoured in the housing sector for some time.
£44 billion in Government support for housebuilding is a step forward, yet someway short of the £50 billion that Communities Secretary Sajid Javid recently said was required.
The target of building 300,000 homes a year should be commended but would be much more impressive if the timeline was considerably shorter than the mid-2020s given the pressing need for new housing that the Chancellor himself has conceded.
More details of the Government’s measures will inevitably emerge in the days and weeks ahead and be subject to proper scrutiny.
But as one of England’s foremost BME-led housing associations with three decades of proven experience in building homes for people who really need them, we look forward to be fully involved in delivering for the communities we serve.
James Thomson, CEO, Keepmoat Homes
Our priorities for this Budget were affordability and the supply of homes for young people. The pre-announced £10 billion for Help to Buy was essential, but our expectations have been exceeded with the generous abolition of stamp duty for first time buyers. This removes a huge potential barrier.
Local authorities are potentially a significant source of additional homes of all tenures through development partnerships. Development funding for them could make a huge difference to supply.
Most important is the relaxation of HRA borrowing restrictions for those in high demand areas.
Borrowing has been the biggest single issue and this measure makes councils far less dependent on the combination of finance that can be raised through private sector partners and the pots of funding announced recently by the Government.
Tanya Jackson, head of corporate affairs for Yorkshire Building Society
Reform of Stamp Duty is long overdue, so we are very pleased that the Chancellor has decided to abolish this tax for 80 per cent of first-time buyers.
In the last year, a staggering 267,000 first-time buyers paid stamp duty on the property they bought: a nine per cent increase year on year, which is why we have campaigned for reform.
The Chancellor was right to say, however, that further reform is required. This should include help for growing families trying to move to a bigger home – something that is essential to free up homes for first time buyers. At present, second steppers pay an average of £8,000 in Stamp Duty, rising to £23,000 in London.
Dorothy Thompson Drax Group CEO
Having this clarity from the Chancellor on the Carbon Price Floor will help to unlock further investment in low-carbon and renewable technologies ensuring that, together, we can continue creating a cleaner economy for future generations.
“Reducing carbon in our energy system is the fastest way to deliver a low-carbon economy. The carbon price floor has enabled the UK to half the amount of carbon emitted through electricity generation since 2012.
The support for Electric Vehicles in the Budget demonstrates how vital low carbon electricity generation is for growth in other sectors of the economy.
At Drax, we will now continue to explore new ways of converting our remaining coal generating units to biomass and gas, and build new rapid response gas plants.
These moves will help take coal off the system quickly and cost effectively, while maintaining security of supply and increasing our ability to provide flexible services to the grid.
Christine Hewson, KPMG’s head of tax in the North
Businesses were looking for a Budget with few surprises – and, thankfully, that’s what they got.
The Chancellor avoided introducing any further complexity into the tax system, and it is encouraging to see him use tax policy as a lever for growth and investment as we approach Brexit.
There were measures to improve competitiveness and innovation, and a commitment to continue with a competitive corporate tax environment – things business crave – but the sharp reduction in economic growth forecasts threatens to overshadow.
The surprise R&D boost, through the increase in the tax relief rate to 12%, sends a clear message to global businesses that the UK is open for innovation. It means that, net of corporate tax, the Government will contribute £10 for every £100 of R&D expenditure by business.
This could play a key role in encouraging global businesses to choose the UK as a location for their R&D. Coupled with the £2.3bn R&D grant boost announced on Monday, the signals are positive that the UK is an attractive place for innovation.
However, more needs to be done to attract inward investment for the UK digital and tech sector.
The announcements made by the Chancellor today only scratch the surface of what can be offered to digital and tech businesses setting up in the UK and we need to attract inward investment from this sector by introducing tax incentives and increasing investments in our tech clusters. Doing so would support talent, boost productivity, and create hundreds of thousands of good, high-skilled jobs up and down the country.
If we are going to stay in the race for being front runners in cyber security, AI, automation, driverless vehicles and other new technologies, we really need to offer more to entrepreneurs and innovators to succeed.
Eyes now turn to the imminent industrial strategy white paper, which will hopefully help in the delivering of productivity performance improvements. As the main route to future economic growth and prosperity, it is a prize worth aiming for.
Claire Evans, head of fleet consultancy at Zenith
The Chancellor claimed this budget aimed to help Britain embrace change, meet its challenges head on and seize opportunities. It set out to support innovation and encourage research and development by firms with new funding and tax breaks for companies through tax credits and investment incentives.
The fleet sector called for clear guidance on a range of issues, and it is good to see some clarification from the Chancellor that will help our industry plan with more confidence. There is a clear direction of travel from the government with more support for the adoption of cleaner engine technology and electric vehicles with taxation only impacting less efficient diesels.
The anticipated rise in diesel taxes arrived with the announcement that from April 2018 VED rates for new diesel cars will rise by one band. It means an Audi A3 in 101-110 band will incur an increase of 42p a month over a typical four-year term.
Funds raised by VED changes will support a £220m Clean Air Fund for local clean air plans.
The diesel BiK supplement will increase by 1% from April 2018. In news that will encourage manufacturers to continue to advance cleaner diesel engines, the diesel supplement will be removed entirely for vehicles that meet the Real Driving Emissions step 2 standard (RDE2) bringing it in-line with the petrol equivalent. It is disappointing news for drivers in existing diesel cars who will be subject to the rise and not given time to move into cleaner technology.
The move will encourage fleet providers into the cleanest diesel engines alongside petrol and ULEV vehicles in the long-term. And give fleets more clarity to enable better planning on policy choices.
The planned fuel duty rise was scrapped, making it the most prolonged period the duty has been frozen in 40 years. VED for HGV and the road user levy were also frozen in a welcome move for the sector.
The chancellor unveiled extra funds and tax incentives for electric car drivers. It included a new £400m charging infrastructure fund, an additional £100m in plug-in car grant, and £40m for research into charging. And drivers who charge their vehicles at work will not be taxed as a Benefit-in-Kind.
Chris Sellars, Head of Residential Property at Banner Jones
We’re delighted to hear about the abolishment of Stamp Duty for first time buyers purchasing homes up to £300k, referred to as the ‘rabbit out of the hat’ moment for Cllr Hammond in today’s budget announcement.
The announcement will help to stimulate the housing market, following the news that there has been a significant decrease in the number of 25-34 year olds owning homes from 59pc – 38pc over the last 13 years.
The biggest challenge for first time buyers is the additional costs involved, which can often be a four figure sum. The removal of some of these costs will have huge positive impact and we hope that first time buyers will come into the market as a result.
We would have liked to have seen a reduction in the 3% stamp duty surcharge on buy-to-let investors as we believe this could help even further.