Business West, the region’s largest business organisation, described Chancellor Philip Hammond’s Spring Budget as “underwhelming” but warned there were some measures that will make firms nervous.
These included the National Insurance increase for the self-employed – which it feared could dampen entrepreneurship – and the impact of business rate rises, despite help for some small retailers and pubs.
Ian Larrard, pictured, director of Swindon & Wiltshire Initiative – part of Business West – said: “They say that the Budget is more about political theatre than changing economic reality, and this performance would have had business audiences shifting in their seats. 
“This was an underwhelming Budget from the Chancellor, with limited eye-catching announcements and a lack of major changes for businesses to welcome, and a few announcements that will make them nervous.
“In some measure this was forced upon the Chancellor. With Brexit creating considerable uncertainty over the coming two years, it is not a time to spend freely. However, even the Chancellor’s limited wiggle room was smaller than expected – as the medium-term growth projections announced have deteriorated, despite a short-term boost to growth this year.”
Nonetheless, businesses would be disappointed with what was announced, he said.
On business rates, he said: “There has been some shift to ease the pain of business rates revaluation – with help targeted at growing, smaller businesses who are leaving behind small business rate tax relief, a populist handout to pubs and the creation of a fund to help local authorities ameliorate the worst cases.
“However, if you aren’t a pub or don’t qualify for smaller business rate relief, you’ll be left wondering what relief is available to the often sharp increases in tax you will be expected to pay. Many businesses will continue to feel they are being unfairly squeezed by rate rises that do not reflect their ability to pay or their profitability.”
The self-employed had also been targeted with higher tax rates, said Mr Larrard.
“With rises in Class 4 NIC. Self-employment falls outside of the government’s election pledge of a ‘tax lock’, so this group now finds themselves targeted as a way to raise revenue.
“The self-employed have been the bedrock of employment growth in the UK since the great recession, and tax changes here may make many nervous. It remains to be seen whether it will dampen entrepreneurship or reduce the incentives to set up business by yourself.
“The introduction of ‘T Levels’ to raise the status of technical and vocational qualifications was welcome, but must be backed by proper resources and reform if the aim of having a higher status to qualifications is borne out in their real-world perception by future employers.
“Overall this Budget gave the impression of steady as she goes, more in preparation for a possible rough sea ahead than in an expectation of finding vast new lands of undiscovered prosperity.”
Business West is the organisation behind the Swindon & Wiltshire Initiative.
Jon Lacey, pictured below, accounts director with Regulatory Accounting, the Swindon-based accountancy firm, said the Budget was notable for what it didn’t mention – with no reference to Brexit, Inheritance Tax, housing, Stamp Duty or Capital Gains Tax. 
There were some measures to be welcomed, such as the efforts to mitigate the effect of the 2017 revaluation of business rates, and a delay in the introduction of Making Tax Digital for smaller businesses, he said.
But the self-employed were clearly in the Chancellor’s sights, with the move to increase Class 4 National Insurance contributions by 1% to 10% from April 2018, once the abolition of Class 2 NI contributions comes into force.
“The Chancellor has looked at the way in some places of work where there can be a self-employed person sitting next to a contractor, sitting next to an employee, all doing the same job, but all taxed in different ways and tried to remove what he sees as unfairness,” said Jon.
“But this doesn’t take into account the fact that most self-employed people are doing a unique roll, working on their own, and they don’t have many of the advantages of an employee, such as sick pay and security.”
Dominic Bourquin, partner at accountancy firm Monahans, which has offices in Swindon and Chippenham, said: “The first word that comes to mind is ‘underwhelming’.
“Philip Hammond’s second budget – and his first and last Spring Budget, as he moves to a single annual autumn budget from hereon – didn’t do a lot to impress.
“The fundamental problem is that our financial problems are in the billions, which only allows the Chancellor wriggle room of millions when he’s handing out relief.
“The fact is that our public sector borrowing is due to be £58bn in 2017/18, and we’re currently paying £50bn servicing our debt. That’s £5bn more than our annual budget for defence and the police.
“So when the Chancellor announces £435m support on business rates, or puts aside an extra £216m for schools and £300m to support science and technology PhDs, the first thing that comes to mind is that in the grand scheme of things how little those amounts actually are in an economy with a GDP of around £1.9 trillion.”
But he said the business rates issue was a nettle that yet again the Exchequer had not grasped.
“There’s a bit of tinkering around the edges, with £1,000 relief for the majority of pubs, and other small reliefs for certain businesses. But all we’ve been promised beyond that is consultation between now and the next revaluation, which could be up to seven years away.
