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Budget statement: Shropshire business reaction

Shropshire Chamber of Commerce has welcomed measures announced today by Chancellor Rishi Sunak to address the growing cost-of-living crisis – but says it is unlikely to prevent many businesses being forced to raise their prices this year.

Fuel duty is to be cut for only the second time in 20 years, by 5p a litre, for at least a year, and VAT relief is being extended to cover energy-efficient investments.

There were hopes that the Government may scrap the proposed rise in National Insurance due to kick in next month, or at least raise the threshold.

And the Chancellor chose the second option – increasing the threshold by £3,000 from July this year, meaning no tax or National Insurance will now be paid by anyone earning less than £12,570.

Mr Sunak also revealed that the Government planned to reduce the basic rate of income tax from 20p to 19p by end of the current parliament.

Richard Sheehan, Shropshire Chamber’s chief executive, said: “We would have liked to see more done by the Chancellor – but he could have done much less. These are all welcome announcements which will go some way to helping to offset the fastest rises in the cost of living in a generation.

“But will they be enough to prevent many of our companies being forced to raise their prices to combat the rising cost of doing business? That’s far from guaranteed.

“Rural counties such as Shropshire, with a poorer public transport infrastructure than urban areas, have been feeling the biggest impact of the current fuel price rises which means we have taken the full force of the cost-of-living crisis. So the fuel duty cut is certainly welcome.

“However, we also have many homes and businesses off the main power grid who rely on heating oil which has more than doubled in price since the start of the year, and the huge impact of this must not be overlooked.”

He added: “Businesses don’t want to be constantly asking for Government help, but these are extraordinary times, and it is successful and financially solid businesses which will drive the recovery in our economy.

New figures revealed today that inflation in February was at a 30-year record high of 6.2%.

The British Chambers of Commerce (BCC) expects the surge to continue over coming months as the energy price cap rise, the reversal of the hospitality VAT cut and upward pressure on energy and commodity prices from Russia’s invasion of Ukraine continues to bite.

Anton Gunter, managing director of Telford-based transport company Global Freight, said: “We very much welcome Chancellor Rishi Sunak’s decision to cut the duty on fuel but in our view he hasn’t gone far enough to ease the growing financial burden currently being felt by consumers and businesses alike.

"Against the backdrop of rising inflation, increasing energy prices and the ongoing economic uncertainty due to the pandemic and political unrest in Ukraine, we’re just not sure how much of an impact 5p will have in real terms, if any. The savings will be minimal.

“We understand the Chancellor is facing a difficult situation balancing rising public debt, but the next few years are likely to be tough for everyone and he needed to extend more support to the public and businesses at this critical time.

“Transportation costs will continue to rise, food prices are soaring and energy costs are at the highest rate in years and we can’t see any of that changing any time soon.

“For many people, they are facing a difficult and uncertain financial future.. What would be nice now is to see the large fuel companies following the government’s lead and lowering their own profit margins to help ease mounting fuel costs for those that need it most.”

Paul Brown of WR Partners in Shrewsbury said: “A more cynical person than me may think this is less of a plan and more a hastily cobbled together list of half formed ideas in an attempt to create a feel-good factor, but of course I am not that person. 

“However, it is interesting to note that the hype around the 1p basic rate cut seems slightly at odds with the fact that a large proportion of the population will shortly suffer a 1.25% tax rise – I guess a 0.25% net increase (but only after 2 years of a 1.25% increase) is better than it could have been…

“Overall, I am not convinced that the measures announced merited the kind of dramatic summary with which the Chancellor brought his speech to an end with. 

“The attempts to address the immediate concerns of the Chancellor’s much loved hard working families seem, at best, half-hearted while many of the longer term measures seemed to pose more questions than they answered.  I do have a good deal of sympathy with the Chancellor in that he has faced a pretty tough set of challenges over the last few years, but I can’t help echoing a voice that drifted across the chamber during his speech – Is that it?”

Kevin Burrows is the founder of Iron & Fire, a speciality coffee roaster based in Shrewsbury, with customers all over the UK. 

He said: “We provide customers with comprehensive coffee machine servicing and training which requires our team to travel the length and breadth of the country - any slight reduction in fuel costs will, therefore, have a positive impact.

“However, there is a bigger issue at play here.  For us, the cost of green coffee beans has gone through the roof in the past two years and a significant percentage of these increases can be attributed to transport costs.  Simply, the UK’s rail network isn’t sufficiently set up to deal with transporting freight and we’ve been relying far too much on road transport since the 1980s.  Ultimately, moving more road freight to rail would be the best long-term solution.”

Commercial finance company Q Financial Services says the statement is a move in the right direction – but that the economy is likely to remain fragile for some time to come.

Senior mortgage and protection adviser Dan Harris welcomed the Chancellor’s decision to cut fuel duty by 5p/litre and increase the National Insurance threshold by £3,000, as well as the longer-term aim to cut the basic rate of income tax to 19p by 2024, which he said would put more money back in consumers’ pockets.

But Dan said that rising inflation, soaring energy costs and the war in Ukraine would all add to a period of continued uncertainty for households and businesses across the country and urged anyone concerned to seek professional advice.

“The Chancellor has little room for manoeuvre in the current climate and we welcome some of his measures to reduce the impact of this cost-of-living crisis. 

“But despite this, things are likely to remain difficult for some time. We have seen three interest rate rises in recent months and although the rate remains at a historically low level, this is undoubtedly causing some anxiety among mortgage holders.

“Added to this there remains considerable pressure on food and energy bills, inflation forecasts remain high and the situation in Ukraine means that global markets are likely to be nervous for a long time yet.

“That means that both businesses and households are likely to face a financial squeeze and we would urge everyone to review their finances and seek advice and support where appropriate. This is a prudent step at any time, but particularly in the current climate.

“There are a huge number of ways in which companies such as Q can help, but it’s important we are consulted as early as possible if that help is to be most advantageous.”

Mandy Thorn MBE, chair of the Marches LEP, said: “The move to scrap VAT on renewable energy products will help all our efforts to drive the uptake of clean, sustainable power and work towards a zero carbon economy.

“By developing renewable technologies we can help companies drive down their energy bills, cut their emissions and protect the planet, as well as strengthening this country’s energy security so that we are no longer so fully exposed to global forces.

“We support many of the other measures to help with the cost of living crisis announced today, including the cut to fuel duty which will help businesses cope with a steep rise in operating costs.

“But the business sector will need continuing support as it emerges from the pandemic into a range of new challenges. Inflation today hit a 30-year high at 6.2 per cent, wage costs are rising, we are in the middle of a recruitment crisis and energy bills show little sign of easing in the short term.

“Against this backdrop I was disappointed the Chancellor did not go further by removing VAT from energy supplies to domestic premises and reduce VAT to commercial entities.” 

Battery and energy storage pioneer AceOn said the Chancellor’s move to scrap VAT on renewable energy products was a ‘good starting point’ but called on the Government to be more ambitious in its support of green technology.

The Telford firm’s managing director Richard Partington said: “We have been calling for the axing of VAT on renewables ever since it was increased in 2019.

“With prices for conventional energy spiralling out of control and a growing realisation that we are in the last chance saloon as far as climate change is concerned, this is long overdue but still very welcome news.."