North West business leaders have reacted to Chancellor Kwasi Kwarteng’s mini Budget which he outlined in the House of Commons on Friday morning.
For a summary of all the key points from his statement, click here.
Below, BusinessLive has rounded up views from leaders across the North West on each of the announcements made.
University of Salford
Dr Gordon Fletcher, retail and economy expert from the University of Salford Business School, said: “This feels like a series of un-costed party pledges being made going into a general election rather than a costed, balanced management of national finances being made by a responsible government.
“The announcements primarily benefit those probably least concerned about cost of living increases within their households and those business most benefitting from the current situation. It is a solution pinned to a vague objective of achieving growth without addressing the real systemic issues that confront UK business including productivity issues and upskilling the working population.
“The fiscal event has not received scrutiny from the Office of Budget Responsibility and no statement about the long-term consequences of these decisions accompanied Kwarteng’s performance. The event appealed directly to – and rewarded – the constituency that elected Truss to Prime Minister. There will be little to celebrate for those most worried about heating their home over Christmas.”
Bibby Financial Services
UK managing director Derek Ryan said: “Freezing corporation tax at 19% will doubtless be welcomed by many. But the former Chancellor’s proposal to increase corporation tax to 25% would only have applied to those making profits of £50,000 or more, which is approximately 70% of businesses.
“For a significant number of the UK’s 5.6 million small to medium sized businesses, profits fall well short of this threshold. Consequently, today’s announcement makes little or no difference to their prospects for growth or survival. Indeed, our own data shows 76% of SMEs are concerned that the current economic climate is killing entrepreneurialism and 26% can’t afford to invest in their businesses.
“Small to medium sized businesses clearly need more direct, long-term support if they are to make a meaningful contribution to Mr Kwarteng’s ambitions.”
Project director David Parkin said: “We are delighted that the Chancellor, Kwasi Kwarteng, has named HyNet within the Growth Plan to be accelerated for “as fast as possible” delivery.
“This includes the HyNet’s hydrogen pipeline, hydrogen storage and carbon capture and storage infrastructure.
“HyNet is at the centre of the UK’s low carbon hydrogen economy and will create over 6,000 jobs across the region, safeguarding highly skilled manufacturing jobs and bring investment work £31bn into the UK economy, helping to level up across the country.
“The transition to a low carbon economy, through projects such as HyNet, provides the UK with a fantastic opportunity to protect and create highly skilled jobs, create a sustainable supply chain, and provide UK businesses with the ability to deliver the environmentally friendly products that consumers are increasingly demanding.
“Similarly, Authorities spanning the HyNet region, including Liverpool City Region Combined Authority, Cheshire West and Chester Council and Greater Manchester Combined Authority, in addition to Ellsmere Port, have been named as ‘investment zones’ in which development, investment and job creation is turbocharged.”
Director of strategy Jessica Bowles said: “Amongst the tax cutting and deregulation focus of the mini-budget was an announcement about creating investment zones.
“The idea is a good one if they are developed through local collaboration and partnership and build long-term business confidence. To be game changers they need to be properly rooted in the vision and opportunity of their towns and cities with strong connections to their communities, good quality jobs, great placemaking and with long-term investors from both public and private sector.
“We also need faster infrastructure development to better connect our towns and cities more effectively, so we welcome the Government’s plans to streamline the processes around this. Properly devolving decision-making and funding programmes would be a quick way to do this and inject new pace. We know infrastructure investment is critical to unlocking new opportunities. The publication of the 100 prioritised infrastructure projects will go some way to showing us what these plans look like and how quickly change might be achieved.
“All eyes will be on the budget proper later this autumn where we hope to hear more about long-term investment in our regional economies.”
Northern Powerhouse Partnership
Vice-chair Professor Juergen Maier said: “Investment zones can be highly effective tools for attracting businesses – but the government risks undermining their efficacy by failing to tackle challenges such as inadequate transport infrastructure, poor education outcomes and low skill levels.
“A real plan for growth would focus on the longstanding barriers to productivity, such as the full delivery of Northern Powerhouse Rail and investment in innovation – but these were notable by their absence.
“We’ll be working with metro mayors to fill that void, making sure that we’re encouraging responsible businesses to invest in the North, creating the high-wage, skilled jobs that are critical to growing the economy and improving living standards.
