Houses of Parliament
Image Source: Esteban Chiner
Today's Budget speech was the last before the UK leaves the EU
Richard Bell

Autumn Budget 2018: London business leaders react

Chancellor Philip Hammond took to the Commons on Monday to outline the Government’s tax and spending plans for the 2019/20 financial year and beyond.

Here’s what businesses leaders in London had to say on the Autumn Budget.

John Holland-Kaye, chief exec of Heathrow Airport

“We welcome the Government’s announcement that passengers from more countries will be able to use the eGates at Heathrow.

eGates offer a world-class immigration process whilst keeping Britain’s border secure. The Government should make this happen before the end of March 2019 to demonstrate that Britain is open for business, as we leave the EU.“

Ben Rowland, co-founder of Arch Apprentices

“Arch Apprentices are delighted by the government’s proposal to announce a £695m initiative to help small firms hire apprentices, with their proposed contribution now reduced from 10% to 5%. We have been strong advocates of the apprenticeship reforms that the Government has introduced, and truly believed that they will have a big impact on resolving the growing skills gaps in the UK.

“It’s brilliant that the government are taking steps to reinforce apprenticeships as the way to boost skills and productivity and we hope employers will increasingly recognise them as an opportunity to accelerate their business performance and bring new life to their teams. Apprenticeships have been proven to create enthusiastic, loyal employees who report greater levels of satisfaction and are more likely to stay at the company long after their apprenticeship has finished.

“The UK is facing major issues surrounding productivity and a lack of skilled workers. We see the government’s belief in apprenticeship as the real solution to these problems. Through these changes, we will train a workforce fit for any future.”

Tom Strange, CEO and founder of Constellation AI

“It’s great to see the Chancellor look to big digital companies like Google and Facebook for increased revenues through taxation of digital services. It’s also encouraging to see there will be a distinction between these businesses and small digital companies.

“A one-size-fits-all approach to taxation simply wouldn’t work, and would result in small businesses being excessively burdened with regulation and increased costs. Unlike small businesses, large companies have the resources to tackle new legislation. This new digital services tax will help level the playing field while delivering much needed investment into the digital industry.

“I would like to see the money go towards increased grants for organisations like Innovate UK, or higher subsidies for socio-economically challenged students in STEM. With this approach each technology company pays its fair share, and helps to stimulate an important part of the economy in a way that meets the needs of the treasury, tech industry and wider society.

“It will also dissuade the big companies re-allocating their investment and capital expenditure elsewhere, establishing the UK as a progressive and attractive destination for invention, innovation, and as one of the best talent pools in the world - a reputation that we both deserve and need, particularly in the wake of Brexit.”

Laurentiu Ghenciu, VP EMEA at 2Checkout

“The government spending plan, laid out in today’s Autumn Statement, intends to help bricks and mortar retailers to stave off threats from the likes of Amazon. However, although a step in the right direction, this still raises the question of how smaller retailers will cope going forward. How else can they stop themselves from becoming defunct?

“Retailers must think of and plan for digital transformation if they are to stay competitive, and learning from online businesses, especially those who sell internationally and “put their eggs into more than one basket”, is a good way to start.

“Tools such as localisation, including accepting local payment options, support in multiple languages, ability to sell across channels, and flexibility to mix business models (for example selling physical goods such as groceries or office supplies on a subscription model), become increasingly critical.”

Rob O’Donovan, CEO and co-founder of CharlieHR

“It’s great to see Government setting aside £200m in this Budget for the replacement of the European Investment Fund by the British Business Bank. It’s needed and I’m sure will breathe a small sigh of relief for early-stage Founders. But, they could always do more.

“Hammond recognised in his speech that encouraging entrepreneurs is key to the prosperity of the UK, but with the rapid growth of the UK tech sector, £200m seems small.

“The new UK Digital Services Tax on revenues of tech giants is long overdue. I’d like to see some of this money reinvested in the UK tech sector, enabling millions of startups to grow and thrive, and be able to offer the salaries needed to attract the right talent to scale.”

Philip Clarkson, director for rating at Lambert Smith Hampton

“[On the reduction in business rates for independent shops and restaurants operating from premises with rateable values of £51k or less] This move is likely to assist retailers in towns and villages rather than city centres where fewer premises will be rated under £51k.

“It’s good news for a butcher in Otley or Morley, for example, but is unlikely to make any difference to a fashion retailer in Leeds city centre.

“According to our research, just 12 per cent of retail units (11 out of 89) in Trinity Leeds will benefit whereas in Otley the figure is much higher at 57 per cent (265 out of 467).

“However, this is another example of the Chancellor tinkering with the system rather than undertaking a wholesale reform of business rates.

“It is closing the stable door after the horse has bolted because so many high street problems have been exacerbated by the delay in revaluing high street shops, which should have been done in 2015 rather than 2017.

“The whole system needs a rethink. It needs to be much quicker in responding to the market so that rates can be adjusted accordingly.”

Chris Vincent, managing director of V4 Wood Flooring

“The Chancellor has listened to retailers and suppliers in announcing this significant package of support for our High Streets.

