Business leaders react to the chancellor’s 2016 Budget
Was George Osborne’s 2016 Budget good for business? Some of the headlines include a drop in corporation tax of 3% to 17%, and sweeping cuts to business rates for small operations.
Osborne billed the small business rates cut as: “A £7bn tax cut, for our nation of shopkeepers”.
So what do the shopkeepers think of it all?
It seems the Budget has been widely applauded by UK businesses.
Good for small business, but chancellor must show his workings
Simon Walker, director general of the Institute of Directors said: “There was plenty in the Budget for small and medium-sized businesses. They will welcome measures including more relief on business rates and cuts to capital gains tax, and a further corporation tax reduction coming in a few years. Business leaders and workers alike will be pleased with increases to the income tax personal allowance and the higher rate thresholds next year, while the introduction of a lifetime ISA will be a big boost for young people who have been put off by the inflexibility of pensions.”
Walker added: “The UK faces risks on many fronts, and much heavy lifting will still be required to get rid of the deficit by the end of the Parliament. For a chancellor who correctly prizes maths education, although he’s come up with a good answer, he hasn’t yet shown us enough of his working on how he plans to get there.”
Stronger foundations for businesses
Charlie Mullins, founder and managing director of Pimlico Plumbers said: “The UK is threatened by a cocktail of risks, but the chancellor has ensured that we have stayed on track with a long-term plan that will stop us suffering from a globally-induced economic hangover.
“While fragile economies around the world falter, we have built upon solid foundations that ensure we have the kind of stability we need to deliver continued growth.
“And if it’s the economic cocktail that George has spotted behind the bar, which we all may be forced to have a sip of at some point, steps are being taken to support UK business. Taking small firms out of business rates is a positive step to support entrepreneurs and SMEs.
“Firms can reinvest that cash into their operations and workforce. It also provides a platform for growth for enterprises run from home to take the first step into dedicated premises from where they can build their businesses and take on more people.
“Together with the cut in stamp duty for commercial property and the changes to capital gains tax, these moves can help to light a fire under UK enterprise and give entrepreneurs stronger foundations on which to build successful businesses.”
Keith Morgan, chief executive of the British Business Bank, said: “Today’s Budget announced that the British Business Bank will support £1bn of finance for smaller business.
“This included the creation of the £250m Midlands Engine Investment Fund (MEIF). The region has 460,000 SMEs and the MEIF will make finance available to help them grow, with wider benefits for regional employment and prosperity. The Midlands has enormous potential to deliver for the UK economy and we look forward to working with the Local Enterprise Partnerships to establish the fund over the coming months.
“The MEIF will sit alongside the Northern Powerhouse Investment Fund in providing assistance to businesses outside London and the south east. Overall this will help to increase the UK’s productivity, which remains one of the key challenges for the wider economy.”
Northern Powerhouse booming?
Glynis Frew, managing director of Hunters Property Group, said: “Anything that moves the Northern Powerhouse forward will help all aspects of the economy across the country. The region is expanding rapidly whilst strengthening the economy and appropriate infrastructure is needed to support it. Currently, one can travel from York to London in two hours but it also takes an hour and a half to travel from York to Manchester. It is nonsensical to keep a part of the nation which can support the economy as divided as this and we welcome these new plans. However, the question has to be asked whether these proposed transport links will be sufficient to support and drive the region forward.”
Rates reform is welcome boost
Frances Dickens chief executive of Astus Group said: “This was a budget of two halves. On the plus side, this was a good budget for small businesses. The decisive – if overdue – reform of business rates including taking 600,000 small businesses out of business rates altogether is a welcome boost particularly to the High Street. Meanwhile deciding to link business rates to the lower rate of the Consumer Price Index (CPI) rather than the higher rate of the Retail Price Index (RPI) is a common sense move.
“I’m also pleased about the reform of commercial stamp duty which will benefit smaller firms. However as a supporter of Brexit, I am disappointed that the chancellor used the Budget and independent Office of Budget Responsibility advice to ratchet up the fear factor around the EU referendum, rather than encouraging objective discussion of the pros and cons of EU membership.”
Crossrail 2 is good for business
The Federation of Small Business (FSB) said: “We welcome the announcement in the budget to commission Crossrail 2. The population in London will hit 11.3 million by the year 2050 and London needs to take tough infrastructural decisions to meet the demands of small business.”
Mike Cherry, policy director at the FSB added: “In a Budget constrained by both the need to reduce the deficit and the economic outlook, the chancellor has listened to our calls for the tax system to be made simpler for small businesses and the self-employed and taken important action on business rates.”
Tax cut will have transformational effect
Jim Duffy, chief executive of Entrepreneurial Spark said: “Reducing corporation tax to 17% by 2020 will have a transformational effect on startups and scale-ups, allowing ambitious entrepreneurs to reinvest more profits and create new jobs. Additional small business relief will ensure more small businesses pay no rates at all, which is to be applauded as we encourage people to start their own businesses and create wealth. Removing VAT loopholes for international ecommerce businesses will help the UKs digital firms be much more competitive.”
Johnny Luk, chief executive of the National Association of College and University Entrepreneurs (NACUE) said: “This is a good pro-business budget, with considerable adjustments to the tax system to help small and young businesses. This includes the reduction of corporate tax to 17% by 2020.
“The acknowledgement of digital enterprise in supporting micro businesses via tax free allowances indicates awareness of an emerging economy. We welcome changes in the business rate relief threshold and the reduction of national insurance tax for the self-employed. I have hope also that the encouragement for investors in unlisted companies will also drive scale ups in the community.”