Spring Statement 2018: What would North East businesses like to see?
On Tuesday March 13, the Chancellor of the Exchequer, Philip Hammond, is to reveal 2018’s Spring Statement.
Instead of the usual Budget, the UK is now being delivered a much smaller Spring Statement at the House of Commons next week.
Following the Chancellor’s decision during the Autumn Statement 2016, there will now be only one major fiscal event each year, held in the Autumn.
This Spring Statement will be based on the state of the economy, but no immediate tax changes or spending announcements will be made - unlike the Budget.
But what will it mean for this region, and what would North East businesses like to see? Below, we’ve gathered their opinions and predictions - read on to find out what they had to say.
Sean Donkin, The Inn Collection Group
Sean Donkin is the managing director of award-winning leisure operators, The Inn Collection Group, which is the region’s largest independent accommodation provider.
Ahead of the Spring Statement, he said: “While this year’s statement is going to be a vastly pared down address with scant projections, I would hope that the government will look to give clarity on the business rates appeal system which is in complete disarray.
“The business rates overhaul last April has left many businesses in the sector facing crippling hikes in business rates which is bringing them to their knees.
“With over 250,000 appeals outstanding from 2010, and further backlog from the 2017 appeals, the government needs to address the fundamental flaws in the rates system and do more to support businesses.”
Paul Gibson, Active Chartered Financial Planners
Paul Gibson is a director and chartered financial planner at Active Chartered Financial Planners.
He commented: “I hope that when the Chancellor delivers his Spring Statement, he will be delivering positive statistics around gross domestic product growth and unemployment figures.
“We have seen recent increases to GDP whilst unemployment numbers have been falling, particularly in the North East, which is pleasing for our region.
“Financial markets react well to positive news, as this provides stability and builds confidence for investors. I think some positive messages would have a very beneficial impact on the economy in general.”
James Robson, Entrepreneurs’ Forum
James Robson, chairman of the Entrepreneurs’ Forum, said: “I will be interested to hear what the Chancellor has to say about plans to change Entrepreneurs’ Relief to incentivise entrepreneurs to remain involved in their businesses after receiving external investment.
“This is a positive development for business owners as it will help support further growth in these enterprises with entrepreneurs continuing to make a significant contribution to the company that is also benefiting from new investment.
“Another constructive measure that will support entrepreneurs, both those who are establishing businesses and those looking to invest in start-ups, is changes to the Enterprise Investment Scheme.
“The government’s plans to increase the annual EIS limit to support businesses in ‘knowledge-intensive’ sectors, which can create significant employment opportunities for highly-skilled people.
“However, it does come with a caveat that could cause some uncertainty, through the introduction of a ‘risk to capital’ condition, which is designed to address the supposed ‘tax motivations’ of investors.
“I am currently helping a North East tech business put together a crowdfunded equity investment, which will be dependent on the continuation of the EIS scheme.
“Entrepreneurs by their very nature are keen to back businesses with potential and understand the risks of investment, with tax relief not the first motivation. This could hamper some investments.”
Members of Digital Union - the largest collective of creative and digital businesses operating in the North East - also had their say ahead of this year’s Spring Statement.
Rachel Peacock, Digital Union
Rachel is the head of Digital Union, and commented: “The general uncertainty around public funding and the future of our business support organisations of course is a massive concern.
“As is the overall impact of Brexit and the affects this may have on business growth and the economy, both here in the North East and nationally.
“We believe that networks like Digital Union are now more important than ever as is the further collaboration and syncronisation of services and initiatives.
“We all believe that the North East digital sector can lead the way and we hope that the Chancellor’s Spring Statement shows the same ambition as our members do.”
Jim Mawdsley, Generator
Jim is the CEO of Generator. He said: “Due to Brexit, ERDF is in jeopardy and will of course affect a lot of support organisations like our own.
“This is why we have been looking at commercialising our business to try and make it more sustainable as we are all in the dark as to what other funding will become available in the future, if any.
“I will be very surprised if this will be addressed in this statement, however. It’s simply another wait and see situation.”
Professor Lawrence Bellamy, University of Sunderland
Professor Lawrence is the university’s Dean of the faculty of business, law and tourism.
He said: “The region is facing challenges around Health and Social Care staffing and developing further skills around science, technology and engineering.
“Support for students to encourage them to continue their education through reviewing student loan interest rates, the return of maintenance grants and ongoing investment for the development of apprenticeships is essential.
“High business startup and business growth through innovation is the engine of tomorrow’s prosperity. Incentives for startup through grants and loans, access to funding to support innovation and ongoing commitment to offset any EU money losses in this area continues to be a priority.
“The creative and cultural economy continues to show great potential, with pockets of excellence and strong return. However funding in the creative industries has been hit hard in recent years, at a point when investment is needed.
“The STEM initiative is important, but so is supporting our future creativity and innovation. So we’d like to see arts added to the mix to make STEAM.”
Dave Gibson, Blu Sky Chartered Accountants
Dave is the director of Blu Sky Chartered Accountants.
He added: “We’re in agreement with the majority of commentators in that there will be little detail and more focus on positive, long term thoughts.
“The Chancellor has already stated he wanted to get away from the ‘Two budgets a year’ scenario, so the Spring Statement will be what it says – a statement on current and forecast performance rather than a series of tax and spend changes.
“With our annotated copy of the Finance Acts 2017 coming in at 847 pages, we’re rather relieved!
“Let’s hope for some more concrete thoughts on how the economy can be better balanced across the country and how ERDF money may be replaced in the future – but we suspect anything of this nature will be vague and minimal.
“The Brexit elephant in the room has turned into a whole herd, so it’s impossible for anyone to forecast what will happen. We may expect some hard-Brexit contingencies, or he may avoid these for political expediency.
“For the tech/digital/creative sector there may be little or no change. There are however a number of tax consultations pre-announced for 2018 and it may be that some of these are firmed up a little – in our sector this may include a look at entrepreneurs relies, EIS applications, and intangible fixed assets.”
Mark Lazenby, Square One Law
Mark Lazenby is head of Square One Law’s corporate team.
He said: “With the UK being just over 12 months away from leaving the European Union all eyes will be on anything the Chancellor raises in the Spring Statement that will impact on the country after March 2019.
“If Brexit is to truly provide the opportunity to strengthen our position as a trading nation it would be positive to see measures that would benefit regions such as the North East, particularly in relation to the devolution agenda.
“Attracting inward investment is key to economic prosperity, therefore the Chancellor could look to incentives that encourage companies to establish and grow operations in devolved regions.
“In light of the recent collapse of Carillion, the Chancellor should also use the Spring Statement to provide further protection to SME businesses that provide supply chain services to huge multi-nationals.
“SMEs shouldn’t be punished for the poor management at their much larger customers and measures need to be brought in to insulate firms chasing invoices that may never get paid.
“It’s worth noting some positive developments for entrepreneurs expected to be raised by the Chancellor. This includes plans to consult on how individuals who own at least five percent of a company’s share can retain Entrepreneurs’ Relief after their shareholding falls below the threshold when they bring in external investment.
“This will encourage entrepreneurs to stay involved in the enterprises they have built, which supports further business growth, and also should help resolve the quandary between increased levels of tax on the individual and preventing growth as a result of concerns that come with sourcing external investment.”