Budget 2020: the business community reacts
Written by Chloe Shakesby and Jane Imrie
The UK government has made its 2020 Budget announcement today (March 11).
This year’s Budget announcement comes on the heels of Brexit and the coronavirus (COVID-19) outbreak, as well as a slew of heavy storms affecting businesses across the country.
The fiscal plans from new Chancellor Rishi Sunak include measures to tackle the financial impact of coronavirus, such as support for the NHS, sick pay for self-isolators, and funds for small businesses which will need to provide sick pay.
Elsewhere in the Budget, the tampon tax will be abolished as of 1 January 2021, fuel duty and alcohol duty will remain frozen, and £130m is being allocated to business startup loans.
The chancellor also announced tax cuts for small businesses, plans to increase the National Insurance threshold, and an increase in research and development investment to £22bn, as well as funding to fix damage caused by the winter’s storms.
The government will also be abolishing the Reading Tax.
see the key points of the Budget here.
Businesses and organisations across the country have reacted to the announcement.
Debbie Dore, Association for Project Management (APM)
“This Budget and the forthcoming National Infrastructure Strategy seeks to turbo-charge and ‘level-up’ the economy, particularly through infrastructure investment and strengthening regional economic activity.
“While we understand the reasons for delaying the release of the National Infrastructure Strategy, we urge the Government not to lose sight of the value of projects in driving economic growth.
“We urge the government to use the extra time it now has before the release of the National Infrastructure Strategy to reflect on its proposals for skills development.
“Investing in people, as well as material resources, will create the skills necessary to deliver projects now and in the future.”
Paul Christensen, Previse
“While the lower threshold for entrepreneur’s relief is undoubtedly a welcome step in the right direction, the government needs to find new ways to incentivise start-ups and addressing the well-documented issue of slow payments is an obvious way to do so.
“It would also be a more sustainable method of encouraging entrepreneurship than tax relief.
“Businesses – particularly small ones – often fail because they have to cover their own expenses while waiting to be paid for the goods or services they provided. It doesn’t need to be this way.
“Technology today is such that suppliers can be paid instantly without disrupting buyers’ cash flow.
“Artificial intelligence can detect the small number of invoices that need a manual intervention using a history of invoice payment behaviour from buyers, so that the rest can be paid instantly.”
Rupert Spiegelberg, DoctorLink
“It’s positive to see a reassuring response [to the coronavirus outbreak] from the Chancellor.
“Of course, the bulk of this additional money will need to be spent on beefing up front line services to cope with the expected surge in demand if the COVID outbreak worsens.
“However, we believe the NHS should also be looking hard at how it can harness technology wider to get the rapid scale it needs and improve demand management right away.
“China has shown that deploying the appropriate technology is the best way to manage demand, because you can’t create doctors and nurses out of thin air, but you can create huge capacity by improve triaging and process management, and that is where technology can give you a massive bang for your buck.”
Jonathan Richards, Breathe
“It was fantastic to see over £7bn committed by the government to protect and support small businesses during the disruption caused by coronavirus.
“As a small business owner, it’s reassuring that the government will cover the strain caused by sick pay, as well as offering significant loans and cash injections to UK small businesses.
“Many small and medium sized businesses valued under £51k in the retail and leisure sector will also welcome the abolition of business rates until the end of the year.
“These measures take the pressures off businesses and allow them to continue as normal throughout the disruption.”
**John Ellmore, Know Your Money **
“The government’s move to support the self-employed offers some much needed assurance to those that make up the expanding gig economy.
“What’s more, emergency support to help businesses implement self-isolation measures is welcoming.
“That said, we are still left wondering as to what the long-term solution will be. Should the coronavirus outbreak worsen, just how much assistance can the government realistically provide to help businesses and their employees?
“Let’s not forget the financial challenges that self-isolation can also pose to workers. It is estimated there are 2,000,000 people in the UK with no sick pay who may not be able to afford two-weeks of self-isolation.
“For those who find themselves in this position, I’d advise speaking with non-profit organisations such as Citizen’s Advice to ensure they are on top of their finances.”
Yiannis Faf, WhatWeWant
““Increasing investment [in digital connectivity] is one thing, but we now need a clear plan and schedule for the roll out of gigabit-cable broadband. This is a long-term project, and only by offering a clear implementation strategy will tech businesses and entrepreneurs have the confidence to plan for the future.
“Given the plethora of economic benefits such an initiative will provide to the wider economy, the government can’t afford to keep putting digital infrastructure on the back-burner.
“We are globally renowned for our bustling tech scene so let’s ensure the necessary support is being provided.”
