Lancashire businesses react to the Chancellor's statement

Business leaders in Lancashire have been giving their reaction to Rachel Reeves’ Spring Statement yesterday afternoon.

READ: Lancashire Business View's coverage of the Spring Statement

Neil Evans, managing director of VEKA plc in Burnley, said: “The Spring Statement lands at a time when many businesses, including ours, are navigating economic pressures. Whether that’s through rising costs, uncertain markets or just the general pressure of trying to do more with less.

“VEKA has absorbed the National Insurance increase across both our businesses because we believe in protecting our people. But continuing to do this isn’t sustainable without growth.

“Without growth, it gets harder and harder to keep making those kinds of decisions. This is part of a bigger message we’d like the government to hear. Every new demand placed on the private sector reduces our ability to invest, grow and create jobs, and that has a knock-on effect to the economy as whole.

“If the government is truly a government on the side of working people, and if it wants to make good on its promise to get more people into secure work, then it needs to recognise this pressure on their employers.

“Planning reforms and announcements like the ambition of 1.5 million new homes sounded like a big growth opportunity for our sector but, no one in our space really believed that target was realistic without tackling the severe skills shortages in construction.

“We’ve yet to see a serious plan to deliver on this front, and it undermines confidence in government-led growth strategies from the industry and its supply chain.

 “The government needs to understand that private sector businesses like ours are playing a major role in keeping the economy moving. We’re absorbing costs, protecting our people and pushing for growth. But we are not endless sponges able to absorb it all and we can’t do it alone.

“Ultimately, if the private sector is to do the heavy lifting of recovery and resilience, it needs clarity, consistency and a partnership approach from government. Only this will create the promised ‘jobs in every corner of the economy’ and deliver security for working people.”

 Tina McKenzie, policy chair of the Federation of Small Businesses (FSB), which is headquartered in Blackpool, said: “The FSB’s latest quarterly Small Business Index revealed confidence levels among small businesses at their lowest since the first year of the pandemic. That needs to be turned around, and fast.

 “We urge the Chancellor to go further in her next full Budget and actually lower the tax burden, including delivering on the promises made by Labour in opposition to transform the out-dated business rates system and make it fit for purpose in a modern economy.

“Freeing up funds for small firms to invest in their business rather than having money swallowed up in high taxes is the best way to achieve growth.

 “There should be no doubt that the government can deliver a better environment for small businesses, including as taxpayers.

“We therefore welcome the Chancellor’s commitment to open up defence procurement to more small firms.

“Pressure on the government’s finances can be significantly eased by opening up contracts across government to more smaller suppliers - providing greater competition and better value for taxpayers, as well as keeping more of the cash from taxpayer-funded contracts in local economies across the UK.

“This is a crystal-clear example of how improved commercial acumen can deliver savings while increasing value. Each and every government department should do the same.”

Prof Miranda Barker, chief executive of East Lancashire Chamber of Commerce, said: “We, as a collective of the British Chamber of Commerce, and East Lancashire chamber, feel like government is trying to sound sensible with its narrative of securing Britain’s future.

“But effectively they inherited a UK with a stable, if unexciting, economic picture and then proceeded to cool it down.

“I know the Chancellor is keeping to the fiscal rules and there are no increased taxes. They are telling us the OBR is projecting growth performance down from two per cent to one per cent. But then they say the next three or four years will be positive and take us back to the target they originally had.

“There were some measures of good news, the planning reforms especially, which were obviously a British Chamber of Commerce big flagship focus.  I like the fact the OBR has now looked at the GDP effect and that is significantly positive.

“Construction skills investment is good and we’re assuming there is a lot of low carbon installation skills in there and that is going to be positive. SMEs being stimulated and supported to supply into the MOD is great but what about every other public sector contract?

“The negatives would be that we are still no nearer to understanding what on earth the government is going to do about replacing business support.

“The UK Shared Prosperity Fund has been very negative for business support provision and they should be understanding the equation - if they have good business support and economic targets in place and they deliver, government will then have more money to do the other things they are now having to cut.

