Budget gets a mixed verdict from business
Britain’s largest buinesss organisation called it a “good Budget for tough times” and the CBI’s generally positive view was shared by many in the business world.
But some questioned the details and regretted the lack of new commitments that would give specific help to Wales.
CBI director-general Carolyn Fairbairn said: “Against a sombre economic backdrop, the Chancellor today gripped the steering wheel on the UK economy. This is a budget that balances support for people on squeezed incomes with vital action to help grow the UK out of austerity. But delivery is everything.
“Action on business rates, R&D tax credits, the National Productivity Investment Fund and Brexit planning will help firms to invest and grow today against an uncertain Brexit backdrop.”
She welcomed the focus on investment in the long-term drivers of growth. “Building a skills system that supports the fourth industrial revolution is the right ambition, but the approach needs to be joined-up, with the National Retraining Partnership delivering a stable approach and apprenticeship levy flexibility,” she said.
“Additional investment in infrastructure will help tackle regional inequalities. The support for housing supply is critical for people and firms. Metro may- ors will also welcome greater options for transport funding, but regions without devolution deals must not be left behind.”
But the Budget left many key issues unresolved for business in Wales, according to the Federation of Small Businesses (FSB) Wales.
Janet Jones, FSB Wales policy unit chair, said: “We welcome the fact that money will be available to Welsh Government through the Barnett consequential arising from the Budget. The Welsh Government now needs to look at how this money can be allocated to support the forthcoming Economic Delivery Plan.
“We also welcome the movement on business rates in which the Chancellor has called for more frequent revaluations, moving from RPI to CPI and tackling the staircase tax, which had caused serious concern for many businesses . ... The Chancellor called for a review of the impact of VAT and APD on tourism in Northern Ireland, and we would ask for the UK Government to commit to the same for Wales.”
She added: “Despite this, we are troubled to see that there are substantial downgrades in growth and productivity forecasts for the UK, and also dismayed that there was no movement on ‘big ticket’ items for Wales. FSB Wales has been calling for a decision on the Swansea Bay Tidal Lagoon and devolution of Air Passenger Duty (APD) for Wales for some time, as has much of the business community in Wales.
“We are, however, very pleased to see progress being made on growth deals for mid and north Wales. These deals have the potential to unlock further growth and investment for regions of Wales, and we hope to see the Government working in consultation with businesses in mid and north Wales to do so.
“Finally, it is really positive to see that the Chancellor listened to FSB concerns and chose not to lower the VAT threshold. VAT remains a complex and cumbersome system for small businesses to navigate and we would call on the Chancellor to simplify an over-complicated tax.”
Robert Lloyd Griffiths, director for Wales of the Institute of Directors, welcomed the transport upgrades in west Wales but added: “Freezing Air Passenger Duty (APD) tax is encouraging, but in Wales, the devolving of APD for Cardiff Airport would have been hugely beneficial and put us on a par with Scotland and Northern Ireland, where APD has already been devolved.
“The news relating to the north Wales growth deal as well as the opening up of the debate for a mid Wales growth deal is both welcome and positive. However, next year’s Budget is too close to point of Brexit to make a difference, so this was the Chancellor’s last chance to give business the boost it desperately needs. With an unpredictable future looming, it was absolutely essential that businesses be given the confidence and incentive to invest in their equipment and employees.
“Philip Hammond faced a difficult task today, with ugly growth forecasts, and plenty of demands on the Treasury, but companies will still be disappointed with what they got. Individually there were some positive measures, but overall, the Budget was more defined by what it omitted than what it included.”
Chris Sutton, lead director at property consultancy JLL in Cardiff, pointed out that the Welsh Government will be responsible for setting stamp duty tax rates from April and added: “The challenge for Welsh Government is to make sure their new rates fit into the wider context of the UK.”
He added: “The announcement by UK Government of a consultation on a mid Wales growth deal is a welcome policy initiative. Growth deals have emerged as an alternative to city deals for non-metropolitan areas and represent an important step in boosting support for the rural economy.”
Tom Denman, chief financial officer at Principality Building Society, said: “It is good news for our members and customers in England that stamp duty has been abolished for first-time buyers up to £300,000. We already know that there are measures in place for Wales in 2018, so hopefully that will help first-time buyers here get the home they want.”
Andrew West, director of business rates at Cooke & Arkwright, urged the Welsh Government to follow the Chancellor in linking business rates to the CPI measure of inflation instead of RPI.
He said: “The devolution of tax powers to the Welsh Government is an opportunity to put in place measures to make Wales a better, more competitive place to do business. We need to encourage businesses to invest here, to create jobs and grow the economy. If business rates are seen to be rising faster in Wales than in England, then that is clearly a disincentive.
“Our own in-house research covering a 27-year period has shown that CPI has traditionally almost always been lower than RPI, so it is seen as a fairer index. We urge the Welsh Government to follow this initiative and help ease the increasing burden that businesses face from the rating system.”
Richard Selby, director, Pro Steel Engineering, said: “Today’s Budget is good news for the north and mid Wales regional deals. It’s also good to see an extra £1.2bn heading to the Welsh Government, but the big question is what exactly that will be used for? I would argue that to get the Welsh economy moving it should be used to kick-start infrastructure projects such as the Swansea Bay tidal lagoon.
The RICS also welcomed the Chancellor’s announcement of growth deals for rural mid and north Wales. But policy manager for Wales David Morgan said: “However, detail will be vital and we now urge Welsh Government and UK Government to work together to expedite these plans into action as soon as possible.
He added: “In addition the headline figure of £1.2bn extra in funding for Wales is welcome and we urge Welsh Government to seize the opportunity to invest in key infrastructure projects such as the M4 relief road and electrification of the Valleys network.
“However, as welcome as these measures are, we are disappointed by some omissions, notably the Swansea Tidal Lagoon and any mention of revisiting the decision to cancel electrification of the main train line from Cardiff to Swansea. We reiterate our calls for action on these points.”