“A 2.5% growth target is laudable – but it needs to be inclusive and we won’t achieve that without embracing business and communities in the Northern Powerhouse.”
CEO Robert White said: “Many households and businesses will welcome the benefits of today’s tax and energy interventions and, more generally, the new administration’s focus on growth.
“However, the need to address underlying low productivity in the UK remains. Shorter-term intervention measures like those announced today need to be matched by a longer-term investment plan aimed at reducing barriers such as poor connectivity and a lack of social mobility – particularly in the North where the need for the Government to deliver on its commitment to ‘level up’ is ever more pressing.”
Managing director and founder Phil Dawson said: “We really welcome a lower corporation tax rate, ultimately higher business taxes result in higher prices for consumers which isn’t a good thing and will exacerbate current inflation woes.
“It’s good news for us that energy bills are being capped, although it’s a real shame it’s come to this after years of ridiculous policy which promotes newspaper headlines vs tangible action by the government.”
Chief executive Paul Cherpeau said: “Businesses will be pleased to see the government bring forward measures to tackle the short-term causes of inflation with a long-term approach to boost investment and raise confidence.
“The Chancellor’s package of planning reforms and tax cuts is clearly aimed at encouraging investment and growth, but the devil will be in the detail and many questions remain about how quickly the measures will have an impact.
“Businesses will certainly welcome the cancellation of planned increases in Corporation Tax and National Insurance contributions, coupled with specific reforms around plant and machinery allowances and IR35, offering breathing space to plan for the future and reinvest in technology, premises and people.
“Tourism and hospitality play a major part in our regional economy, so specific measures such as VAT free provisions at airports and ports, as well as the repeal of duty increases on alcohol have the potential to benefit some of our largest employers.
“Investment Zones offer perhaps the largest signal of the government’s new direction, with the opportunity for businesses to pay lower taxes and business rates in specific areas. Details on the exact locations and the rationale for choosing them have yet to be released but we hope the Liverpool City Region will benefit from any further opportunities to support growth and investment.”
Planning partner Stuart Tym said: “The proposed local investment zones can be seen as hyper-freeports, eclipsing those announced by the previous administration in terms of deregulation. This is particularly the case for planning policy, with the zones subject to bespoke regulations and potentially scaling back environmental protections, Section 106 agreements and infrastructure levies.
“Changing planning policy can act as a lever for development. However, it’s critical that we avoid becoming tunnel-visioned in the pursuit of economic growth; ensuring that deregulation does not impact the environment and balances the delivery of much-needed market rate and affordable housing with the related required infrastructure.
“Government funding will be used to fill the void left by reducing developer contributions in these zones. The success of this system hinges on often under-resourced local planning authorities being not only able to demonstrate what they would have asked a developer to finance, but also obtain funding from a new government stream and deliver projects in a timely fashion to mitigate the impact of development.
“The confirmation that a bill is set to be brought forward to ‘unpick’ the wider planning system may signal the end of the Levelling Up and Regeneration Bill and its planning proposals. The Chesham and Amersham by-election result may have made that approach to de-regulation unpalatable; which remains the political lens through which further reform must be viewed.
“If the government is to accelerate wider planning reform by ‘unleashing the power of the private sector’, it must also empower the public sector by properly resourcing local planning authorities.”
Tax partner Adrian Young said: “Many of the measures announced by Kwasi Kwarteng today had been all but confirmed by rumour and leak over the last few weeks. These included the reversal in the national insurance contribution increase introduced by Kwarteng’s predecessor, Rishi Sunak, and the cancellation of the planned six per cent increase in corporation tax.
“Both announcements will no doubt be welcomed by north west business leaders, particularly the national insurance reduction, which will impact positively on both employers and employees.
“More surprising, although itself subject to some rumour recently, was the confirmation that the planned one per cent reduction in the basic rate of income tax is being brought forward to April 2023. Again, this will be welcomed by many. Whereas the energy price guarantee has alleviated some cost-of-living concerns, upward price pressures are expected to continue for some time yet. So a reduction in income tax will put more money back into consumers’ pockets at a critical time.”
