The Chancellor has listened to Chambers’ long-standing calls for changes to the business rates system and this will be good news for many firms. This will provide much needed relief for businesses across the country, giving many firms renewed confidence to invest and grow. However, these changes must be the start, rather than the end point of the reforms to this broken system. Additional investment in skills, infrastructure and better access to finance will be key drivers for our economic recovery and will provide longer-term benefits and opportunities for businesses across the country, however it is disappointing that very little of these benefits are specifically aimed at our region. However, businesses have been battered by 18 months of the pandemic and problems around supply chain costs and disruption, labour shortages, price rises, soaring energy bills and taxes and there will be difficult months ahead. While investments announced today will take time to bed in, Government should consider other action that will relieve immediate pressures, particularly on smaller businesses, such as urgent review of the shortage occupation list to allow for short-term visas in key sectors, and an SME energy price cap. If firms face unexpected bumps in the road, the Chancellor must be prepared to take further action to get the economy firing on all cylinders again. The British Chambers of Commerce provides its full response to the Budget 2021 Commenting on the latest forecasts by the Office for Budget Responsibility, Suren Thiru, Head of Economics at the BCC, said: “As expected, the OBR’s latest forecasts provide a significantly more positive assessment of the UK’s near-term growth prospects, compared to the March Budget. However, with acute staff and supply shortages and surging price pressures increasingly weighing on economic activity, the recovery may be slower than the OBR predicts. “The downgrade to the OBR’s near-term forecast for business investment is a key concern, as weak investment levels would limit the government’s ambition for a sustainably high wage/high skill economy by stifling productivity. “The stronger than anticipated growth over recent quarters and lower long-term economic scarring from Covid has delivered a marked improvement to the UK’s expected fiscal position. As such there is scope for the future path of fiscal consolidation to be eased to avoid suffocating the recovery.” Commenting on the reforms announced to the Business Rates system, Suren Thiru, Head of Economics at the BCC, said: “We are pleased that the chancellor has listened to our call to deliver more frequent revaluations. Moving to a three-year-cycle will help to reduce the huge changes in rates bills that clobber firms and enable them to plan their growth strategies with greater confidence. “However, a system that responds more frequently to changing economic conditions must be made easier for firms to navigate. The current system already generates a significant number of appeals, and if it is not made simpler, more frequent valuations would exacerbate this problem. “The new business rates relief to support investment in property improvements is a longstanding BCC call and will help provide ratepayers with much needed time to recoup any capital investments they have made before their higher rates bill applies. This will give firms more confidence to push ahead with investments in key priorities, including the transition to net zero.” Commenting on freezing the Business Rates multiplier and a new temporary relief for retail, hospitality and leisure properties Suren Thiru, Head of Economics at the BCC, said: “We are pleased that the Chancellor listened to BCC’s call to blunt firms’ business rates bills amid soaring inflation. The freeze in the business rates multiplier and support for retail, hospitality and leisure will provide businesses with more financial headroom to repair business cashflow, diminished by the pandemic and rising cost pressures and invest more in growth plans to power the recovery.” Commenting on the extension to the £1 million Annual Investment Allowance Suren Thiru, Head of Economics at the BCC, said: “We are pleased that the Chancellor listened to our call to extend the £1 million annual investment allowance. This should provide a major incentive for firms to crowd in investment, with firms continuing to report that this is a crucial tool which gives them the confidence to push ahead with their plans.” Commenting on funding for childcare, Jane Gratton, Head of People Policy at the BCC, said: “When parents struggle to find a childcare solution, employers can lose talented people from the workplace, stymieing business growth and prosperity. Additional funding for childcare providers will help parents access high quality affordable childcare and remain in work, ensuring employers retain skills and people progress in their careers.” Commenting on Infrastructure Investment, Jane Gratton, Head of People Policy at the BCC, said: “It’s great to see the Chancellor recognise the importance of local infrastructure in driving our economy forward and levelling up communities across the country. “This investment will be a welcome boost toward that goal and will also be vital in achieving our net zero targets by funding more efficient, reliable and greener public transport. “To truly upgrade our connectivity to ensure it meets business needs, investment in a modern rail system is required. The Government must publish its Integrated Rail Plan and deliver on its commitments to critical schemes including the full HS2 network and Northern Powerhouse Rail.” Commenting on Research and Development funding, Hannah Essex, Co-executive director at the British Chambers of Commerce, said: “Measures announced by the Chancellor that both fund and encourage investment by firms in Research and Development are to be welcomed. “Greater funding will encourage investment in research & development which should boost the UK economy at a time when productivity growth remains weak. “However, to ensure that UK firms remain competitive on the global stage it is vital that greater investment in R&D is supported by retention of our intellectual property.” Commenting on the Shared Prosperity Fund, Hannah Essex, Co-executive director at the British Chambers of Commerce, said: “The Shared Prosperity Fund is crucial to ensuring local areas receive the investment they need. The fund must be designed to maximise local autonomy, respond to the voice of business and power economic growth. Chambers of Commerce across the UK stand ready to support the pilot schemes and help develop proposals further once published.” Photo credit: Getty Images/Chamber Canva Pro