“There are some mildly positive things in there, but we are also singularly unexcited.”

Babs Murphy, CEO of the North and Western Lancashire Chamber of Commerce said: “The Chancellor is attempting to balance the books after her financial headroom vanished after the Autumn Budget and the Office for Budget Responsibility slashed the country’s growth forecast for 2025 to one per cent.

“The Chancellor defended her decisions at the Budget and expressed her frustration at the low rate of growth projected. Defence spending, planning reform and targeted interventions to stimulate housebuilding and construction would support the growth agenda.

“As we navigate through another dynamic year, we recognise the importance of staying informed about key developments that may impact our businesses and our community.

“The review is particularly significant as it addresses critical issues such as economic recovery, infrastructure investment, and support for small businesses, all of which are vital for fostering a resilient local economy.”

Roger Phillips – tax partner at Blackburn headquartered PM+M said: “The government was determined to kickstart economic growth when it came to power, but nine months is a long time. 

“The election and unpredictability of Donald Trump, the potential of tariffs and the ongoing uncertainty over Ukraine's future and Europe’s security is weighing heavily.

“But throw into the mix a flatlining economy, an inflation rate that is still above target despite yesterday’s modest fall, and higher government borrowing costs – not to mention our huge debt burden, an ageing population and a potential ramp up in defence spending – and the challenges are monumental.

“The problem is that the government is restricted by its own self-imposed ‘fiscal rules’.

“The thinking behind that decision was sound in principle: they wanted to show they stood for financial responsibility and prove that the UK was able to pay its way and service its debts.

“This situation of effectively living under self-inflicted fiscal restrictions is also mirrored in the government’s pre-election manifesto pledge to not increase income tax, national insurance for employees or VAT.

“It was a vote winner so it would have taken some guts to go against it and it could have dampened an already sluggish economy. Businesses are still bracing themselves for their employer national insurance contributions to rise next month. That has been met with fury so any further rises taxes on employers were never an option.

“I do feel for the Chancellor and her team. Cuts to benefits and imposing spending cuts across Whitehall were the only real options available. Just how much of an impact they will make is debatable. When you look at the global uncertainty and the bleak economic reality that we are all facing, I fear they may not even touch the sides.”

Professor Joe Nellis is an economic adviser at MHA, the accountancy and advisory firm with offices in Preston and Lancaster.

He said: “The Chancellor’s statement and presentation of the OBR’s forecast has proved what we already knew — there is no instantaneous cure to the economic malaise the UK finds itself in.

“The slashing in half of the OBR’s forecast for growth in 2025 to one per cent is certainly a setback for the Chancellor.

“Yet, this was a Spring Statement to calm the nerves, with no big surprises, and aiming to set the foundations for long-term sustainable growth.

“She was also able to offer a glimmer of hope — the OBR predictions for growth next year and every year thereafter have been upgraded to 1.9 per cent in 2026, 1.8 per cent in 2027, 1.7 per cent in 2028, and 1.8 per cent in 2029.

“The conditions for growth will need to be created. The government will be hoping that investment in housebuilding and defence can be the driving forces behind this.”

Rebecca Bradshaw, director at Preston-based accountants Rotherham Taylor, said:" Businesses have been left to fend for themselves, with no indication of how the Government plans to support them through this challenging period.

"The lack of measures to help businesses absorb the increased costs introduced in the Autumn Budget and ensure long-term sustainability is deeply worrying. Many will be forced to make tough decisions, including reducing staff or scaling back investments.

“With the government investing heavily in HMRC's capacity to track down tax fraud, businesses can expect more audits and greater scrutiny of their tax affairs.

“This will increase the risk of errors and potential penalties for companies, further complicating an already difficult business environment.

“Now is the time for business owners and individuals to evaluate their current position, reassess their planning strategies, and work closely with their accountant to prepare for what lies ahead,” added Rebecca.