Businesses outline hopes for Healey's first budget

As chancellor John Healey prepares to unveil his first budget tomorrow, businesses are braced for what the impacts will be. 

The chancellor has said the budget will move 'money and power out of Westminster, and into every postcode around Britain'. How that would look in practice remains to be seen. 

The budget, the chancellor has said, will also include plans 'to give families and businesses a bit of breathing space' following the rise in prices since the start of the ongoing Israel/US conflict with Iran.

The leaders of both East Lancashire and North & Western Lancashire chambers of commerce Simon Brierley and Babs Murphy joined forces with chambers across the country in London earlier this month to lobby the chancellor ahead of his first budget announcement.

Part of a wider British Chambers of Commerce campaign, a statement on the BCC website says: "The message from business is clear. If the government wants to see good growth in every postcode, then this needs to be a budget that cuts, not adds, to the cost of doing business."

Babs Murphy, chief executive of North & Western Lancashire Chamber of Commerce, said: "We were incredibly proud to stand alongside the British Chambers of Commerce and chambers from across the UK in London, speaking with one clear and united voice for the businesses we represent.

"Our message to the Chancellor was simple - give business a chance.

"Businesses are ambitious. They want to invest, recruit, innovate and grow. But they need an environment that enables them to do it.

"The gauntlet has been laid down. Back business, unlock growth and give our entrepreneurs and employers the confidence to invest in Britain’s future. When the Chamber network speaks together, the voice of business is impossible to ignore."

In addition, business leaders from various sectors across the county have spoken about what they expect to see in the budget, or what they hope will be included.

Ben Ritherdon, managing director of Darwen headquartered manufacturing business Ritherdon and Co, said: “I would like to see what the government can do towards boosting manufacturing growth - infrastructure spending and getting more of the things that the country needs made in the UK.

“We need to be making more products that are strategically important for the country.

“If you get UK manufacturers helping with that, then you see jobs being created, leading to more tax revenue generated, helping boost the economy.

“Certain products are in short supply, especially in the electricity supply sector, and this is holding up the electrification infrastructure of the country.

“Why not invest in helping UK manufacturers to develop their product ranges and expand their factories to align with the national infrastructure strategy and  help to ease those supply bottlenecks?

“If the Government can do anything to help boost the manufacturing of the things the country is short of, helping to eradicate supply chain bottle necks, that would be very welcome.”

Lucy Panchal, director at Champion Accountants, which has just relocated its headquarters to Chorley, said: “One of the biggest concerns I am hearing from Lancashire business owners isn't necessarily that they can't afford to invest, it's that they're increasingly reluctant to. Businesses that would ordinarily be looking to recruit, expand or invest in new equipment are choosing to protect their cash reserves because they simply don't know what additional costs might be around the corner.

“Rising employer National Insurance contributions, minimum wage increases and wider operating costs have already put pressure on margins. It's not one individual measure that's causing concern, but the cumulative impact, coupled with constant speculation about what might come next.

“I don't think businesses are expecting major giveaways from the chancellor. What they need is clarity. A budget that provides greater certainty over future costs, with enough notice to plan and adjust, would give business owners the confidence to make decisions rather than continually preparing for the worst.

“For Lancashire's smaller, owner managed businesses, that confidence is just as important as any individual tax measure. Whatever the budget brings, understanding their cash flow, reviewing forecasts and planning ahead will be essential.”

Tony Medcalf, Lancashire based tax partner at MHA, the UK member firm of Baker Tilly International, said a series of targeted tax changes affecting Lancashire businesses are more likely than a single major revenue raising measure.

He said: “The fiscal challenge is not finding one clean revenue raising lever but managing a difficult balance. Tax levels are already high, fiscal drag is pulling more middle and higher earners into heavier tax burdens and further increases risk adding to the strain on households already feeling squeezed.”

On the potential for rises in Capital Gains Tax, Tony added: “A straight increase to CGT is unlikely to raise tax revenues. 

“However, estimates suggest £14bn could be raised by aligning CGT with income tax as part of a broader package of reforms which also includes introducing an investment allowance, removing the CGT uplift on death and reducing opportunities to convert income into capital gains.

“The fear is that any of the above would discourage investment in the UK at a time when such investment is so desperately needed to fuel growth. A pro growth alternative would be to protect competitive rates while strengthening reinvestment reliefs for proceeds recycled into UK businesses, intellectual property and innovation.”

Blackburn based accountants PM+M's corporate tax director Claire Astley said: "The government has made growth a central ambition. The upcoming budget is where that ambition needs to become more than a slogan. Every tax measure announced should be judged against one simple question - will this encourage businesses and individuals to invest, employ people and grow?

"For me, the priority should be creating a tax environment that gives businesses the confidence to make long term decisions. That starts with Business Asset Disposal Relief. Restoring the 10 per cent rate and increasing the lifetime limit to £10m would send a powerful signal to entrepreneurs that building a successful business is something the government wants to encourage.

"The early years of a business are often when the greatest risks are taken, yet they are also when cash is most valuable. A lower tax rate for genuinely new trading businesses could encourage more people to start companies and give those businesses greater scope to reinvest profits, create jobs and establish themselves.

"Investment incentives should go further. Some sort of growth investment allowance for expenditure on artificial intelligence, automation, digital infrastructure and employee training could help businesses invest in productivity and future proof their operations. 

"There are other relatively simple changes that could support growth too. Increasing the Employment Allowance would reduce the cost of employing people and help businesses create and retain jobs; and raising the VAT registration threshold would also remove one of the artificial barriers facing growing businesses, particularly those whose turnover is close to the current limit."

Hilary Heap, north market leader at solicitors EY, said: “The challenging fiscal environment for the chancellor means that generating stronger growth remains the key to greater fiscal flexibility and funding additional spending measures going forward.

"Every region has a part to play in delivering growth and as the government continues to set out its devolution agenda, there’s an opportunity to rethink how different parts of the UK can help to turn growth ambitions into delivery. 

“The Fiscal Devolution Roadmap, due to be published at the autumn budget, offers the chance to set out how local leaders across the north can take on an even more strategic role. Aligning local decisions on infrastructure, skills and housing to provide a consistent and clear strategy for growth could be key for attracting inward investment, unlocking private capital and helping the government achieve its ambition of growth in every postcode.”