Ritam Gandhi, Studio Graphene
“Boxed in by the ensuing COVID-19 public health crisis, today’s spring Budget was less an economic policy overhaul in the wake of Brexit, and more a holding operation as the government scrambles to lay out a crisis prevention strategy.
“But while the announcement might have been less punchy than expected, it was nonetheless reassuring to see that small businesses haven’t been overlooked in the government’s contingency plans; Sunak has offered his commitment to help businesses manage their cash flow as they deal with any financial fallouts experienced from COVID-19.
“Tax commitments that were contained in the Conservative Party’s manifesto have also been given the nod. Entrepreneurs’ Relief, which has been criticised for disproportionately benefitting wealthier entrepreneurs and failing to deliver on its objective - to incentivise people to create new businesses - is set to be revamped.
“I believe tax breaks are incredibly valuable for business leaders, but we must ensure that they serve to benefit everyday entrepreneurs and not just a select few. The EIS and SEIS should be used as inspiration for policies introduced further down the line.
“The commitment of £130m of new funding to extend startup loans is a good first step, but it must be the first in a series of measures aimed at providing the support required for startups to raise the capital they need to both launch and scale – particularly in these testing conditions.”
Darren Fell, Crunch
“Reducing entrepreneurs’ relief will push talented people and their business ideas away from the UK. It also perpetuates the polarising judgment that individual success and wealth creation is somehow morally undesirable.
“The vast majority of entrepreneurs only get wealthy if they create significant value for thousands, if not millions, of people within an economy.
“Most UK workers are employed by, or because of, an entrepreneur. They disrupt and oxygenate stale industries, and create new business paradigms.
“We must encourage innovation, creativity and entrepreneurship post Brexit, not stifle the next generation of startups.
“Also, far more revenue would be gained by reforming corporation tax. The largest and most powerful multinationals must pay what they owe.”
Paul Galligan, Bionic
“The new Chancellor has put it all on the line for the UK’s SMEs at a critical time for the UK economy.
“Delays to the time to pay services, the roll out of a new coronavirus loan service, the temporary abolishment of business rates for specific sectors and a £3k cash injection for small businesses across the country will create a much needed safety net for hard-working SMEs up and down the country.
“It remains to be seen how quickly businesses can access the cash injection and be repaid having claimed compensation for sick pay. It is vital that government services are swift.
“Overall, though, SMEs needed a turbo-charged response to the crisis, and it looks like they’ve got it.”
Mark Tighe, Catax
“Rishi Sunak has risen from relative obscurity to deliver an era-defining Budget that neatly celebrates Boris’ administration as a government of the go-getters and puts R&D firmly back on the menu.
“After so many challenges, including widespread flooding and Brexit, coronavirus was just the latest curve ball that threatened to knock the Chancellor off balance.
“However, besides some tinkering, the bulk of what he delivered was probably coming whatever the weather given the once-in-a-generation challenge of putting the UK on the right track outside the EU.
“A rise in relief available under the Research & Development Expenditure Credit (RDEC) scheme to 13 per cent has been unveiled alongside a commitment to grow investment in R&D to a record £22bn, and plough at least £800m into a new national research agency.
“This is an attempt to make Britain’s direction of travel and the tax take’s future reliance on innovation pretty black and white. The country’s future tax take relies enormously on innovation and the UK will only succeed if it stays on the front line of new ideas, products, services and technology.”
Dr Yvonne Gale, NEL Fund Managers
“Increasing the research and development tax credit will hopefully help innovative North East firms further increase the number of ground-breaking developments that emanate from our region.
“Having dedicated trade envoys based in British embassies around the world can only be beneficial to a region which is already a net exporter and which is being encouraged to make even more of an impact in overseas markets, as many of our investees are already looking to do.”
Philip Moran, TLT
“The unexpected cancellation of the planned increases in alcohol duty will be welcomed by the drinks industry, which continues to battle a wide range of cost pressures.
“The scrapping of business rates for properties with a rateable value of less than £51k will provide relief to small retail and leisure operators, while the raising of the business rates discount for public houses to £5,000 will benefit a sector that has faced significant and well-documented challenges in recent years.
“However, the rates abolition for small properties is unlikely to be of much tangible benefit to those larger chains that continue to struggle with significant rates liabilities and have been pushing for more radical reform in this area.
“As ever, and particularly given other recent and continuing economic shocks, the question will be how these concessions from the Chancellor will sit within the framework of the government’s borrowing commitments over the longer term.”
More to follow.
Access free online guidance for North East businesses in the Growth Hub North East's COVID-19 toolkit →