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Budget: Comment from across the region

By Dan Teuton
12 March 2020

Lee Biggins, the founder and CEO of CV-Library, the UK’s leading independent job board, on the chancellor’s Budget speech:

“The economy has been well and truly turned on its head as a result of the coronavirus sweeping the nation. However, it’s positive to see that the chancellor has made allowances for those affected by the outbreak. The changes to Statutory Sick Pay (SSP) and the £30 billion safety net for employers will be particularly helpful for both business owners and staff.  

“While it's alarming that a fifth of the UK’s workforce may be out of work at one time, the grants and support put in place for SMEs will allow them to continue to operate as normal. With any luck, this should enable businesses to move forward with their hiring efforts, despite the turbulent economy. 

“In fact, with wage growth steadily rising, the future looks bright for the UK job market. With more money on offer, hesitant candidates may be encouraged to push on with their job search. While this budget is certainly positive, the future of the economy is still somewhat unpredictable; but it's clear that there's a light at the end of the tunnel.” 

Bruce Potter, chairman at Blake Morgan law firm, said:

“The chancellor’s first Budget is one of unplanned circumstance, to a degree. Above all COVID-19 has succeeded in disrupting what should have been the chancellor's first attempt at outlining what the government’s vision for the post-Brexit UK really is. But what was announced – on the face of it – is still radical. Amongst the usual giveaways – such as protecting the price of a pint and petrol at the pump – this Budget signifies that this is a government willing to finally take advantage of low borrowing costs to invest. Investment in roads, education, cleaner fuel types, scientific R&D and flood defences come with striking figures attached, far more than in any another recent government Budget. Moreover, the government realises that it needs to ensure the economic benefits of major investment are not only radical but regional too is encouraging news.

“However, there’s a danger this Budget is simply an updated Conservative manifesto – a mix of the pragmatic and the popularist. Behind the big figures, the government needs to be sure it has a clear vision for the UK. This may appear in the coming days in subsequent announcements on national infrastructure including planning reform and road investment, but the government needs to ensure its plans are strategic and not totemic, so businesses really know what our post-Brexit future is. It’s easy to promise big infrastructure, but confusions over Heathrow, long deliberations over HS2 and rebellion over 5G all suggest this government still isn’t comfortable making the case for major – sometimes disruptive – projects.

 “We should also be concerned about what’s missing. Keystone promises on new hospitals and nursing staff restate earlier commitments, but there was little on how we tackle the crisis in our social care sector, plug the recruitment holes left by a post-EU immigration policy and how we finally get to grips with the skills shortages. These aren’t new problems; they’re repetitions of successive failures by previous governments too, but the failure to recognise those challenges is a concern. Whatever the short term issues there may be these long term problems will not go away easily.

 “Set against the context – wobbles in the economy and a potential pandemic – there’s lots here to suggest this government can throw off the uncertainty of the last three years, but there’s still work to be done to shape and energise the UK’s post-Brexit future.”

Ian Miles, private client tax partner at James Cowper Kreston, commented: “Tax changes mean that individuals may have more to spend too. The rise in the threshold for National Insurance Contributions is set to increase from £8,632 to £9,500 which will provide a saving of just over £100 per annum for all workers and the self-employed. There was also some hidden good news for high earners. Dressed up as relief for NHS doctors, people earning between £110,000 and £200,000 who may have previously had to pay the pension tax charge will no longer have to. There is some withdrawal of tax relief on pension contributions for taxpayers earning in excess of £300,000 but the chancellor has not abolished higher rate tax relief on pensions more generally as was muted a few weeks ago.

"Entrepreneurs’ relief which has been labelled one of the most expensive but least lucrative tax breaks has been reformed, with the lifetime allowance being reduced from £10m to £1m. This will disappoint many local entrepreneurs who look to the sale of their businesses to fund their retirement.

"For local businesses there are winners and losers. Small businesses will welcome the increase in the annual employment allowance from £3,000 to £4,000 but companies may face higher corporation tax bills because it was confirmed, as widely expected, that the rate will not be cut to 17% next month, remaining at the current rate of 19%.

Sharon Bedford, business tax partner at James Cowper Kreston, commented: “Although the stated aim of the Budget was to spread opportunities widely across the UK regions, the predominance of hi-tech businesses in the Thames Valley mean that it might still benefit. Billions are being invested in Research and Development and some of this should find its way into the region. There is also an increase in the Research and Development Expenditure credit from 12% to 13% from April.”

There was a lack of detail in the Budget to say how the spend will be funded but there was an inference that businesses will be relied upon to fuel growth and generate more tax. Certainly, there will be more opportunities for some businesses resulting from Sunak’s spending spree but whether his gamble pays off in the longer term, time will only tell.

Julian Smith, tax partner at PKF Francis Clark in Poole, said the chancellor had provided a very comprehensive set of measures targeting many sectors in an effort to kick-start the economy.

He said: “It is a grand gesture with big numbers, very much making up for lost time, but we will wait to see just how damaged the economy is and whether the proposed spending has the desired effect and gets it done.

“His ‘blank cheque’ for Coronavirus relief is reassuring and the fact he didn’t fully abolish entrepreneurs’ relief is welcome, as is more green transport funding – but, as ever, the devil will be in the detail.”