“The business rates system needs a complete overhaul, but unfortunately the bean counters have ducked the issue – again.”
He said there was more pressure on those who work for themselves, as self-employed basic rate taxpayers will see their national insurance contributions creep up from 9% to 10% in 2018, and up to 11% in 2019.
This would result in a shift to more limited company structures, he said, although these brought their own additional costs.
“Those businesses below the £83,000 VAT threshold have an extra year’s grace before they become liable for quarterly reporting, under the Making Tax Digital regime, which will be of some comfort in the short-term. Yet it’s odd to see the tax-free dividend allowance fall from £5,000 to £2,000, just a few years after it was introduced.
“And then there’s the really huge issue facing us as a country. The issue of health and social care. This is an issue so overwhelming that the government is taking a short-term view for now, by putting some cash into social care for a couple of years – and publishing a Green Paper on longer-term funding later this year.
“It sounds as if this has been put into the ‘too difficult to think about’ box. Given the enormous financial strain that social care is likely to put on the UK over the next few decades, let’s hope that someone is brave enough to open the box fairly soon.
“Finally, on International Women’s Day, some women may have something to celebrate. The Chancellor is setting aside £5m for ‘returnships’ – cash to help people back into work after a career break. The reality is that it’s women who tend to take time out to care for children, so there are some crumbs of comfort there.
“Though, it’s small beer. And after all, the Chancellor’s got billions of other problems to worry about.”
According to Stephen Horton, senior executive with Swindon-based regional law firm Thrings, while there were no real radical giveaways or headline grabbers, it was clear there was plenty to fuel controversy on both sides of the political divide in the Budget.
Mr Horton, an expert in capital tax planning, taxation of trusts and estate administration, said many self-employed people would have reason to feel sore over the National Insurance hikes.
But he added: “Self-employed workers have, in recent years, benefitted from increases in State pension entitlements which bring them in-line with employed people.
“To outsiders, therefore, today’s announcement could look like a ‘normalisation’ of the current imbalanced system.”
He also said the Chancellor made it clear that there would be further consultation on how individuals who work as contractors through an intermediary private company were treated for tax purposes.
“In an attempt to reduce the benefits of doing so, the dividend allowance was reduced from £5,000 to £2,000 from April 2018. Looking at this alongside the announcement that professional advisors who enable tax avoidance could be subject to severe penalties in future, there was a claustrophobic feel to the advantages these type of consultancy workers currently have,” he added.
Institute of Directors South West chair Nick Sturge particularly welcomed the announcement on T Levels, which are aimed at boosting technical education.
“[The] lack of technical skills, especially in areas such as construction and engineering, is a timebomb waiting to go off,” he said.
“This will be exacerbated by our departure from the EU and a constriction of foreign workers, so it is critical this issue is addressed quickly to mitigate against a short-term skills gap.
“As the South West has one of the lowest levels of young people going into higher education combined with one of the highest demands for skilled engineering and knowledge economy ready talent, T Levels present an exciting opportunity for our oft-forgotten economic powerhouse of the UK.”
He added that setting funds aside for more research & development would help offset any loss of EU finding and secure the role the region’s universities and research institutions play in developing home-grown talent.
Federation of Small Businesses (FSB) regional chairman Ken Simpson said the Budget produced “some good news but also had a sting in its tail for many small business owners”.
The good news came in the shape of the government’s commitment to provide more support for those most hit by the recent business rates revaluations, which the FSB had campaigned for, he said.
“We believe that the injustice of the latest revaluation shows that the whole system needs a radical reform but in the meantime we welcome the £435m worth of measures to alleviate the pressure on the hardest-hit businesses,” he said.
“The £300m that councils will be given to help in a discretionary manner is not, however, a huge sum and we must make sure it is not eaten up just by areas of London and the South East, which has had most of the publicity during the current controversy.”
He also welcomed the increase in money to help with productivity, growth and, especially, technical skills and applauded the government’s aim to try and equip youngsters for the jobs of tomorrow to help plug the skills gap that was often identified by FSB members.
“The bad news, however, came with the announcement of increases in National Insurance for many self-employed people over the next two years,” he said.
“Nearly half of all growth in jobs over the past few years has come from people starting and running their own businesses and it is vital for the economy as a whole that we incentivise more people to do this and not place additional financial burdens on them.
“There are so many costs for people who run their own business and to add an extra tax burden now will be seen as an unwelcome announcement by many of our members.”
