Business reaction to 2018 budget

Deal or no deal? This was the real elephant in the room when Chancellor Philip Hammond stood up to deliver his autumn 2018 budget speech.

Because if we end up leaving the EU without a deal next March, chances are that many of the fiscal measures he outlined will have to be ripped up, rewritten, and presented all over again.

It was a delicate balancing act for the chancellor, who had to try to live up to Theresa May’s pledge that the age of austerity is almost over, while at the same time keeping one eye on the spectre of Brexit. In the end, he certainly did get the cheque book out.

Shropshire’s market towns will have no doubt been cheered by the £675 million pot of money to help reduce business rates for small independent traders – but as online trading continues to see off even the biggest names on our high streets, many have questioned whether it’s still too little, too late.

James Lowman, boss of the Association of Convenience Stores, welcomed the fact that concerns were being heard, but added: “We also need to continue the debate on how the business rates system can promote investment in stores so they can compete in a rapidly changing retail environment.”

Commenting in response to the Chancellor’s announcement that the VAT threshold would remain as-is for the next two years and that the Business Investment Allowance would be increased five-fold over the same period, James Sage, a Partner in FBC Manby Bowdler’s Corporate team, said: "The UK’s employment levels are at record highs and we’re experiencing sustained demand for our exports but there remains a certain level of uncertainty which is preventing our businesses from further expanding and growing.

"Today’s announcement that the threshold for VAT would remain at its current level for the next two years should, therefore, be applauded.  Likewise, the increase of the Business Investment Allowance from £200k to £1m, also for two year, will not only help instil greater business positivity, but also provide the financial landscape that will encourage businesses here in the West Midlands to continue growing and investing.  This will prove vital as they seek to continue competing on the global stage.”

There was delight in many quarters to see a Budget so focused on business, with money for a further 10,000 start up loans, assistance for apprentice funding, preservation of entrepreneurs tax relief and one third discounted from business rates for small businesses with a rateable value below £51,000 . . . all countered by the UK digital services tax which will come into force in April 2020 and raise over £400m.

Paul Moran, Chairman of Shropshire Constructing Excellence and Business Development Director for construction firm Pave Aways, welcomed the Chancellor’s announcement on home building.

“The extra £500m for the housing infrastructure fund to build 650,000 more homes and the extra £420m for local authorities for minor works will be a boost to the construction sector. However we can only deliver these projects with a workforce equipped with the right skills - so we look forward to a Government investment in construction skills as well.”

But the founder and CEO of Emoov.co.uk, Russell Quirk, said: “As expected, the Government has chosen to turn its back on addressing the current housing crisis and has instead deployed yet more cheap magic tricks and white rabbits in an attempt to divert our attention.

"Retrospective stamp duty relief on shared ownership properties up to £500,000 is a very small give away and £500 million to help with an additional 650,000 homes will equate to nothing but rhetoric.

"To say that the big developers are not land banking shows a completely naive disconnect from reality. Today absence of any meaningful housing announcements is disappointing, to say the least especially when housing is the second hottest political topic in this day and age."

Patrick O’Brien, UK Retail Research Director at GlobalData, added: “The £900m extension to small business rate relief gives an estimated 500,000 independent shops a boost but does nothing for the long list of struggling retail chains who were hoping, for once, that they would have their tax burden reduced.

“Amazon is being targeted as part of the new digital services tax, where the government expects to raise £400m a year from digital platform giants, but none of that extra tax will be used to lessen the onerous rates bills that the likes of Carpetright, Mothercare or Debenhams struggle with.

“Physical retail chains continue to bear a disproportionate burden of business rates, and while the current government included a manifesto commitment to conduct 'a full review of the system to make sure it is up to date for a world in which people increasingly shop online', it continues to avoid tackling the issue head on.”

Chris Pallett, managing director of Telford-based managed IT service provider, Bespoke Computing, said: “The main takeaway from this budget for business connectivity is a route map for speeding up the rollout of full fibre for the UK. 

"This brings with it higher speeds and networks which are cheaper and easier to manage, making us globally competitive. We can provide such links to businesses in many areas already, but wider availability of full fibre networks will continue to bring the costs down for harder-to-reach areas.

“For a rural area such as Shropshire and Mid Wales, it’s the ability to get high speed data to everybody and not just the main towns which takes time and investment, so £200m announced by the Chancellor for pilot schemes to look at addressing this problem could bear fruit for us in time.”

Alex Buttle of car buying comparison website Motorway.co.uk, added: “The Chancellor’s immediate investment of £420m to tackle the UK’s pothole epidemic just won’t cut the mustard. It sounds like a big number, but a recent report suggested councils already have a shortfall of £556 million just to fix the issue in 2017/18, so this won’t even cover this year’s deficit."

Adam Marshall from the British Chambers of Commerce praised the ‘rock-solid commitment by the Chancellor to Entrepreneur's Relief’, describing it as an ‘important signal to those taking big risks to start up and grow firms here in the United Kingdom’.