Spring Statement 2018: North West business leaders react
The Chancellor delivered his Spring Statement to MPs this week (March 13).
Speaking at the House of Commons, Philip Hammond said the UK economy has grown at a faster rate than expected, with growth this year set to be 0.1% higher than forecast, at 1.4%.
While there were no immediate plans for ending austerity in Britain, Mr Hammond hinted at the possibility of outlining spending increases in the Autumn Budget, when he will discuss an overall path for public spending for 2020 and beyond.
He said there is “light at the end of the tunnel” for the UK economy – but are businesses able to see it?
Here are the latest reactions from across the North West:
Jane Parry, tax partner at PM+M
“As expected, the Spring Statement was a bit of a non event which was refreshing as I know many businesses didn’t want another ‘mini budget’. They’re tired of hearing new policy announcements along with additional tax and spending measures; they simply want to focus their time and effort on growing despite the ever present uncertainty of Brexit and things like the Making Tax Digital regime and the looming shadow of GDPR.
“The news around consultations on tackling the issue of single-use plastics and the taxation of the profits of digital giants like Facebook and Google is all well and good, but action is what’s needed not more consultations.
“On a positive note, it was good to learn that tax receipts are covering day-to-day government spending for the first time since the 2008 financial crisis, that borrowing is £4.7bn lower than expected and that growth is slightly higher than forecast last year. However, we’ve still got one of the slowest growth rates in the G7 and public debt as a percentage of national income remains well above 80%.
“The consultations on productivity improvement and tackling late payment are both good news for local businesses, as is the additional funding to help smaller businesses take on apprentices.
“What I want to see from the Government over the next few months is simple: more clarity around Brexit and how it plans to help businesses grow by closing the skills gap and helping them to improve productivity. These are the real issues that need to be addressed, everything else comes second.”
Bob Ward, North West senior partner at EY
“The figures in today’s Spring Statement underline what we already know – and indeed what EY’s own recent Regional Economic Forecast shows – that we are seeing a slowdown in economic growth across the UK, with the OBR forecasting a fall in GDP from 1.7% growth in 2017 to 1.3% in 2020.
“Our Regional Economic Forecast shows that in the North West we are predicted to have an annual GVA growth rate of 1.5% to 2020, with growth expected across all sectors except public administration.
“Our mixed economy means that the North West remains resilient but businesses must be alive to the significant changes around digital and technology that we can expect to see across our national economy in the near future.
“Our own research clearly shows that the more a region is exposed to ICT (information and communications technology) and professional and financial services, the faster the growth tends to be, as those sectors continue to drive the economy.
“So the Government’s commitment to investing more in digital initiatives, such as 5G test beds, is welcome but yet more is needed if this region and the country’s productivity growth is to be improved.”
Dr Gordon Fletcher, retail expert at the University of Salford Business School
“The Spring Statement was a downbeat affair in both presentation and substance. The Chancellor’s focus is set on the long-term reduction of national debt softened by the expected “gift” of an increase in the personal allowance.
“In an economy with modest growth projections, the uncertainty of Brexit and a pressing need for investment in housing stock, a cautious conservative statement was the most expected route for Hammond to take.
“More interesting were the various “calls for evidence” about plastics use, promoting green transport, collecting VAT on online sales and digital payments. The Chancellor’s recognition of the digital economy was also a positive signal, however citing Matt Hancock MP’s app as an exemplar of these developments was probably an ill-considered overly enthusiastic shout-out for a colleague.”
Lee Dentith, CEO and founder of Now Healthcare Group
“The path from education to workplace continues to evolve and we are seeing more people choose less conventional routes into employment, so the announcements around investments to help employers roll out placements for T-level students and funding for recruiting apprentices’ is hugely welcomed.
“We are a growing digital health company and need new talent, so it will be interesting to see how the funding is allocated and how businesses like ourselves can benefit and prosper.”
Nicola Quayle, office senior partner at KPMG in Manchester
“The shortest fiscal statement in history contained little in the way of detail, but it was still good to see Mr Hammond refer to Britain’s productivity challenge in his response to the OBR’s forecasts. The issue is more relevant than ever for the North West. The latest ONS figures showed the region is performing 7.4% below the UK average, with Manchester achieving productivity of 10.2% below.
“The government needs to support regional leadership if this is going to change. We need to invest in our young people to build a stronger workforce, encourage investment in technology to keep with a rapidly evolving economy and develop infrastructure to that connects businesses and general populations, particularly in rural and outlying areas.
“Sluggish productivity risks holding Manchester and the North-West back, which is a similar conundrum facing many other cities and regions across the country. But, I know that our city has passion, ingenuity and willpower to continue its incredible growth story.”
David Sharpe, director of Lancashire accountancy and business advisory group Pierce
“Philip Hammond’s Spring Statement included a number of positive forecasts from the OBR, including rising employment, falling inflation and a reduction in the UK debt as a % of GDP.
