The region reacts to the Chancellor’s Spring Statement

As the chancellor delivered his Spring Statement, he has promised to create an “innovative economy” by driving business investment in research and development.

Rishi Sunak has set plans to boost private sector investment and innovation and craft a culture of enterprise.

Measures have been introduced such as an increase in Employment Allowance, two new business rates reliefs will be brought forward by a year, and a commitment to improving R&D relief rates.

So as Sunak believes this raft of measures will “boost investment, innovation and growth”, The Business Desk heard reactions from businesses across the region as to whether they agreed with him.

Louise Bennett, Chief Executive of Coventry & Warwickshire Chamber of Commerce, said: “I do not think we should be surprised that it was not a budget for businesses. In fact, there are very few crumbs of comfort as businesses face increased costs left, right and centre.

“At a time of economic challenge for the whole world, we do understand the Chancellor’s cautious approach to the public finances. While we could point to areas of current policy and continue to ask for further support, we do understand that the Chancellor has to balance the levers of public spending at his fingertips.

“A balanced approach will help get inflationary pressures under control and also ensure that the Treasury has more room for manoeuvre if the situation gets any worse.”

Steve Clarke, the managing director of Teepee Electrical, a cable harness, wiring looms and panel assembly specialist said Sunak boosted his mood “a little”.

“There were some wins for SMEs. The Fuel Duty cut and speed of introduction will help stabilise costs outside of our control a little, especially with shipping of goods in and out.

“Employment allowance is a small positive and rising the National Insurance Contribution Threshold should give our employees more towards their cost of living and will be a small benefit to employers. In an ideal world, I would have liked to have seen this implemented from April for the start of the tax year.

“Teepee very much supports putting people, capital and innovation at the heart of the UK’s growth strategy and welcomes even more beneficial R&D tax relief, encouragement to spend on capital and more funding that can meet our specific skills needs.

“My only bugbear with all of this is that it’s kicking the can down the line and, at the earliest, any changes will be announced in the Autumn statement. Business and the economy could do with these actions being taken now and rolled out immediately…all the promise around what is to come will simply stall decisions and hold back spend.”

For corporate recovery firm Begbies Traynor, the measures were not enough to reassure businesses.

Gareth Prince, a partner at Begbies Traynor in Birmingham, said: “Aside from the fuel duty cut and temporary business rates relief, there were slim pickings for businesses in today’s Spring Statement. It was always going to be difficult for Rishi Sunak to introduce sweeping changes at this point, with the promise of more significant measures in the full Budget later in the year. However, that will provide little comfort to businesses in difficulty right now.

“With inflation at its highest level for more than three decades, businesses across the region are facing crippling cost rises and today’s measures won’t be enough to see some of them through this tough trading environment. For those struggling with cost pressures right now, we cannot stress enough the importance of seeking advice at the earliest possible moment to try and turn the situation around.”

John Webber, Head of Business Rates at Colliers echoed sentiments regarding the lack of support for businesses. Webber called for reassurance that rates bills will immediately reflect lower rents for next year.

He said that, “Without this reassurance, the government’s “levelling up agenda” will be meaningless. And the high street is unlikely to get back on its feet.

“It was disappointing that the “elephant in the room”, business rates was largely ignored, despite the impact that ultra-high rates bills has had on businesses in recent years.”

Although there will be a 50% business rates relief for eligible retail, hospitality, and leisure properties, coming in this April, Webber says this is not enough.

“The Chancellor re-iterated the 50% business rates discount for the retail, leisure and hospitality sector as of April 1st but with a cap of £110,000 per company, this will only support the smallest businesses in the sectors and will do little to help the larger companies who account for the majority of jobs. Any support to businesses in other sectors of the economy was also totally lacking.

“Downwards transition meant many businesses in these sectors (hospitality and retail) paid too high business rates for too long. It was a key factor in the demise of Toys R Us, Laura Ashley and other high street brands and had a major impact on the high streets of many of the UK’s provincial and poorer towns- areas of the country the government claims it now wishes to “Level Up.”

As Sunak says he will examine the tax system following the statement, Chris Romans EY’s Head of Tax in the Midlands welcomed the lack of tax increase.

He said: “Rishi Sunak clearly considered that the lack of a formal Budget was no reason to avoid making changes that would have made many a Chancellor proud – eleven measures which between them encompassed immediate tax cuts, promises of further incentives and cuts in the Autumn and, to top it off, the ultimate rabbit from the hat of a cut in the income tax rate. There was not a single tax rise in sight.

“The immediate cuts were focused on today’s sources of pain – that of fuel duties – matched with commitments to allow the Chancellor to maintain credibility in the journey to Net-Zero. Beyond this, the measures were few but targeted.

“However, the Chancellor spent much of his speech in design mode, setting out his aspirations and announcing the publication of his 11 page “Tax Plan”, replete with potential costed announcements. This is a positive step forward, providing a forum for engagement, and avoids the criticisms of the previous business tax roadmap, which was more of a travel journal covering the past than a vision of the future.”

As manufacturers have faced a global crisis in rising costs and supply chain issues, for Coventry’s Manufacturing Technology Centre, CEO Dr Clive Hickman felt the spring statement was a positive step forward for the UK’s manufacturers.

He said: “We welcome the Spring Statement, which outlines concrete steps to ensure that the West Midlands manufacturing sector remains competitive, sustainable, and resilient. The Government’s commitment to cut tax rates on business investment will boost manufacturing productivity and create high-quality jobs. In addition, the reform to R&D tax credits is a very positive step that will enable the scheme to be more effective, better value for money, and more generous. These measures will be crucial to spur innovation and encourage investment across the region.”