South West business leaders have been reacting to the Chancellor, Jeremy Hunt’s, Autumn Statement today (November 22) in which he announced tax cuts and support for business investment.
Business West Gloucestershire director Ian Mean said businesses were given a “huge boost” in what the chancellor coined “the largest government package” ever to help business in British history with 110 areas of help.
Mr Hunt announced a cut in employees National Insurance will be cut from 12% to 10% on January 6, which would save a worker earning £35,000 a year £450. “And that in turn would mean an extra 94,000 jobs being filled”, said Mr Mean.
He added: “Planning is a huge issue for companies wishing to expand and the Chancellor said he would be providing £32m to ensure quicker approval permissions.
“And as predicted, the Chancellor made a very big invitation to firms wishing to invest to grow by extending the full expensing initiative to allow firms to claim back tax on their profits. He also announced an extra £50m for skills development.”
READ MORE: Live updates - Chancellor Jeremy Hunt cuts taxes and National Insurance - updates and reaction
Chancellor Jeremy Hunt cuts taxes and National Insurance - updates and reaction
Ed Rimmer, chief executive of Bath-based alternative finance provider Time Finance, likewise welcomed the Chancellor’s Autumn Statement. He said “there is cause for businesses to sit up and take notice”.
In regards to business tax cut, which hopes to maximise business investment, increase productivity and boost GDP, Mr Rimmer said “this is a measure the OBR predicts will create £3bn investment a year”.
However, Mr Rimmer said: “If the Chancellor wants businesses to grow, increase productivity and contribute to GDP, he must recognise that borrowing to invest is a viable business strategy, albeit one that will certainly be boosted by this tax relief package.”
Elsewhere, Mr Hunt announced £2bn and £975m for automotive and aerospace manufacturing respectively.
David Williams, senior office partner at KPMG in the South West, said this could go a long way to shoring up these sectors in the South West, “by helping them continue to expand and mitigate ongoing challenges such as talent recruitment and retention”.
Mr Williams also said: “As a major provider of local jobs and having struggled since the pandemic, the region’s hospitality industry will welcome the news that the Chancellor will extend the 75% business rates discount for hospitality, retail and leisure businesses.”
He added: “Plans to launch a new scheme that will train the next generation of science and technology venture capitalists, as announced in the Autumn Statement text, should come as positive news for the South West’s broad range of innovators. The region is home to some of the UK’s foremost research and development specialists and academic institutions, so we have no shortage of expertise and bold ideas. The challenge for our innovators has been securing the investment they need to help scale their concepts, so the Chancellor’s plans to respond to these needs will be welcomed.”
More reactions from the South West...
Huboo
Founded at a Safestore in Bath in 2017, the Bristol-based ecommerce fulfilment firm now employs more than 700 people globally, across the UK, Europe, Turkey and the US.
Peter Edgar, chief financial officer at Hubo said: “Whilst the living wage boost will help the lowest paid in the very short term, increasing the living wage at a time when AI and automation are already disrupting how businesses think about hiring feels like a misstep. These technologies have fantastic potential to empower human workers and make us all more productive, but if we make the basic cost of labour too expensive, businesses may simply decide to dispense with the humans altogether.”
However, he warned that entry roles could be more at risk from greater business use of AI and the government’s decision to increase the living wage for youngest workers could “further disincentive employers to take chances on people at the start of their careers”.
Mr Edgar suggested addressing the UK’s ailing productivity both by enhancing business use of technology and championing long-term skills development.
He concluded: “While the Chancellor has committed money towards new apprenticeship pilot schemes that could, over time, stimulate more training, he has missed an open goal around skills development.
“Increasing the Apprenticeship Levy would create an immediate incentive for firms to invest in workforce skills and lay a clearer pathway towards higher-paying jobs, especially for lower-income households. As it is, today’s Statement adds to the overall corporate wage bill without necessarily boosting either employee productivity or performance.”
Nationwide
The building society, which has its headquarters in Swindon, said it would welcome all measures that “can play a role in helping people buy their first property”, including the Mortgage Guarantee Scheme extension.