“But as the Chancellor says, forecasts are “there to be beaten”, and it can go either way, especially with the full impact of Brexit awaited.
“A positive however for smaller firms in East Lancashire and the wider region is a further crackdown on large companies who pay smaller companies late.”
Gary McIndoe, solicitor and managing director of immigration law firm Latitude Law
“Whilst we were never going to see an admission by the Chancellor that the Brexit process is perhaps not going to plan, the statement was a missed opportunity for the Chancellor to seek to allay fears. Instead, Philip Hammond stated the “substantial progress” had been made to date in the course of talks.
“I would have liked to have seen a commitment by the Chancellor to listen to the views of not just the small, hard-core of Brexiteers in central governnment, but also the more moderate positions being taken across all parties, including those supporting Brexit but seeking continued access to the Single Market, and those who also supported the Remain campaign and continue to believe that Brexit will be extremely damaging to the UK, both in the immediate and longer term.”
Rebecca Durrant, tax partner at Crowe Clark Whitehill
“As expected the Chancellor’s Spring Statement was short but not necessarily sweet.
“There was continued emphasis on investment in skills, education and infrastructure, all crucial for businesses in the North West. There is a focus on digital businesses which tend to suffer with the skills gap in the North as there can be a drain of talent to the South.
“He made much of the ‘remarkable’ jobs market but I would question whether these are jobs that give people a decent standard of living, or more zero hours contracts.
“The increase in national living wage is good news for families but a further strain on already squeezed small businesses.
“From a tax perspective there were no fundamental changes which does mean we have some stability. This in turns means we can help our clients plan with confidence for the coming tax year.”
Jo Sellick, managing director of Sellick Partnership
“In a bid to get the public on side, Hammond opted to dangle a carrot, suggesting that more funding could be injected into the NHS, our education system and other public services come the Autumn Budget - but there were no guarantees, and it was delivered under the proviso that the British public must work hard enough for the funding to be granted.
“I credit Hammond for acknowledging the flaws in the new apprenticeship system, and committing £80m of funding to support businesses in taking on apprentices. The levy introduced last year has actually led to a decline in apprenticeships, but the positive impact of placing three million young adults in apprenticeship schemes by 2020 has the potential to be huge - enabling British businesses to fill skill gaps and develop home-grown talent, which must be a priority as we anticipate losing a lot of skilled and reliable European workers post-Brexit.
“I also welcome the creation of half a million more jobs by 2020 and the new focus on training, although the Chancellor avoided going into much detail on how the government would facilitate this. This will need to be a priority if we want to continue boosting our economy - however slowly - after we leave the EU.”
Julia Norris, partner at FS Legal
“While the announcements are something of a mixed bag, there appears to be some cautiously optimistic news regarding inflation and a focus on productivity, particularly in the tech industry. In the face of Brexit, any positive news to stimulate productivity and kick start new business is always welcome.
“With Manchester continuing to be a resilient city for existing business and a leading player in the science and tech start up business arena, it will be interesting to see how this continues to develop over the next few years.”
Gareth Smyth, group managing director at Hilton Smythe
“I was glad to hear the Chancellor re-affirm his commitment to entrepreneurs and small businesses during the Spring Statement. I felt that the picture of the economy overall was very stable with growth potential, and this is a very positive position to be in, particularly for those who run their own businesses.
“I would have liked to see more focus on small businesses and entrepreneurs, particularly in relation to the Business Enterprise Fund, and I hope that the Chancellor will make this a priority in the Autumn Budget instead.”
Robbie Blackhurst, founder and managing director of Procure North West
“It was encouraging to hear the Chancellor commit in last year’s autumn statement to a £44bn five-year programme to deliver over 300,000 homes per year, but the same question that was posed then is still relevant after today’s Spring Statement… who is going to build them?
“The Chartered Institute of Building (CIOB) has recently reported that an additional 157,000 construction workers will be required by 2021 to maintain current levels of demand and this Spring Statement does not do enough to adequately address this shortfall.
“The £80m proposed in today’s Spring Statement to support SMEs to recruit apprentices will be welcomed by the business community. However, further thought needs to be given to the delivery of apprenticeship programmes and how they are firstly made more attractive to candidates, and secondly sustainability in line with growing wage demands linked to skilled construction trades.”
Tony Medcalf, tax partner at MHA Moore and Smalley
“We were told not to expect any fireworks in this autumn statement and the chancellor was true to his word.
“He made reference to quite a few issues that would be of interest to the business community, such as more money to help small firms engage with apprentices and taking action to tackle late payments, but didn’t give further details.
“He also said he wanted to unleash inventors and discoverers, but again there was no mention of how this would be done. This was a scene-setter speech that touched on the government’s aspirations, rather than setting out specific policies.
“On the whole, I think business owners will be relieved that there are no new major initiatives to have to try and get their head around.”