Partner Article

North East Business Leaders React To Chancellor's Autumn Statement

Business leaders across the North East have reacted to Chancellor Jeremy Hunt’s Autumn Statement – a mini-budget which he said had “meant taking difficult decisions”.

Revealing that millions will face tax increases alongside a raft of spending cuts, the package also included measures designed to stimulate growth and bolster flagging public services – with extra funding for education and the NHS.

Chris McDonald, chief executive officer of the Teesside-based Materials Processing Institute, and policy chair for innovation and enterprise at the Federation of Small Businesses, said: “I welcome the government’s focus on energy, infrastructure, and innovation together with its announcement that the research and development budget will grow by £20bn in 2024-25.”

With the Chancellor also announcing the retention of investment zones, centred on universities in ‘left behind areas’ to build growth clusters, he suggested: “I’d like to see the inclusion of research and technical institutions that also driving the innovation that is crucial to a successful economy.”

He added, however, that the budget would pile more pressure on cash strapped small businesses, with a reduction in the Research and Development (R&D) tax credit scheme.

“It surprises me that government is choosing to disincentivise investment in small business innovation, at a time when we most need growth to pay down the debt and provide well-funded public services”

Simon Whiteside, Partner at North East business advisory firm, RG, said: “While the reduction in Capital Gains Tax allowances is part of a package to increase income into the Treasury, it should have little effect on the M&A market. Raising the headline rate of CGT could have caused some concerns, but the impact of the threshold change will be minimal.

“Similarly, there could have been clear indications that CGT rates were planned to increase in the future, but nothing was said, or appeared in the supporting information to suggest this. This is all important because transactional activity helps to drive investment and increases employment opportunities, which are essential for wider economic growth.”

Ben Quaintrell, managing director of estate agency group My Property Box, which operates across the North East and North Yorkshire, said the budget provided a route map to growth with measures designed to promote economic confidence and stability.

He said that the Chancellor’s confirmation that previous cuts in stamp duty will remain in place until 31st March 2025 may prove a vital boost to a slowing rate in home sales.

“Demand continues to remain high in the rental sector, but sales have slowed in recent months,” he added. “This budget promotes stability, and the retention of the previous reductions in stamp duty is a positive move that will banish some of the uncertainties that have caused some home buyers to put their plans on hold.”

Sim Hall, founder and managing director of Darlington-based STEM recruitment specialists Populus Select, said: “I am glad to see the Government place a renewed focus on life sciences, green industries, and advanced manufacturing. Green and science-based industries offer the greatest chance of economic and social growth for regions of the UK.

“With the North East already a hotbed of innovation in these sectors, as well as traditionally being a so-called left behind area, I greatly encourage the Levelling Up Minister to consider the region for the Investment Zones programme, so that we can build upon the good work already done, supercharge the growth of these high potential industries and creating a lasting legacy of well-paid highly skilled jobs. I hope that Sir Patrick Vallance as Chief Scientific Adviser will visit the region to understand how we have been able to quickly and safely bring innovations to market.”

Dr Michelle Cooper MBE, Chief Executive of County Durham Community Foundation, said: “We welcome any and all support for people living in poverty. The swifter help arrives the better as we are now in November, it’s cold, and many have been suffering for some time due to the uncertainty around the cost-of-living crisis.

“Recession is here, inflation at a 40-year-high, and the global growth outlook is poor. Ordinary people are still facing some very tough times. The rise in the energy price guarantee from £2,500 to £3,000 in April will be a big hike for many and create extra strain on households in County Durham and Tees Valley.

“Help must be made as simple as possible to access. All too often we hear that help may be there, but too many just don’t know about it or how to access it. We need urgent clarification on the available support and relief for small charities and the people they serve.

“Our role as a Community Foundation is to help fund small but vital charities as they fight poverty and enrich lives, and they tell us that they are meeting huge and increasing need while feeling very worried about the energy bills and costs of their premises. Time and again we hear that they are helping people who have never needed help before, which speaks of growing pressure on working households.

“While on the face of it, supporting 600,000 Universal Credit recipients to find better paid work and more hours is positive, we must remember that people have unique lives and challenges, so I hope these measures are applied with good sense. There are some excellent reasons why people cannot work longer hours, like caring responsibilities. There is not a one-size-fits-all solution and allocating a work coach is not necessarily helpful for many people.”