“Business rates relief will go some way towards relieving the strain on smaller retailers and help to revitalise town centres, encouraging footfall and consumer spending.

“Mr Hammond also announced a UK digital services tax for the giant tech companies to ensure they pay their fair share of tax. This is a welcome move to a fairer distribution of the tax burden.”

Martin Talbot, group marketing director at totaljobs

“Today’s Budget proved hugely promising for both jobseekers and employers, with a target to deliver 800,000 more jobs in the UK by 2022. With the signalled end of austerity, predicted sustained real wage growth, and unemployment at its lowest rate in over four decades, now is an excellent time for candidates looking for a new opportunity.

“The £695m initiative to help small firms hire apprentices will enable more workers to learn vital skills in the industries they choose to specialise in, and will allow more employers to take on apprentices and provide necessary training and development for the younger workforce.

“We now expect employers to step up to compete for top talent and fight for the most skilled and in-demand individuals. Employees looking to make their next career move can take great encouragement from today’s announcement, and we will surely see candidates demanding much more from their potential employer as the UK jobs market continues to flourish.”

Dr Zain Sikafi, CEO and co-founder of Mynurva

“The news had been unveiled in advance of his announcement, but the Chancellor’s confirmation today that the Government will boost funding for the NHS – and especially mental health services – is a welcomed step in the right direction. However, in truth, £2 billion does not go far enough.

“Just recently depression moved up to take second place on the GP list of common illnesses, overtaking obesity. It’s become clear that the mental health crisis warrants a significant commitment if we are to tackle the problem and improve services across the country. And yet still only a fraction of total NHS spending will be directed towards mental health, undermining the Government’s ambition to put mental health on equal footing with physical health.

“With mental health having long taken the backseat, there is a lot of catching up to do if we are to improve the provision of these vital services. The overwhelming feeling from the Budget is that while there has been some positive progress, much more needs to be done. And regrettably, the Chancellor’s speech failed to disclose any new details about the policy reforms that will introduced in support of mental health services – merely reiterating what had already been announced in the lead up to the Budget.”

Paresh Raja, CEO of Market Financial Solutions

“At a time when demand for property is outpacing supply, there is limited time left for the Government to improve accessibility to housing. Unlike the Spring Statement earlier this year, some important announcements were made, including the commitment to build an additional 650,000 new homes.

“Unfortunately, there were no new reforms to creatively increase the amount of private investment into derelict homes that could be renovated and put back on the market. The country boasts some of the world’s most desirable real estate, which is why we should be encouraging both domestic and foreign investment into the property market. It is also questionable whether the Government will be able to deliver on its new-build targets given its past track record.

“It is easy to see why the Government keeps missing new-build targets: Housing Ministers are appointed and replaced at far too great a frequency. Since the Spring Statement we’ve seen a new MP enter the role, but how long will Kit Malthouse last? The Government must ensure there is strong, consistent policy in the property industry because it remains hard to pinpoint their long-term strategy at present.”

Ritam Gandhi, founder and director of Studio Graphene

“The focus on technology was promising to see, including a £1.6 billion commitment of new investments to support the modern industrial strategy. However, there was no further update on the Chancellor’s proposed reforms to the EIS fund structure to encourage investment into early-stage firms deemed highly innovative – something touted in the Spring Statement.

“The Government is right to promote reforms that benefit tech startups. The country has become globally renowned for this thriving tech sector, but we must not become complacent – rather than assuming we will remain a leader in tech innovations and digital disruptions, the Government must be willing to intervene and provide a helping hand to those young companies struggling to scale-up. Approximately 50% of startups fail within their first three years, so more must be done to help nurture and support young businesses.

“With Brexit now on the horizon, the Government cannot assume that tech startups will continue to flourish. More policies, investment incentives and infrastructure improvements are needed so startups are able to progress to become mid-size enterprises and beyond.”

Richard Green, CEO and founder of Evvnt

“There has been plenty of talk about ‘Brand Britain’ and the role of scaling SMEs in driving productivity, and today’s budget has reaffirmed the Government’s commitment to support small businesses. It was promising to see the Chancellor follow through on the commitments he made during the Conservative Party Conference, including extending the enterprise allowance to support unemployed people to set up a business.

“The business rates relief for smaller retailers is also positive news. However, businesses are calling for more clarity regarding Brexit, and this budget was another missed opportunity by the Government to offer tangible support for SMEs during the withdrawal period. Many entrepreneurs are eager to embrace international markets beyond Europe, but without the right structures, many do not know how to access them.

“The Government’s somewhat muddled approach to Brexit has left many businesses in the dark, and this Budget fell short of providing the clarity entrepreneurs and SMEs were hoping for. The reality is that any initiatives the Conservatives have in the pipeline all hang in the balance of Brexit, and come 29 March 2019, the Government could be forced to deliver a new budget that retracts many of these proposed reforms.

“While Number 10 has tried to suggest that this will not be the case, it is clearly very difficult to properly forecast how Brexit will affect the private sector once the UK leaves and the sense remains that we are merely treading water until that time.”

