Fuel duty to be cut by 5p per litre until March next year. That might have been the headline from Rishi Sunak’s spring statement, but there were other measures to help businesses.
The income threshold for at which point people start paying National Insurance will rise to £12,570 in July, which The Chancellor said was tax cut for employees worth more than £330 a year.
He also pledged to cut the basic rate of income tax from 20p to 19p in the pound before the end of this Parliament and the employment allowance, which gives relief to smaller businesses’ National Insurance payments, will increase from £4,000 to £5,000 from April.
Fiona Graham, Director of External Affairs and Policy of the Institute of Family Business, which represents thousands of family businesses across the UK, said: “We were pleased to see the Chancellor signal his intention to tackle long term issues that family firms have been raising for some time – like using the tax system to support business investment and reforming the Apprenticeship Levy. However, reviews rather than changes mean that today’s statement was a missed opportunity to support business in facing the huge challenges they are dealing with today.”
Ian Mean, Vice Chair of Gloucestershire’s Local Enterprise Partnership, and director of Business West, said: “As predicted he cut fuel duty by 5p per litre but I have to agree with the RAC that this is just “a drop in the ocean”. Our hauliers here in Gloucestershire wanted at least 12p. However, the cut comes in from 6pm this evening and the welcome news is that it lasts for a year. What he did do – also widely predicted was lower the tax threshold to benefit lower paid workers.
But business leaders from across Coventry and Warwickshire say there were ‘very few crumbs of comfort’ in the Spring Statement.
The Coventry and Warwickshire Chamber of Commerce’s Spring Statement lunch saw businesses from a range of sectors assemble at the Manufacturing Technology Centre in Coventry to watch Chancellor Rishi Sunak deliver his statement on live TV.
Businesses questioned whether enough had been done to tackle rising inflation and support industry through looming challenges.
Tim Squires, Commercial Director at Coventry-based Squires Gears Manufacturing, said: “The only real positive from a manufacturing point of view was in regards to fuel.
“It is a slight bonus that moving goods around is going to be slightly cheaper but other than that I am scratching around to see if there are any other positives.”
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, here 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.”
There was a cool reception for the Chancellor’s promise of a cut in the basic rate of income tax from 20% to 19% in 2024. Rob Gunn, Accountant’s Crowe‘s Midlands Tax Partner, said: “Basically we are talking about a basic rate change of £375 in two years’ time for the average tax payer.”
Gunn also pointed out: “A quick reading of the Red Book, which contains the detail behind the Spring Statement, reveals that one of the biggest increases is from HMRC’s increase in compliance activity.”
Crowe’s Midlands managing partner and national head of manufacturing business Johnathan Dudley said: “We would welcome any move in the Autumn Budget 2022 to look again at the Apprenticeship Levy – its administration is universally hated by companies that try to use it.”
Black Country Chamber of Commerce chief executive Corin Crane called the Spring Statement “light and short”. He said the cut in fuel duty would have little real impact for households but would benefit logistics companies where fuel was a major cost. But he regretted the lack of any move to protect business from rising energy bills.
Johnathan Dudley agreed, adding: “The hint that the superdeduction and investment allowances will remain is welcome, but if you can’t afford the energy to open your factory, you’re hardly going to buy a new piece of kit.”
Crowe audit partner Mark Evans said: “While the latest figures talk about inflation at 6.2%, a lot of companies in the Black Country say it feels like a lot more than that on the ground – more like 20%. One of our building company clients has seen a 25% increase in Upvc guttering in just a week.
“There are signs that, unusually, inflation is being generated on the supply side rather than by demand. The costs of metal and energy are causing that in this area. They are struggling to secure deliveries from their supply chains, so one automotive manufacturer currently has an 85 week order book. They are having to Hoover up stock, which in turn is putting huge pressure on their cash flow.”
“However, Government cannot escape the fact that manufacturers are facing eye watering cost increases that are pushing many towards a tipping point and companies would have been looking for substantial business support measures to help alleviate these. In particular, the lack of action on energy costs for business is especially hard to fathom.
“It has been two years to the day since lockdown began and there is very little in today’s statement to support a sector that kept working throughout the pandemic, ensuring that there was food on the shelves, PPE for our NHS and medicines for the people who needed them. The promise of jam tomorrow with consultations through the summer and action in the Autumn will also be of little comfort for many who would have liked to have seen action and support immediately”.
“We have also yet to see a long-term economic vision that has enterprise, growth and innovation at its heart. Without adding a turbocharger for growth the Government risks leaving the economy spluttering along as a two stroke.”