However, the lender said it was disappointed that the Government “continues to restrict qualifying loans to 4.5 times income as research shows that most homes remain unaffordable through the scheme”.
Rachael Sinclair, director of Mortgages and financial wellbeing at Nationwide Building Society said: “Owning a home remains an aspiration for many, which is why as a leading lender to first-time buyers, Nationwide has continually offered products to those with small deposits outside of the Mortgage Guarantee Scheme including our Helping Hand range which lends up to 95% LTV and up to 5.5 times income.
“However, more needs to be done. That is why we continue to call on the government to commission an independent review into the first-time buyer market. This will provide much-needed clarity on issues that continue to hamper prospective homebuyers, such as the lack of new homes and the need for products that address the equally significant barriers of deposit and affordability.”
Grant Thornton
International professional services network Grant Thornton has looked at Mr Hunt’s statement through a South West lens and come back disappointed.
Jonathan Riley, practice leader Bristol and South West of Grant Thornton UK said: “Given what the voter intention polls have been saying, it felt like a bullish speech from a Chancellor who is determined to focus on growth.
"The South West per se was not prominent in the speech and we would have welcomed seeing a local area selected as one of the new Investment Zones.”
Commenting on the nation’s skills gap Mr Riley said “we can’t do enough” to address this issue and so welcomed the chancellor’s intention to invest £50m into the support of apprenticeships in engineering and other key sectors.
He added: “Many UK regions have focused on developing the science and innovation economy and making available an additional £500 million to fund innovation centres to make the UK an ‘AI powerhouse' sounds progressive. Extending freeport and investment zone tax breaks from five years to ten years will also be welcome.”
Business West
One of the largest chambers of commerce in the UK, Bristol-based Business West works with more than 20,000 businesses across the South West.
Matt Griffith, director of policy at Business West said: “This was a ‘two cheers’ type of budget – with some unexpected and welcome surprises set against a challenging economic context.”
While not sharing the same enthusiasm as Gloucestershire director Ian Mean, Mr Griffith said the National Insurance reduction would be welcome by businesses, "feeding directly into workers' pay packets". He also said the announcement that Full Expensing will be made permanent will "hopefully boost levels of private sector investment".
He explained: "Low levels of business investment have been a challenge for the UK for decades and helps explain some of our poor recent performance on productivity and growth across our region, and nationally. This is something that we, and the British Chamber of Commerce, have been pushing for and are very glad to see announced.”
However, Mr Griffith said he was "disappointed" that the South West region was not more visible in the budget.
He said: "We have not been chosen as one of the government’s investment zones – the second time we have lost out on this flagship government economic policy. Our region is struggling to be recognised at a national level despite the excellent credentials we have in life sciences, clean energy, aerospace and automotive. The risk is that low visibility and level of political ambition starts to undermine our key economic assets and investor sentiment.”
“There is a pressing need for our region to start raising its profile and making the case for investment support to help transform the South West.”
Westcotts
South West chartered accountancy firm Westcotts has looked at what the Autumn Statement means for businesses in the region.
The Exeter-headquartered firm said that compared to previous budgets there were some “significant announcements”. Referencing cuts in National Insurance for companies and the self-employed, investment in innovation and businesses rates, Westcotts said “what we didn’t get was anything on inheritance tax".
Mark Tibbert, partner and head of tax at the firm said: “Whilst the tax cuts announced will benefit many, there are questions as to whether it is really a Statement that benefits businesses. With the tax cuts all aimed at employees or the self-employed, with increases in the minimum wage, increasing costs, and rates relief targeting only specific sectors, many businesses may find their costs increasing, especially employment costs.
“But with signs of an improving economy many remain hopeful for the coming year. As always, we will be looking at the full detail of all the announcements and providing commentary on what this means for our clients and businesses across the South West over the coming days.”
Ellis Jones Solicitors
Dorset law firm Ellis Jones Solicitors' managing partner Nigel Smith, said: “The Chancellor’s very welcome reforms of National Insurance have certainly grabbed the attention.