Jeff Doble, founder and chairman of Dexters

“Investment in housing is always welcome and I was pleased to see another £500 million investment in the Housing Infrastructure Fund announced today. However I feel the planning system remains the main barrier to housebuilding. In its current form, the planning process, rules and tariffs almost certainly prevent the Government getting anywhere near its ambitious targets.

“I was pleased to see today’s announcement that shared equity purchases of up to £500,000 will be exempt from stamp duty, however if the Government is determined to help the housing market, then they should have reversed George Osborne’s damaging rise in rates.”

Miles Celic, CEO of TheCityUK

“Today’s commitment to greater infrastructure spending, particularly the emphasis on local transport and more money for the National Productivity Infrastructure Fund, are important steps towards addressing the UK’s productivity gap.

“The extra support for the Transforming Cities Fund and for other UK regional and national initiatives are further positive moves to support prosperity across the whole of the UK.

“The Chancellor has been careful to maintain headroom to respond to any potential Brexit outcomes, however uncertainty continues to impact businesses on both sides of the Channel. If a Brexit deal is not forthcoming, then it is right that the Budget is rethought, with a much greater emphasis on business support and economic stimulus.”

Stella Amiss, head of tax policy at PwC

“The Chancellor’s strong words of recent months were no bluff. At home, the confirmation of a new digital services tax was trailed as a step towards levelling the playing field between online retailers and the high street. But it is much more than that. Working out who is taxed and who isn’t in the digital economy is no mean feat when all businesses operate in an increasing technological world.

“It’s no surprise then that the Chancellor has approached this with caution - a narrowly targeted regime, a 2% rate, and an effective implementation date pushed back to 2020.

“This new tax is well and truly aimed at the tech giants and not the online retailers so will do little to address the woes of bricks and mortar retailers and could well be perceived across the pond as an anti-American measure that could come back to bite us as the UK looks to move to trade talks after the Brexit deadline.”

Jonathan Richards, CEO and founder of breatheHR

“The Autumn Budget, although uncertain in the face of Brexit, spelled good news for British entrepreneurs, startups and SMEs.

“The introduction of a Digital Services Tax – targeted at tech giants with revenues of over £500m rather than small UK companies – will help boost this vital sector of the economy, ensuring that the UK remains one of the best places to start a tech business. It will encourage aspiring entrepreneurs to take the leap when starting out, and crucially, not put off investors from backing budding new businesses.

“With cuts of a third to business rates for companies with a rateable value of £51,000 or less, the chancellor has shown that the government is invested in the future small British businesses. This means that the small retailers could see a saving of up to £8,000, ensuring that the high street can remain at the heart of many communities.”

Mark Pearson, founder of Fuel Ventures

“At a time of economic uncertainty, today’s Budget announcement has set out a clear message of support for business investment in the UK.

“While this is a step in the right direction, there’s still more to be done for UK start-ups and entrepreneurs. We know that foreign investors, family offices and institutions are still confident in the UK start-up scene, and overall I would have expected more substantial support for UK entrepreneurs.

“The Government needs to ensure that these benefits reach businesses that will make a positive impact to the UK economy, which is made even more prominent given the potential challenges Brexit will bring.”

Garrett Cassidy, CEO and co-founder of Trezeo

“It’s encouraging to hear Chancellor Hammond declare that ‘Britain is open for business’ and that he wants to ‘reinvigorate capitalism’ with Government support for small businesses. But it doesn’t look like he’s gone far enough in support of the self-employed and solo-entrepreneurs, large contributors of the ‘jobs miracle’ he referenced.

“The self-employed are, put simply, one of the UK’s most productive and dynamic sectors. And it’s on the rise, with almost 5 million self-employed in the UK contributing £271bn to the UK economy last year.

“Whilst the rollout of IR35 for the private sector has been delayed to 2020 for medium and larger companies, it means that the UK’s small businesses and the self-employed potentially face further uncertainty and huge tax implications.

“IR35 will create even more bureaucracy and confusion for the self-employed, who already face plenty of challenges to setting up and growing.

“The rules potentially make it possible for big businesses to push their National Insurance obligations onto the self-employed, who end up being taxed like employees without any employment rights like steady pay, pension contributions, sick pay, insurances and more.

“No mention of the Government’s response to the Taylor Review so still no clarity on employment status, even though IR35 changes to come in by 2020 for the private sector.

“A thoughtful fiscal strategy needs to be developed that creates a safety net for the self-employed; that understands the needs of the self-employed in the information age, not the industrial age, and supports the sustainable growth of this way of working - not short-term tactics that may hinder it.”

Kate Ison, partner at Bryan Cave Leighton Paisner

“The government has confirmed that it intends to proceed with its proposals to hold directors and other people involved in tax avoidance, evasion or phoenixism jointly and severally liable for company tax liabilities, where there is a risk that the company has entered insolvency to avoid or evade the payment of tax.

“We welcome this measure in relation to those directors and companies which deliberately exploit the insolvency regime to avoid payment of tax which is due.

“However, it is critical that the measures are proportionate and that appropriate safeguards are included to ensure that the new rules are only targeted at those who intentionally abuse the insolvency regime and do not extend beyond this small minority.”

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