Managing partner Jane Parry said: “On the face of it, today’s barrage of tax cuts – including the basic rate of income tax cut and the abolition of the 45p additional rate – will be welcomed by some, but we are talking about some truly eye watering sums that are being added to the national debt.
“Some of the world’s leading economic voices and leaders believe this form of ‘trickle down’ economics is deeply flawed and will put the public finances on an unstable footing for years to come, and I am with them. Especially when compounded by the lack of an energy company windfall tax which is, in my view, pretty shameful.
“The news that corporation tax will stay at 19% is good news for businesses struggling with mounting costs, but – of course – it will only be benefit to companies that are actually making a profit. The energy price cap for business is a positive step but it’s still a chunky hike in costs and the real issue is that it gives no long-term certainty, which is what firms need.
“If there’s no de-escalation of the war in Ukraine, or it gets worse, then this move will be nothing more than kicking the can down the proverbial road. It’s simply impossible for businesses to make strategic and long-term decisions in this environment which is complex and ever changing.
“However, there was some welcome certainty on making the £1m Annual Investment Allowance for capital equipment expenditure permanent, thus avoiding the regular speculation about see sawing thresholds which hampers long-term business decision making. The promised enhancements to the venture capital investment schemes are also welcome. Let’s hope those bankers start to invest their larger bonuses in UK businesses as a result.”
Head of the North West Steve Hogg said: “Plans to help both households and businesses alike with their bills will be welcomed across the UK but we can’t afford to lose sight of the need to address lasting regional inequalities.
“Low-tax investment zones and stamp duty cuts will grab headlines but what’s needed is a concerted effort to drive long-term investment and regeneration in our towns and cities.
“For businesses in the North West, that requires a recommitment from this government to spend on infrastructure, education and Net Zero projects.
“With two years until the next General Election, time is of the essence for this government to get it right and get businesses and investors on side. We’ll be looking for more from the budget proper later this autumn.”
Aaron & Partners
Head of Real Estate Emma McGlinchey said: “The news that stamp duty land tax (SDLT) is cut will no doubt come as a pleasant surprise for homeowners looking to buy property.
“Cuts of this type generally have a complex impact on the property market – not always for the better. For instance, it could inflate house prices, in turn pricing out first-time buyers. Whilst the loss of revenue for the Treasury may be neutral if activity increases, such measures do not address the supply side issues. Also, the opportunity has not been taken to simplify the rules on SDLT.
“However, the move by the Chancellor will certainly encourage people to think about moving, boost buyer confidence and hopefully invigorate a market that has showed signs of slowing since the last SDLT holiday ended and recent increases in interest rates. Certainty has been given to the market as these are permanent cuts.”
Managing director Katie Gallagher said: “The tech and digital businesses that we represent welcome the reversal of the increase in corporation tax and the National Insurance increase; as well as the reduction in income tax. In particular, this will give start-ups and early-stage businesses a boost to ensure they are given every chance to succeed.
“However, tech companies and start-ups are nervous for the economic future, having seen investment drying up, hiring freezes and the ongoing skills shortages. We do welcome the increase to limits on Seed Enterprise Investment Scheme (SEIS) funding, which now allows start-ups to raise up to £250,000 under the scheme, 66% more funding than previously.
“We tentatively welcome the concept of the new low tax Investment Zones and would call upon the Government to work hand in hand with the existing regional tech eco-systems which already understand the local economy and where investment is needed to really flourish.
“This Budget leaves many questions about costings but in the short term we are glad to see some measures to support businesses. We look forward to seeing the full economic and fiscal forecast later this year.”
Managing director Sean Keyes said: “I thought it was a good budget for both businesses and individuals, and I think it will help us climb out of this potential recession.
“From both an individual and business perspective, I agree with reducing National Insurance by 1.25%, though I understand this may impact the NHS which is having a tough time at the moment. However, at no point should any government take more than 50% of anyone’s pay packet, and so, if tax therefore goes too high, then people will only find ways of not paying it. This may seem unpopular, but we need high achievers to feel rewarded for their efforts in order for the economy to grow.
“In terms of the construction industry, cutting stamp duty will be very good for the sector because it’ll encourage people to move house; this will also kickstart first time buyers and boost first-time ownership. In doing so, this also encourages people to buy new furniture and undertake vital home improvements, thus creating wealth for the economy.