“Anything which reduces the burden of this ‘hidden tax’ is to be applauded, especially as the Chancellor has considered both the self-employed and employed.
“The introduction of changes on January 6 rather than in the new tax year in April will make an immediate impact on pay packets although some employers may need support or advice to help with implementation through their payroll.”
Manning Gee Investments
Independent financial advisor Samuel Gee said the 8.5% commitment to the Triple Lock is an "encouraging outcome" for pensioners, in what he said was "delivering one of the most significant cash increases to the state pension". For those receiving the full state pension, this translates to a rise of over £900.
The director of Bristol-based Manning Gee Investments added: "In tandem, the 9.8% increase in the minimum wage, now standing at £11.44 per hour, marks a positive stride for low earners. The extension of this increment to individuals aged 21 and 22 recognises the essential living expenses faced by those in this age bracket who would typically earn less while performing the same job. Coupled with adjustments to the benefit system, these changes reflect a significant shift towards inclusivity in the workforce, aligning with the Chancellor's vision to 'make work pay'."
Referencing the reduction in National Insurance contributions for the self-employed, Mr Gee concluded: "While there are positive developments for pensioners and the self-employed in the Autumn Statement, concerns arise regarding the allocation of resources, particularly for small businesses heavily dependent on their workforce.
"The notable tax loophole for large firms with ability to invest, coupled with a relatively modest measure for the self-employed, raises questions about the balance of support across sectors. The impact on small businesses, especially those with substantial staff-related expenses like hospitality and smaller retail businesses appears to have been overlooked. This lack of explicit support disproportionately affects smaller companies with precarious cash flow, despite their valuable contributions to the overall economy."
Burges Salmon
Bristol law firm Burge Salmon welcomed the chancellor's proposals for the AI industry.
Tom Whittaker, senior associate said: "Government recognises much of what industry has been calling for – investment, access to capital, access to computing capability. These announcements will be well received, coming shortly after the AI Safety Summit at Bletchley Park and industry investments in the UK, with notable AI and tech companies choosing to locate here."
However, Mr Whittaker said the industry needs more such as changes to investment schemes, changes to visa systems and improvement of technology education.
He added: "Connected to the Statement, there remains a split about whether the UK is taking the right approach with AI regulation. Some argue that the UK is doing too little, too slowly and that the EU’s proposed AI laws will set the standards in this field. Others argue that the UK is taking the right approach, utilising existing regulators and regulations without burdensome new legislation.”
Evelyn Partners
Evelyn Partners said Mr Hunt addressed “some” structural issues the clean energy industry faces in his Autumn Statement.
The professional services and wealth management firm said the capacity of transmission networks and delays in getting new grid connections “are one of the fundamental barriers the renewable energy industry faces”, as these block investment and the progress of renewable projects.
Jayne Harrold, partner in Business Tax at the firm said: “The announcement today that the Government will be supporting measures to reduce the end-to-end process of electricity transmission network build from 14 years to 7 years on average, and joint action with Ofgem to drastically reduce the waiting time it takes viable projects to get a connection to the grid is significant for investment in the renewable energy sector and acceleration of project development.
“Legislating to provide the Crown Estate with borrowing and wider investment powers to unlock 20-30GW of offshore wind seabed rights by 2030 and working to bring forward floating wind in the Celtic Sea through the 2030s will also act to accelerate investment.”
Furthermore it is hoped funding of £960m in a Green Industries Growth Accelerator will support investments in manufacturing capabilities for the clean energy sectors, particularly carbon capture and storage, hydrogen, offshore wind, electricity networks and nuclear. Ms Harrold said this should also support local supply chains.
She added: “For the transport sector, designating low-carbon infrastructure as a critical national priority, and consulting to ensure that the planning system prioritises the roll-out of electric vehicle charging infrastructure, will help to ensure that the infrastructure is available to facilitate the widespread adoption of electric vehicles.”
Dorset Chamber
Ian Girling, chief executive of Dorset Chamber, said the Chancellor had taken some “pro-active steps” to support businesses during the challenging economic climate, though he added that some firms in the county may feel he had “not gone far enough”.
