Spring Statement 2018: Yorkshire businesses give their verdict
As Chancellor of the Exchequer Philip Hammond delivered his first Spring Statement, we learned the the economy grew by 1.7% in 2017 and that the OBR has revised the UK’s growth forecasts from 1.4% to 1.5% for 2018.
During an upbeat presentation, Mr Hammond also revealed that the forecast for borrowing has lowered in 2017-18 to £45.2bn from £49.9bn predicted in November.
Although the Chancellor has more than happy to report this economic growth, the OBR’s new forecasts show that the UK is still growing less quickly than most other G7 economies.
Mr Hammond said that there is “light at the end of the tunnel” for the UK’s future, but Bdaily has collected reactions from across the Yorkshire business community to see if they agree.
Cllr Judith Blake, leader of Leeds City Council
In Leeds we have remained committed to providing services for people in the city in the face of huge reductions in the amount of money from central government.
The recent National Audit Office warnings of the impact of austerity on local authorities gave a clear indication of how hard it is to keep providing the services people need if the Government doesn’t provide the finance to back that up.
The Chancellor’s statement today did nothing to ease those funding pressures or provide the essential financial support councils need to protect vital front line public services people in Leeds rely on.
Suzanne Robinson, managing partner for EY in Yorkshire
The figures in today’s Spring Statement underline what we already know – and indeed what EY’s own 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 Yorkshire we are predicted to have an annual GVA growth rate of 1.4% to 2020, and investment in tech skills will be vital to maintaining this trajectory.
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.
Chris Hearld, North Region chair at KPMG
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.
As we’ve said repeatedly, the government needs to support regional leadership if this is going to change, and this is nowhere more pressing than for the people of Yorkshire.
We need to invest in our young people to build a stronger workforce, encourage investment in technology to keep pace with a rapidly evolving economy and develop infrastructure that connects businesses and general populations, particularly in rural and outlying areas.
James Sleight, partner at Leeds-based restructuring specialists, Geoffrey Martin & Co
It’s been widely trailed that there would be no real surprises in the Spring Statement, now that the Chancellor has moved the Budget to the Autumn.
Whilst the Office of Budget Responsibility has pushed up its forecast on economic growth in 2018 from 1.4% to 1.5%, it hasn’t changed its views on the UK’s medium term growth prospects, which it expects to be lower than the historical average.
The projected low growth rate could lead to further problems for the UK’s estimated 250,000 ‘Zombie’ companies, that are uncompetitive and are surviving mainly due to low interest rates.
Without higher growth in the economy pulling them along, I think we’ll see more casualties in vulnerable sectors such as retail, housing and hospitality over the next six months.
David Brennan, CEO of Leeds-based Nexus Vehicle Rental
Despite the Chancellor coming into this announcement with an upbeat attitude, a series of disparaging news stories at the start of this week, including the decline in consumer spending, cast an ominous shadow over proceedings.
The much downplayed Spring Statement was introduced to provide stability to consumers and businesses and to allow them to plan effectively for the future without having two major tax changes in the same year. While this may be the case, the government still needed to offer clarity to help inform our spending.
Transport - Despite the Chancellor’s positive outlook and ‘balanced approach’, economic uncertainty persists. UK businesses need to remain mobile throughout this period and the need to keep labour and goods moving is constant.
It is worrying to see the funding gap in regional transport spending continuing. The Chancellor claimed the nation is undergoing the largest road building project since the 1970s, however, London currently receives five times the level of funding as Yorkshire and the Humber.
This balance needs to be addressed if the Northern Powerhouse movement is to achieve any success.
The two previous Budgets included plans for the growth of a national electric vehicle infrastructure and momentum needs to remain with this if we are to accelerate the uptake of EVs. However, we welcome the consultation on lower VED rates for the cleanest vans.
Paul Stokey, Head of the Leeds office for law firm Shoosmiths
Confidence around the Government’s commitment to furthering the Northern Powerhouse agenda may have been dented given there was only passing mention of it in the Chancellor’s speech.
It will be very interesting to see how much of the £840m of funding for local transport priorities that Mr Hammond invited England’s cities to bid for in his statement today will, ultimately, be allocated to cities in the North – given there is still a clear North/South imbalance to tackle.
Having the right skills and the most talented people in place is just as important as having quality infrastructure in place when it comes to building a strong Northern economy.
The Chancellor’s announcement around improving the way the government measures the economic value of people is to be welcomed then, if it will help to ensure targeted future investment in the North’s human capital, keeping talented and skilled people up here and avoiding a ‘brain drain’ to the South.
Claire Evans, head of fleet consultancy at Zenith
The Chancellor delivered a positive picture of the UK economy. The headlines for the fleet industry sit in plans to improve air quality. He will consult on VED tax cuts for low-emission vans and on whether the tax relief for non-agricultural red diesel contributes to air pollution in urban areas.
The move should accelerate a trend towards cleaner diesel LCVs that is already being driven by the introduction of ULEZs throughout the country, with London the first in 2019.
LCV fleets are already considering the need for cleaner vehicles, and we can expect increased demand for Euro 6 vans. Under ULEZ rules any diesel vehicle other than a Euro 6 will attract an additional fee for driving into the centre of the capital.
Other cities are considering their own plans, which may or may not include LCVs. Any further tax incentives that would support the move to cleaner vans are welcome.
We support the BVRLA’s call for clarity on company car tax rates beyond 2020 and expect to see them in the Autumn budget.
Marcus Brew, managing director of York-based UNTHA UK
In a political landscape dominated by Brexit discussions, it feels like the environment is rarely a priority nowadays. It was therefore refreshing that, in a succinct Spring Statement lasting only 26 minutes, recycling came to the fore.
Really, this shouldn’t have come as a surprise. It was a logical next step, seen as the intention to launch a consultation was announced in the Autumn budget. Nevertheless, to actually hear the detail underpinning the proposed ‘call for evidence’, was very refreshing.
It all centred upon single-use plastics – a material now widely acknowledged to be blighting the world’s oceans. It used to be a concern that worried only the minority, but now plastic waste is on the radar of the masses, thanks – in a large part – to David Attenborough’s commentary on Blue Planet II. And so it should be. The plastic problem is huge.
It will therefore be interesting to see how the nine-week consultation on single-use plastics will unfold, and I am glad to hear that the whole supply chain will be analysed. In line with the principles of the waste hierarchy, this isn’t just about how troublesome items such as takeaway packaging and plastic plates are recycled. It is crucial to also look at product design and the creation of plastic waste in the first place, so that the issue can be tackled at source – if not before!
I also look forward to hearing and seeing how the £20m innovation fund will be utilised by businesses and universities charged with exploring this important topic.
Finally, the prospect of a single-use plastic tax may be met with groans by some people, as, admittedly, a tax shouldn’t be required to instigate change. But there is proof that taxes do often drive the progress that is truly required, with landfill charges and the plastic bag fee among the successful examples to date.
Recycling aside, the Statement was met with praise from some and criticism from others. But that’s just politics, isn’t it? Overall, I’m pleased to hear that, Brexit aside, we are able to reflect on a period of growth, with a strong outlook for the next few years. Yes it may be a slightly different outlook to what we heard about in March 2016 but, all things considered, we aren’t doing bad!