Fergus Laird, investment partner at North East’s largest independent commercial property consultancy Naylors Gavin Black and President of the Commercial Property Network, said: “While there is still much more that could be done to reform business rates in a way that encourages investment and supports businesses hard pressed by rising operation costs the Chancellor’s announcement overall is to be welcomed.

“The package on offer, we understand, means generally the total increase in rates bills will be less than 1%, rather than the predicted 20% rise should the Chancellor not have intervened, and this extra cost would have landed on the shoulders of property owners, investors and businesses at a time when rising costs elsewhere are already squeezing margins.

“In fact, most commercial properties won’t see any increase in their business rates, which is especially good news for the high street, which has struggled with falling footfall and high costs for a number of years.”

Aman Chahal, the chief executive officer of Stockton-on-Tees headquartered TaperedPlus, a nationwide leader in flat roof design and insulation systems, said the Government’s pledge to improve the energy efficiency of homes and industry will lower bills, reduce the UK’s reliance on energy imports and contribute to net zero objectives.

He said: “The Government is doubling its investment in improving energy efficiency by £6bn from 2025 which is a positive step towards addressing a long-term problem typified by poor standards of insulation which drives up both energy consumption and carbon emissions.

“We are already seeing an increasing number of clients, in both domestic and commercial markets, seeking to invest in more advanced and efficient flat roofing designs because of a desire to reduce energy consumption and meet new safety standards.”

Gavin Cordwell-Smith, CEO of North East-based property and construction firm Hellens Group, said: “There were no easy answers from the Chancellor to a bleak economic outlook. Businesses must now knuckle down and contribute positively, helping to generate the growth which will deliver us all from financial uncertainty and invest constructively to support and grow our communities.”

Lee Watson, tax partner, Clive Owen LLP which has offices in Darlington, Durham, York, and Middlesbrough, said: ““Tax increases could have probably gone further but thankfully did not. However, there is still an impact on businesses as R&D tax relief for small and medium companies will be reduced, whilst the relief for large companies will increase. Business owners and savers will pay more tax due to cuts in the rate at which the 45% tax rate starts and the cutting of dividend allowances in the next two tax years.

“Those business owners driving hybrid or pure electric cars will see future income tax rises.

“In addition, investors will face higher taxes on capital gains as the tax free annual exemptions will also reduce in the next two tax years. This could also impact business owners selling their business or buy to let property.

“The VAT threshold has been frozen which could see more businesses brought into the VAT reporting regime and therefore making tax digital, due to rising prices of goods, meaning that the turnover of businesses is likely to increase to compensate for additional costs facing businesses.

“There will be a rates revaluation exercise in 2023 which could see businesses face larger rates bills but there will be reliefs for certain businesses.

“Employers will also be required to comply with higher national minimum wage rates from April 2023.”

Dr Arnab Basu MBE, CEO of Sedgefield-based tech firm Kromek, said: “The Prime Minister and Chancellor face an unenviable challenge of navigating dire global economic conditions while seeking to deliver domestic growth and supporting vulnerable families during a period of high inflation.

“Mr Hunt’s commitment to delivering growth in innovation and technology is welcome – we in the UK have to demonstrate a long-term plan to build a resilient economy based around innovation and supply chain resilience.

“In my opinion, much more radical approaches need to be considered to accelerate levelling-up, such as regional tax variations to encourage enterprise and attract job creators and high-skilled people to see the North East as their home.

“Tax increases for electric cars could have an undesirable effect on achieving our carbon neutral goals as a country while the adoption is steadily increasing.” David Horn, Director at Sunderland-based digital security consultancy Cyberwhite said:

“The fiscal statement has shown that as a nation we must recognise the need to stabilise the country’s finances for prosperity in the future.

“Whilst we welcome the Chancellor’s budget, it’s important that the levelling up agenda is not side tracked, which is why we support today’s announcement to proceed with phase two of the levelling up fund, putting skills and jobs at the forefront of the government’s agenda for people in the North East.”

This was posted in Bdaily's Members' News section by News Gathering .