Lancashire businesses react to 'low key' Spring Statement
This year's Spring Statement delivered by chancellor Philip Hammond contained new measures for tackling late payments to small companies. But, with the outcome of Brexit uncertain, not much else for businesses.
New legislation will force big businesses to review and report on their own failure to pay suppliers in good time to the audit committee.
James Lawton-Hill, marketing director at Nixon Williams, said: "We’re pleased to see today’s announcement that the government plan to do more to tackle the problem of late payments to small businesses. It’s huge problem across the UK with recent research from the Association of Independent Professionals and the Self-Employed (IPSE) suggesting that freelancers spend an average of 20 days a year chasing invoices for late payment.
"This is a much welcomed first-step in helping to safeguard the financial interests of British contractors, freelancers and the self-employed, who can often be at the mercy of big business supply chains. Not only will it help ease cashflow – the lifeblood of a small business – but it will also allow more time to focus on business growth; potentially reduce the need to rely on credit facilities or overdrafts, and provide a boost to the UK economy."
But owing to Brexit uncertainty, the chancellor was able to few other announcements in his speech which lasted just thirty minutes.
Ian Cass, chief executive of the Forum of Private Business, said: “The confusion around Brexit has not only meant that the chancellor has found himself in a position where he has been unable to introduce material policies to help businesses, but also that businesses remain in a complete vacuum in being able to plan even for their immediate future."
The confusion around Brexit has not only meant that the chancellor found himself unable to introduce material policies to help businesses.
And the FPB is unhappy that what few changes have been announced were not discussed with businesses themselves.
"Even the ‘No Deal’ trade tariff proposals have been announced without the engagement of business," said Ian.
"Waving the carrot of a Brexit Dividend is merely a political gesture, and it really is time that the parliamentarians who represent us, on whichever side of the house they sit, realised that the economic growth the country has enjoyed over the past nine years and is forecast to continue enjoying for the next five too, has been delivered by hard working businesses who have a right to know what rules and regulations they will be expected to work to from the beginning of next month."
David Gorton, partner at PM+M, added: "The biggest immediate tax change for business is the implementation of Making Tax Digital for VAT on 1 April.
With Brexit uncertainty overshadowing almost everything, giving businesses even more to think about with new tax rates and rules would have been a bad move.
"The real cost for most businesses in complying with the MTD requirements is proving to be considerably in excess of the optimistic figures bandied around by Government when it was first announced. There are also still a significant number of businesses who have not yet got their MTD arrangements in place."
Talking of the wider economy, David said: "It was interesting (but not exactly a surprise) that the Chancellor decided to skim over the Office for Budget Responsibility’s decision to mark down its growth forecast for 2019 from 1.6% to 1.2%. His approach was instead to focus on some the UK economy’s strengths; most notably inflation being below the Bank of England’s 2% target.
"This has meant a 3.4% rise in real wages last year which, in turn, he claimed as evidence of a robust labour market. The employment rate stands at 75.8% but the OBR’s predictions are that this will continue to grow at only a modest rate over the next five years. In reality, no-one really knows and until Brexit is sorted that will continue to be the status-quo. His rhetoric around businesses needing to do more on productivity once again sounded vaguely familiar."
Rebecca Bradshaw, director at Rotherham Taylor Chartered Accountants, criticised the chancellor’s Spring Statement for failing to deliver little else beside the late payment measures.
“No one was expecting much from this Spring Statement, but I think a large number of businesses were hoping for some kind of certainty to help them plan ahead," she said."
“Ultimately, Mr Hammond did little to either reassure or support businesses, both large or small, in his speech.
“It is clear that the UK’s small to medium-sized businesses are struggling with the uncertainty caused by Brexit, with many holding back on spending and investment, so to offer nothing to them will be disappointing to many.”
In a Written Ministerial Statement released by HM Treasury after the Statement, the Chancellor also announced a number of consultations on tax following announcements he had made in the Autumn Budget.
These consultations will cover a wide range of matters, including preventing abuse of the R&D tax relief for small and medium-sized enterprises, draft regulation on the National Insurance Contributions (NIC) Employment Allowance that would restrict it to businesses with an employer NIC bill below £100,000 and a call for evidence on lettings relief and the final period exemption, which extends private residence relief in capital gains tax.
"Unfortunately, the Chancellor had few tools left at his disposal, other than to let businesses and the public know that the UK economy is ‘fundamentally robust’ enough to handle Brexit," added Rebecca.
Meanwhile, Tony Medcalf, tax partner at MHA Moore and Smalley, saw the low-key spring statement as a positive.
He said: "Businesses will be relieved the chancellor has stuck to his word of returning to one major fiscal event each year and reducing the spring statement to an update on economic forecasts.
"With Brexit uncertainty overshadowing almost everything, giving businesses even more to think about with new tax rates and rules would have been a bad move."
Carys Roberts, IPPR chief economist and head of the Centre for Economic Justice, said that more needs to be done, especially to support the North West.
"The baby steps and half measures announced in the Spring Statement are wholly inadequate to fix the fundamental weaknesses in the UK’s economic model," she said.
"As the IPPR Commission on Economic Justice found, we invest less in our economy than our OECD peers and have done for decades. We’ve seen the longest period of wage stagnation since the Napoleonic era and real wages are lower than they were in 2007.
"And our economy is hugely unbalanced: median incomes in the North West, North East, West Midlands, Wales and the South West are now 30 per cent lower than London and the South East.
"The announcements do little to correct these long-standing weaknesses. And the chancellor’s statement did not face up to the elephant in the Chamber, which is whether and on what terms the UK will leave the European Union. On that he has no better view and no clearer idea of the plan than the rest of us."