Business leaders and experts in Exeter and Devon are continuing to assess the measures announced in the Chancellor’s Autumn Statement.
Businesses have largely welcomed Chancellor George Osborne’s Autumn Statement measures to boost ‘hard working’ enterprises, but have been left disappointed over spiralling energy costs.
Tim Jones, chairman of Devon and Cornwall Business Council said: “Energy prices increased by 37 per cent between 2005 and 2012, while in the US they went down by four per cent.
“Fuel poverty now exists in businesses, it’s not just residential. People are actually rationing their energy consumption, in what can only be described as a dysfunctional market.”
Much of the focus has been upon business rates discounts – and criticism over the Chancellor’s failure to address the pre-recessionary fixing point.
John Endacott, a tax partner at Francis Clark, said: “The measures on business rates are to be welcomed but are still short of the wholesale review of the tax that is required.
“The tax burden on small businesses in our region is just too high.”
On the fuel-levy and rail fares freezes, the firm’s head of tax Steve Collins added: “Westcountry businesses will be happy that there will be no rise, [but] these measures will probably feel like they are merely reducing the rate of increase.”
Charles Kislingbury, head of the Exeter office at property consultants Jones Lang LaSalle, said: “Whilst it’s a great relief to see the much predicted improvements to our economic prospects, businesses need to ready themselves for better times so greater support for development would have been useful, ensuring property supply moves in line with increased demand.
“However, there were encouraging moves in terms of housing, with the £1 billion investment in home building and increasing the Help to Buy scheme. Our precious High Streets should also benefit from rates cuts and relief for businesses taking on empty premises.”
Adrian Hemmings, partner at Simpkins Edwards, the accountancy firm with offices in Exeter, Honiton and Okehampton, said: “In terms of specific policies, the ones that we feel will have the most positive impact on people in the region will be the fuel duty freeze, the pre-announced increase of the tax-free personal allowance to £10,000 and the free school meals for what is effectively all Key Stage 1 pupils.
“Details are less clear on some policies such as the tax breaks for married couples and civil partners but these may become clearer the closer we get to the next general election.
“For businesses, the ongoing clampdown on tax avoidance is already having an impact, with the closing of loopholes meaning that legitimate tax planning strategies are having to be adapted to ensure they are compliant. At the same time, increases in business rates are to be capped at two per cent which will help businesses across England.”
The Chancellor has said that private businesses are forecast to create 3.1 million more jobs by 2019 – “more than offsetting reductions in public sector workforce”.
To encourage the development of the skills base that will be needed to support new business growth, he said that HM Revenue & Customs would fund employers directly, in a bid to create more than 20,000 higher apprenticeships over next two years.
“The surprise measure is the removal of employer’s National Insurance contributions completely for 16 – 20 year olds,” said Mat Scott, tax director at KPMG in Plymouth. “Most SMEs now pay more in NICs than they do in Corporation Tax, so this announcement will be most welcomed, as it will reduce the costs to business and hopefully in turn support job creation.”
Mr Endacott added: “It will boost employment creation in the South West and help small businesses.”
Matthew Lee, managing partner at accountant Bishop Fleming also welcomed the Chancellor’s plan to scrap the so-called ‘job tax’ – employers’ National Insurance contributions for employees aged under 21 – but added: “It’s a pity, though, that this National Insurance measure cannot take effect before 2015 – the election year.”
He added: “As a firm, we have recognised the need for a total reform of business rates, which are constraining and crippling many SMEs by being set at outdated property values and uniquely rising with inflation.
“The Chancellor has applied a sticking plaster by capping that inflationary increase to two per cent, extending small businesses relief, introducing a 50 per cent discount for new occupiers of empty shops, and offering a £1,000 discount to small retailers.
“The introduction of monthly payments will help Treasury cash-flow and may also help some small businesses. These are all welcome gestures, but Mr Osborne has failed to tackle the fundamental iniquities of this tax. We shall, therefore, continue to campaign for a root and branch reform of business rates.”
Paul Spencer, regional director for South & West at Lloyds Bank Commercial Banking, said: “The Autumn Statement set out a range of measures that should help give SMEs the support and confidence that they need to grow – and its success should be measured, at least in part, by the impact it has on this sector of the UK economy.
“The various announcements on small business rate reform are a step in the right direction and are key to ensuring that local businesses can operate competitively throughout Britain. Furthermore, the Government’s commitment to helping businesses reach overseas markets by increasing the export finance capacity available to firms, should also be a confidence booster.”