Spring Statement: Swindon business reaction

March 13, 2019

Chancellor Philip Hammond’s Spring Statement was overshadowed by Brexit when it should have helped shape long-term economic needs, Business West, the region’s largest business group, said today.

The organisation, which runs the Swindon & Wiltshire Initiative, has become increasingly alarmed at the impact the political scrabbling over Brexit is having on the regional economy and the ability of its companies to plan ahead.

Its response to the Spring Statement was no different, with managing director Phil Smith, pictured, saying: “Like nearly all current government business, the Chancellor’s focus and forecasts were dominated by the shadow of Brexit.

“For many businesses, this is a cause of great frustration – as pressing domestic problems go unaddressed whilst political infighting sucks out the oxygen that could be being used to kindle greater growth, job creation and in tackling our underperforming infrastructure, transport, housing and skills systems.” 

Mr Hammond had used his statement to argue against no-deal and had stated that there would be a ‘Brexit dividend’ in terms of public spending if no-deal is taken off the table, said Mr Smith.

“He clearly stated that no deal risked a ‘relatively smaller economy …. [and the] pain of a restructure’.

“As the Chancellor’s downgraded growth forecasts for 2019 make clear, Brexit is causing a decline in private sector investment and risks a loss of wider confidence in the UK economy. With little in the way of new measures for businesses to get excited about, the spring statement was in many respects a palate cleanser before the meaningful Brexit votes of [later today] and Thursday evening.

“He finished his speech asking MPs to put an end to the no-deal uncertainty – a sentiment businesses in the region will no doubt echo. It is up to MPs to now listen to the Chancellor’s plea and start focus on the long-term economic needs of companies in the region.” 

Richard Mathews, CEO of Swindon accountancy and law firm Optimum Professional Services, pictured, said: “The Spring Statement is just that, a statement, so is not much more than an update on the economy. 

“This year more than ever there was very little the Chancellor could announce, with so much uncertainty caused by Brexit. The measures he talked about to help small businesses are welcome, but I feel we’ve heard these before.” 

He said Swindon’s economy seemed fairly buoyant. “Our clients are not seeing insolvencies, cash issues or liquidations, there is very little unemployment, and we can’t see interest rates rising in the short or even the medium-term,” he added.

Dominic Bourquin, a partner at regional accountancy firm MHA Monahans – which has an office in Swindon – said if anyone was hoping that the Spring Statement would provide a welcome distraction from Brexit, they would have been sorely disappointed. 

“The seemingly never-ending deal-or-no-deal Brexit debate, and the uncertainty it brings with it, became the star of the Spring Statement show. Mr Hammond offered the promised Brexit ‘deal dividend’ in one box and no-deal economic disaster in the other,” he said.

“If there was anyone left in any doubt as to which Brexit box Hammond would prefer MPs to open, there won’t be now. “With the focus firmly on whether politicians can finally agree a deal before the UK leaves the EU, Mr Hammond has clearly decided that now is not the time to rock the boat with any major changes to the UK taxation system.

“In fairness to him, he has always said that big tax reforms would not be a feature of his Spring Statements, but it was still a bit of a surprise to find that he’s almost avoided them altogether.” 

Dominic, pictured, said that instead, the Chancellor had made do with re-affirming changes that had been previously announced, such as next month’s increase in personal allowances. “There was, however, a glimmer of reassurance for companies concerned about the introduction of the government’s Making Tax Digital plans,” he said.

“Not only has Mr Hammond confirmed that there will be a ‘light-touch’ approach to penalties in the first year of implementation but has also confirmed that Making Tax Digital won’t be mandated for taxes until after 2020. That’s particularly good news for small businesses, which have been trying to get to grips with their new obligations.”

Another piece of good news came in the form of the apprenticeship levy reduction from 10% to 5%, said Dominic.

“Mr Hammond is introducing the previously announced reforms from April, a year earlier than expected. This will no doubt be a welcome boost to apprenticeship support for SMEs.

“There were a few indications in the statement that changes could be afoot and that we should look out for consultations due to be published in the coming months.” A further announcement which will be key for employers to keep an eye on is the government’s review of the Minimum Wage policy and the remit that will be set by the Low Pay Commission for 2020 and beyond.  The results are due later this year.

“Despite revising the projected economic growth downwards for the time being, Mr Hammond is still promising us a bright future, and this seems to be the most important thing to take away from his statement this year,” said Dominic.

“I suspect we may see a few more changes in the autumn, when the way forward for Brexit will hopefully be a little clearer.”

MHA Monahans also has offices in Bath, Trowbridge, Chippenham, Melksham, Frome, Glastonbury and Taunton.

Accountancy group EY’s South West head of tax Karen Kirkwood, pictured, said it seemed like the Chancellor had been “late with his homework”. 

“Ahead of any fiscal event, the Treasury officials put forward ‘starters’ and then work to develop them for inclusion in the Budget or Spring Statement. But this time, it looks like few have been ready in time,” she said.

“Some of this might well be the intent of keeping the Spring Statement light of content, but the written ministerial statement looked more like the Chancellor was apologising for being late with his homework.

“Instead of seeing lots of consultation documents, we saw the publication of only four publications, and were given promises of 16 more policy documents, and six other reports on comments received from past consultations. So we can expect this to come out between now and Legislation Day in July.

“Anyone would think that Treasury, Revenue & Customs had their attention diverted to other tasks.”


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