Mr Girling said: “The extended freeze on the small business multiplier for business rates, and the extension of the 75% discount for hospitality, retail and leisure will be a comfort to many although fundamental reform is still desperately needed. “Incentives to encourage some firms to clean up their act on late payments are encouraging but more needs to be done to tackle this scourge affecting business.
“Some businesses may have concerns about the increase in the National Living Wage at a time when costs are already high while I hope other measures to improve productivity, simplify tax relief, support growth and innovation, boost the labour market and put more money in people’s pockets will be felt in Dorset.”
McGills Chartered Accountants
Reviewing the Government’s new fiscal policies, McGills Chartered Accountants said that, while businesses will benefit in the long term, it may cost some significantly.
The Cirencester-headquartered firm said rising wages will also carry a higher Employer National Insurance liability, despite a reduction of Employee National Insurance to 10% to the benefit of workers.
“Small and medium-sized enterprises (SMEs) are likely to be hit hardest as they often lack the profit margins and financial buffers of larger firms,” according to the firm.
Sharla Dandy, partner at McGills Chartered Accountants, said: “Despite a major emphasis on leveraging the current economic climate and creating opportunities for small businesses, policies within the Autumn Statement will place a heavy burden on SMEs in the coming months.
“Working people will be rightly supported through higher costs of living with rising wages and reduced NI contributions, but businesses seem poised to pay the price, particularly with no NI reductions to employer contributions. This is particularly true for sectors that rely heavily on labour or those that already operate with low profit margins.”
However, despite a bleak short-term outlook for SMEs, the Chancellor’s 110 measures for the coming year may yet bolster surviving small businesses through a long-term commitment to growth, says McGills Chartered Accountants. The Chancellor announced an indefinite extension of ‘Full Expensing’ allowing capital-reliant businesses to claim a deduction from taxable profits of up to 100% of their expenditure on qualifying plant and machinery capital.
“This extension will be hugely beneficial to manufacturing and related sectors, as SMEs that rely on investment in capital can suffer cash flow problems,” said Ms Dandy.
In addition to support for internal investment, high-growth sectors including technology, sustainable energy and manufacturing, will benefit from significant investment from the Treasury, with £975m being made available for the automotive sector, £520m for life sciences and £960m for clean energy manufacturing.
Ms Dandy concluded: “Some sectors – such as professional services – will not benefit as significantly from upcoming investment projects or full expensing, so they will have to think carefully about optimising future financial plans. Changes within the Autumn Statement will have potentially massive impacts on SMEs and business owners. Professional advice is key to weathering the upcoming squeeze and maximising the benefits of new measures.”
Albert Goodman
The Somerset-based accountancy firm said it was “disappointed” with the Chancellor's offerings for companies and employers.
Corporate tax director Kelly Pinder said hospitality and leisure businesses would be helped by a one-year extension to a 75% discount on business rates, and welcomed the extra detail on the merging of the Government's two R&D schemes.
However, Ms Pinder noted that making the full expensing of capital spend on equipment permanent would have “limited benefit” for many South West firms.
Ms Pinder said: “Companies can already spend £1m a year on capex and benefit from full relief, without the need to apply the more stringent full expensing rules which includes a claw-back in full on any future monies received for the sale of such assets.
“Investment is great if businesses have the funds to do so, but for those that don’t and/or those that decided to invest in people, this will be little to shout about.”
Devon and Plymouth Chamber of Commerce
Chamber chief executive Stuart Elford, said: “The Chancellor's Autumn Statement delivered all three of the main asks of British Chambers of Commerce, namely speeding up planning, reducing delays in connecting to the national grid, and making permanent the allowance on investment expensing.
“He backed this with some tangible figures and gave a very positive outlook for the economy, which will give comfort to businesses and encourage investment.
“Looking at the South West, the extension of tax incentives for the Freeport were welcomed and should encourage inward and foreign direct investment.
“The Chancellor referenced 110 growth measures and is clearly aware that it is business that will grow the economy. While some details are still to be clarified, on the whole this was a positive budget for business.”
