AUTUMN BUDGET 2021: Business West says region losing out again despite Sunak’s ‘levelling up’ claim

October 27, 2021

Business West, the region’s largest business group, said many firms would “remain muted in their enthusiasm” for a Budget that failed to address the scale of the post-Covid challenges they face.

The organisation, which runs the Swindon & Wiltshire Initiative, also claimed the West of England had again missed out when it came to government funding on major infrastructure projects – despite its claims to be levelling up the country. 

It acknowledged that Chancellor Rishi Sunak had praised the “imagination and drive” of businesses as key to the continued recovery of the UK economy and had given an upbeat Budget of higher spending and optimistic messaging.

And with growth forecasts revised upwards, lower than feared unemployment and greater wiggle room for spending on vital areas of investment – with some £150bn of additional spending – the Chancellor was able to outline a positive spending focused Budget, much of it pre-announced in previous weeks and months.

However, while this positive news would be welcomed as part of a strong bounce back to growth following the deep Covid-induced recession, given the scale of the challenges they face, many businesses would be less than enthusiastic about many of the Chancellor’s measures.

Business West managing director Phil Smith, pictured, said that avoiding a spending squeeze was important, given the fragility of the overall economy and individual firms.

“However, businesses will have watched the Budget with a less resolved question over whether the government will be doing enough to sustain the economy and tackle the significant challenges that businesses still face," he said.

“Many businesses are in a tough period, with Covid recovery needing to be nurtured and companies looking to ‘make up for lost time’ in recouping lost income in the months and years ahead. 

“They also face strong head winds in the face of skills shortages and rising costs, from supply chain and labour market inflation and additional business tax burdens from National Insurance and Corporation Tax.

“The West Country also continued to broadly lose out from the Chancellor’s largesse, with a very long list of individual projects and schemes announced, dominated by Northern constituencies and the devolved nations of Scotland, Northern Ireland and Wales.

“We are still not getting cut through in central government for the support our region needs.”

Business West outlined four areas of particular interest to businesses in the region.

Challenge One: Covid withdrawal

With the course of the pandemic still uncertain – and some sectors such as hospitality, retail and tourism still suffering from lower demand – Business West believes there is a need to make sure government Covid support matches business needs.

However, the Chancellor made no reference to how or whether the government would support businesses if restrictions get re-imposed on public health grounds going into the winter, missing an opportunity to provide much-valued predictability to help businesses plan for the worst case.

Mr Smith said: “Many businesses remain vulnerable, with depleted cash reserves, high inflationary pressures and paying down Covid-incurred debt, such as bounce back loans and extended overdrafts and credit cards.

“With increases to National Insurance contributions from April and the pre-announcement of National Minimum Wage rate increases, the costs employers face are a significant concern.

“For the lowest paid, the change to the Universal Credit taper from December 1 will ensure they keep more of their earnings than previously and might help employers recruit to previously difficult rules in sectors such as care and hospitality.”

Challenge Two: Funding for the West of England 

According to Business West, the region faces an uphill battle to secure its fair share of long-term government investment. Its ‘levelling Up’ agenda, despite being described in the Budget as delivering for all parts of the UK, continued to focus government funding attention on other areas of the country, it claimed.

Business West director James Durie, pictured, said: “This Budget failed to soothe fears that our region continues to lose out compared to others.

“With a very long list of individual projects and schemes announced, this was dominated by Northern constituencies and Scotland, Northern Ireland and Wales.

“The West of England saw some welcome investments in transport, with a headline £540m in transport investment. However, most of this money is re-announced from the 2019 Transforming Cities Fund.

“Some funding was announced to introduce zonal ticketing across public transport operators in the West of England which could encourage better use of existing routes and services, even if there is no expansion to services overall.

“However, this looks small in comparison to other Northern cities, with Greater Manchester and the West Midlands receiving a billion pounds each, whilst West Yorkshire gets a £830m.

“As a growth region, which makes a net contribution to the Treasury, has a growing economy and significant planned housing in the coming years, and is working hard to decarbonise itself, much larger investment and a more ambitious approach to infrastructure is urgently needed. We are disappointed that these needs remain unmet.

Swindon failed to win any additional government investments, after the significant announcements made on the targeted Towns Fund in the previous Budget.

Challenge Three: Skills

Business West said the region’s skills system had entrenched problems which meant its firms struggled to train their existing employees and young people to create the skilled workforce both they and economy needed to grow. 

This has recently become acute in some sectors of the economy because of migration changes brought about by Brexit and the stresses of the pandemic.

Business West policy manager Claire Ralph, pictured, said: “Business West regularly meets businesses whose growth is being slowed by being unable to find the right staff – leading to lost income for the region.

“While the Chancellor listed a good number of schemes and initiatives in the Further and Adult Education area – for example a new numeracy scheme called Multiply – more money has been allocated for apprenticeships based on forecasts of more young people remaining in education through their college years.

“The Chancellor’s greater focus on Further Education and post-16 skills is welcome given the neglect and underfunding of this sector in the past, meaning too often our young people’s potential is wasted and employers struggle to secure the skilled staff they need to run and grow their businesses.

“While any new money is welcome, the scale of the skills challenge especially for employers looking to hire new staff is massive. There is much to do and businesses require consistency of policy delivery and financial support.

“The latest focus has been on the phased roll-out of the new T-level qualification which is currently poorly understood by young people and employers.
“Some existing, better-understood, vocational qualifications such as BTecs will be defunded where they overlap with T-levels in the coming years, which risks cutting off choice for young people and their future employers.”

Challenge Four: Business rates

Business West said for businesses with physical premises the system of business rates acted as a real drag on the region’s high streets and dampened growth and investment.

Phil Smith said: “With the rise of online shopping and the decline of our high streets, business rates is now an out-of-date tax in need of radical change to ensure our towns and high streets are able to survive and thrive in future.

“The Chancellor made some announcements here, dominated by a one-off cancellation of a planned uplift of rates to take account for inflation, worth £4.6bn over three years.

“There was also a temporary discount of 50% for 12 months in 2022/23 on business rates for hospitality and leisure to provide some comfort to the challenges our towns and city centres face.

“The planned uplift in business rates for businesses operating out of commercial premises has been cancelled for the next tax year (2022/23) and more frequent revaluations will help businesses pay rates more reflective of their property values.

“The business rates announcements were all temporary measures: fundamental reform of the rates system didn’t materialise as many will have hoped.

“Business West echoes calls from the British Chambers of Commerce and other leading business organisations for a much more substantial reform of the rates system to level the playing field to e-commerce businesses.”


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