Business organisations have been responding to today’s Budget announcement.
The Federation of Small Businesses (FSB) says that while the Budget will help many, more is needed on employment costs
National chairman, Mike Cherry, said: “This Budget will help many small firms with their final push through to September, but there is little here to aid job creation or help people return to work.
“Ensuring the newly self-employed can now access support marks a big step forward – we’re pleased to see our campaign has been heard – but directors, who appear to have been left out yet again, will be incredibly disappointed.
“Thousands of small businesses are on the brink of collapse and thousands more are suffering from low confidence as cash reserves dwindle. They will welcome both the extension of flagship support schemes that have kept them going over the hardest year they have ever faced, as well as confirmation of new support measures around taxation, employment and cash grants.
“The continuation of business rates and VAT discounts is critical, and it’s important that those in supply chains benefit from them, not just those that neatly fit the definitions of frontline retail, leisure and hospitality. The new super deduction option sounds very promising, and we look forward to further detail on the investments it will cover – it should be made accessible to the smallest firms. Confirmation of pre-announced measures like Help To Grow on management and digital skills, and Restart cash grants, are welcome, and it’s key that the very smallest firms benefit from them.
“That said, while the furlough extension is much-needed, small employers are still struggling due to high national insurance contributions and the removal of the job retention bonus. The Government should look again at these areas. Fundamentally, there was very little in the statement on job creation and reducing the cost of employment.”
Giving his reaction, Phil Smith, MD of Business West, said: “It was another extraordinary budget from the Chancellor, reflecting what is an extraordinary time for the UK economy.
“Businesses will welcome an extension of the full range of Covid-19 support measures, with the timescales longer than many were expecting. The extension of the furlough scheme, an extended and more targeted self-employed scheme, a new tranche of business grants and a new recovery loan scheme will all continue to provide a safety net for businesses through to the autumn. There will be disappointment, however, that limited company owners appear yet again to have been forgotten.
“Overall, given the uncertainty that still hangs over the ending of lockdown, the Chancellor’s approach makes good sense and contrasts favourably from the ‘stop start’ approach to previous business support extensions.
“The Chancellor’s pledge to “continue doing whatever it takes” will put businesspeople at ease, many of whom still face extremely challenging times ahead. Nevertheless, there was a sting in the tail – with the Chancellor setting out a path to repairing the public finances.
“Rather than targeting the broader public, the weight of tax rises will fall on the private sector – most notably with a rise in corporation tax to 25% in 2023 – a higher level than many were expecting. There is some tapering for companies with very low profits. There was however a big, short term incentive for firms to invest in new plant and machinery via a ‘super deduction’ at 130% over the next two years, and more loss flexibility for struggling businesses.
“Many businesses recognise that the Government’s generosity has to be repaid – but will worry that it will fall on a relatively narrow set of wealth creators, making the tax base more vulnerable to changes in economic circumstance and reducing our international attractiveness. “
Dr Adam Marshall, Director General of the British Chambers of Commerce, said there was much to welcome in the Budget announcement.
“The Chancellor has listened and acted on our calls for immediate support to help struggling businesses reach the finish line of this gruelling marathon and to begin their recovery. Extensions to furlough, business rates relief and VAT reductions give firms a fighting chance not only to restart, but also to rebuild.
“We particularly welcome the massive ‘super deduction’ investment incentive that the Chancellor has put in place for the next two years. This responds directly to our call to encourage those businesses that can, to invest and grow.
“While no business will relish paying higher rates of Corporation Tax in future, the impact of the Chancellor’s tough decision is blunted by the big new incentives for investment, lower rates for the smallest firms, and the extension of Coronavirus support measures in the short term.
“This Budget provides reassurance to businesses, provided that they are able to restart and rebuild according to the Government’s road map. If firms face unexpected bumps in the road, the Chancellor must be prepared to take action until the economy is firing on all cylinders again.”