“Reversing the plan to raise corporation tax also means we can now employ another person next year.”
Grant Thornton UK LLP
Partner Carl Williams said: “”Levelling Up was the flagship domestic policy for the Johnson premiership, and if the Truss government continues to pursue it effectively, businesses will need to come together for a common purpose to make it succeed.
“Here in the North, that can be difficult because of the nuances of the Liverpool City Region and Greater Manchester, but it’s about making sure that there’s a consistent agenda that we’re all working towards to ensure we’re driving growth.
“The news of how certain areas can bid to become potential Investment Zones, which includes Greater Manchester and Liverpool City Region, could help in this regard. In theory, businesses within those Zones can focus on a specific agenda that suits their needs so they should find it easier and more cost-efficient to operate.
“It’s clear that not every region will require the same level or type of intervention, so this approach could be a good way of stimulating growth in the areas that most need it, but does run the risk of creating a two tier economy within our region.”
MHA Moore and Smalley
Tax partner Tony Reddin said: “The tax reforms announced by chancellor Kwasi Kwarteng in today’s fiscal announcement represent one of the most significant shake-ups of UK finances over recent decades.
“The measures are all aimed at prompting growth at a crucial time for the UK economy by incentivising investment.
“A string of cuts aimed at UK businesses include the cancelled rise in corporation tax from 19% to 25% as well as the creation of more than 40 new investment zones across England, which will benefit from reduced business taxes and relaxed planning rules aimed at encouraging firms to invest.
“There are also a range of tax cuts designed to boost personal income and make the UK significantly more competitive on a global scale.
“The most significant of these is the scrapping of the top rate of income tax of 45% to 40%. Also announced was the acceleration by a year of the cut in the basic rate of income tax to 19%, a measure which will mean more than 31 million people across the UK keep a greater proportion of their earnings.
“Alongside other notable announcements, including an increase in the stamp duty threshold for residential purchases, a reversal of planned increases to national insurance and cuts to duty rates for beer, cider and wines, this is clear evidence of the government’s intention to kick-start the economy by easing the tax burden on both people and businesses.”
Partner Hadyn Rogan said: “There was a significant amount of speculation around what Liz Truss would do to taxes. Some of this week’s announcements were unsurprising, including the reversal of the increase to National Insurance, but others were less so.
“The Government hopes that the reversal of the planned increase in corporation tax will stimulate further growth in the UK economy and help to attract inward investment by keeping the UK corporation tax rate competitive in comparison to other G7 and European countries. Meanwhile for individuals, the changes to dividend tax announced yesterday will have an effect on many savers receiving dividends from their investment portfolios who will no longer face the increased taxation on their investment income.
“Although these changes are not insignificant, looking ahead to the October Statement businesses will be watching for detail on what support will be offered once the energy support package announced on Wednesday expires, while individuals will likely be expecting further measures to help alleviate their personal tax burdens. For both, a cut in VAT on fuel bills would be welcomed.”
Ed Dwan, partner and head of BDO LLP in the North West, said: “The Chancellor delivered a new Growth Plan Statement with a promise to hit UK economic growth of 2.5% through a range of tax cuts but the omission of an OBR forecast.
“BDO’s recent poll suggests businesses in the region will be incentivised by the cancellation of the planned increase in corporation tax. In the North West, 41% shared they would have the confidence to invest in growth if the rate was held at 19%, which the Government has now confirmed.
“An announcement was made around new investment zones with the aim of turbocharging regional growth with geographically targeted tax incentives and driving levelling up. The 40-plus zones are yet to be confirmed but the Chancellor shared he was in discussions with authorities across the UK. It is reassuring that levelling up is still on the agenda, but regional businesses won’t grow from tax cuts alone.
“Ambitious companies still need the capital and confidence to invest, as well as the right talent to help deliver growth. Businesses consistently tell us that recruiting the right people and skills remains the greatest barrier to expansion. With a policy like this, there’s also a risk that it simply moves growth around the region from already thriving areas.
“Business leaders were also looking for tax simplification with 28% of businesses in the region calling for an overall simplification of the current tax system and 75% of businesses in the region sharing the view employment and payroll taxes are in the greatest need of reform. The plan for the winding down of the Office for Tax Simplification in favour of embedding this across departments will therefore be watched very carefully.”