East Anglian business leaders welcome chancellor’s measures for small firms – but warn him not to waste money on giveaways
PUBLISHED: 17:50 13 March 2018 | UPDATED: 18:27 13 March 2018
A “Tigger-like” Philip Hammond sounded an upbeat note as he claimed Britain was bouncing back and that improving public finances could open the door to public spending increases.
Seeking to shrug off his image as the Eeyore of the cabinet, the chancellor presented modest upturns in economic forecasts and declared there was “light at the end of the tunnel”.
However, there were few eye-catching giveaways in the newly slimmed-down Spring Statement – the first since the move to just one major fiscal event a year – and the confident mood was dismissed as “astounding complacency” by Labour.
Mr Hammond reiterated many of the spending pledges made in November’s full Budget and instead of unveiling new ones, announced the start of a series of consultations.
They ranged from cracking down on single-use plastics to assessing whether to phase out pennies and £50 notes because they are not used enough.
For small businesses, there was a concession on the next business rates revaluation, which will now be brought forward by a year to 2021, when it will switch from five-year to three-year cycles, and the start of a consultation on the threshold at which firms must register for VAT.
They will also benefit from an £80m education fund to support them in taking on an apprentice, helping the government closer to its target of three million new apprentices by 2020.
The results of the calls for evidence will be presented at the Autumn Budget and business groups are already manoeuvring into position ahead of an expected full round of tax and spending changes.
Mr Hammond told MPs: “If, in the autumn, the public finances continue to reflect the improvements that today’s report hints at, then ... I would have capacity to enable further increases in public spending and investment in the years ahead, while continuing to drive value for money to ensure that not a single penny of precious taxpayers’ money is wasted.”
Nova Fairbank, public affairs manager for Norfolk Chamber, said Mr Hammond should resist using any breathing space which had been earned on headline-grabbing moves.
“As deficit and debt levels improve, the chancellor must resist calls to pour money into politically-attractive, short-term spending priorities.
“Any headroom the chancellor has must be used to leave a lasting mark on our infrastructure and to attract investment – particularly with the challenges and changes of Brexit ahead,” she said.
“A far stronger push is needed to fund and fix the fundamentals here at home in the coming months, and Norfolk business wants the chancellor to use his Autumn Budget to gear up and spend to improve digital connectivity, deliver further road and rail improvements, strengthen the UK’s energy security and build more houses. Existing plans alone are not enough.”
Measures to clamp down on the late payment culture that hits the cashflow of smaller firms have also been welcomed by the Federation of Small Businesses, which said the end to the “crisis” situation could add £2.5bn a year to the economy.
East Anglia area lead David Howell said: “Eight in ten small firms suffer from late payments. The collapse of Carillion highlighted the dangers of the UK’s pernicious poor payment culture. We need to create an environment where another Carillion can’t happen.”
The FSB also welcomed proposals which could see the phasing-in of VAT obligations for companies when they reach turnover of £85,000 - rather than the current cliff-edge which sees some companies put the brakes on growth to avoid being hit.
“VAT is the most time-consuming tax for small firms to handle,” said Mr Howell. “A small VAT-registered firm spends more than a working week a year complying with the tax on average. That’s time that should be spent running their firms and increasing productivity.”
Mr Howell also asked for the government’s business rates revaluation to make the regime “fairer” by “aligning business rates bills with current property values and the local economy” – though he sounded a warning over any changes that would add to the administrative burden facing firms.
He added: “The chancellor has shown he’s on the side of our small business owners and self-employed entrepreneurs. We look forward to his kind words being followed up by real action.”