How do businesses feel about the measure outlined by Philip Hammond in today's Budget?
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Businesses are giving their initial thoughts on the big changes in today's Budget, including business rates, funding for technical education, an increase in national insurance and the chancellor's hint that digital businesses could be in for higher taxes.
On business rates:
Karen McCormick, Chief Investment Officer at Beringea, said:
"The introduction of a ’transitional cap’ on business rates for companies coming out of small business relief will benefit fast-growing businesses, and represents a solid step towards safeguarding London’s reputation as the pre-eminent European location for starting up and scaling a business.
“This is especially important at a time when spiralling property prices and commercial rents are causing uncertainty and competing cities such as Berlin and Amsterdam are making concerted efforts to woo UK entrepreneurs.”
Nick Black, CEO of Apadmi, said:
“Concerns around changes to business rates, which will take place in April, are still a primary focus for many small businesses. Increased business rates will have a detrimental impact on SME technology firms, and would actually hinder the growth and innovation expected from the increased investment.
“The government should be doing all it can to fuel SME business growth, particularly at a time where businesses are concerned about the status of overseas workers and the shortage of talent currently here in the UK.”
Phil Vernon, head of rating at PwC, said:
“Local Authorities will again play a key role in helping local business through the introduction of a new relief to help soften the impact of the rates revaluation on 1 April by allocating £300m to help worst-hit business
“The new relief creates a new administrative burden for both Local Authorities and Ratepayers, and the Government will need to cut out red tape by making the relief process as painless as possible. A costly application process will add more frustration and confusion to the business rates system.
“As with many targeted reliefs, the financial assistance will be subject to EU state aid limits.”
Business rates were one of the most controversial areas going into the Budget
On funding for STEM subjects and apprenticeships:
Tim Thomas, Head of Employment & Skills Policy at EEF, said:
“This is a welcome first step towards finally putting technical and academic education on a truly equal footing. It ticks all the right boxes in terms of the emphasis on parity of esteem and the need to radically simplify and streamline the current system of qualifications which is overly complex and misunderstood by students, teachers and employers.
“Government must now ensure this is truly new funding to the skills system and that the technical qualifications which result are designed and demanded exclusively by employers of all sizes.
Carolyn Fairbairn, CBI Director-General, said:
“This is a breakthrough Budget for skills. There has never been a more important time for the UK to sit at the global top table of technical education for young people. Firms will be looking for ongoing partnership with the Government as they try to make the Apprenticeship Levy work.”
Ann Francke, Chief Executive of the Chartered Management Institute (CMI), said:
“Investing £300m in STEM subjects is one part of the solution we need to boost UK productivity and profit from post-Brexit opportunities.
“But it dwarfs the £13m the Chancellor pledged in his Autumn Statement for Sir Charlie Mayfield’s review to raising management skills. The government is right to state that innovation in skills is paramount to improving productivity: poor management costs the UK economy £84bn a year in lost productivity. For this welcome investment to pay we’ll need skilled managers to lead the projects.”
Mr Hammond announced measures to boost skills education
On potential taxes on digital businesses:
Anne de Kerckhove, CEO of Iron Group, said:
“Despite Philip Hammond’s assertion that entrepreneurs are the “lifeblood of our economy”, and his assurance that business rate increases will be minimal for small businesses, his seemingly abrasive reaction to digital businesses and the tax they pay, paints them as a liability rather than an asset.
“The UK has been experiencing a start-up boom in recent years, with 80 new companies born per hour last year complementing the 58,000 digital businesses that are currently active in the UK - so essentially by suggesting that there will be tax increases for those digital businesses that don’t have a physical shop window, is biting off the hand that feeds our GDP.
“What worries me most is that a rise in digital business tax will fundamentally slow down GDP by shackling the creation of new digital business start-ups, due to the additional financial barrier that they are being expected to hurdle.”
Tax increases could be on the way for digital businesses
On the increase in National Insurance Contributions:
Kevin Nicholson, head of tax at PwC, said:
"The increase in National Insurance was smaller than many expected, but the significance of this move should not be underestimated. It is very clear the Chancellor sees differences between the two regimes as anomalies to be ironed out. This has opened up a big potential money spinner.”
Alex Henderson, tax partner at PwC, said:
"This proposal marks a significant shift in UK tax policy. A key feature of the tax system over the last 40 years has been to incentivise entrepreneurship, recognising the risks that come with self-employment. By helping businesses to grow and employ people, governments reap greater tax revenues in the longer term.”
Chas Roy-Chowdhury, head of tax at ACCA, said:
‘Self-employees are subject to a lower national insurance contribution (NIC) because they do not receive the same entitlements and benefits as their employed counterparts – such as holiday and sick leave. Before this tax is raised, the government needs to think carefully about ways to align the level of benefits.
‘The government still has time to do this, as the increase will be phased in over two years. I look forward to hearing more about how it intends to address the issue of parental entitlements."
Sole traders and micro-businesses were targeted for tax increases