SPRING STATEMENT: Reactions from industry

The following is industry reactions to Chancellor Rishi Sunak’s Spring Statement, which he delivered yesterday. This statement is mainly an update on the current state, and the future, of the country’s finances. As well as this, he announced some substantial, new policies, set to affect our budgets looking forward.

‘Rising inflation means difficult times ahead for all businesses’

Stephen Marcos Jones, CEO of the Association for Consultancy and Engineering (ACE), which represents companies large and small which design, deliver and manage our built environment, comments:

“Rising inflation is the backdrop to the Chancellor’s update with the official forecast from the OBR peaking at around 9% in 2022. The resulting impact – coming after what have been two extremely challenging years – means difficult times ahead for all businesses in all sectors.

“Whilst our members may not be as directly exposed as those working in other sectors, inflationary increases affect every single company which is why we would have expected more proactive, immediate and targeted moves to mitigate current inflationary pressures on UK PLC.

“The review of UK’s approach to R&D investment, with a wider scope and promise of increased relief is welcome. Of course, the devil is in the detail, but this has the potential to stimulate more innovation from the private sector whilst contributing to higher productivity. Furthermore, we welcome the moves to review how the tax system and apprenticeship levy can be used more effectively to encourage greater investment by employers in adult training.

“We would like to have seen more targeted measures to support Government ambitions on Net Zero and Levelling Up. The Statement was a missed opportunity to drive progress in these areas and use them as catalysts for both economic growth and recovery.”

‘Not heard the outcry’

Mike Foster, CEO of the Energy and Utilities Alliance (EUA), says: “The Chancellor has clearly not heard the outcry over rocketing energy bills faced by millions. He has done nothing in the Spring Statement to help the vast majority of consumers who face bills doubling this year.”

“His VAT cut on solar panels and heat pumps will be welcomed by those who make them and by those who can afford to fit them, but a VAT cut on energy bills would have helped everyone.”

“Frankly, consumers waiting to hear good news on their energy bills will be left asking, ‘is that it Chancellor?’”

‘Is now a good time to buy a house?’

Edward Heaton, Founder and Managing Partner at buying agents, Heaton & Partners, says: “The news to scrap VAT on energy efficiency measures is welcome, especially to those running old country houses which are often the most difficult to make truly efficient because of their construction.

“Homebuyers have never been so acutely aware of their energy consumption, often wanting to know that renewables can be incorporated into the running of the building to keep their carbon footprint, not to mention annual costs, low. Anything that encourages people to pursue a greener path is a definite positive.

“Long may this transition last! It will be the practical conservation of many a historic house that will allow our architectural legacies to thrive. The move towards self-sufficiency will gather pace in the coming years, from growing your own to installing storage power facilities that provide for breaks in the power supply.”

“Is now a good time to buy a house? Over the decades, the most consistent advice I have given is that it is better to be in the housing market than out of it. I have witnessed too many examples of people trying to read the market and be clever only to find themselves priced out of houses that once were perfectly affordable to them.

“We live in uncertain times, and no one can truly predict what will happen, but so long as you’re willing to take a long-term view, then markets will always bounce back. Whilst a house for most will be someone’s biggest investment, never lose sight of the fact that it is also primarily a home.”

‘Good for the UK’s self-employed’

Mike Parkes, technical director at GoSimpleTax says: “The cost-of-living crisis is set to reach a perfect storm in April 2022 when increased national insurance and dividend hikes come into effect. 

“The government will temporarily increase National Insurance by 1.25% for employers, employees and the self-employed, although it’s being named as a health and social care levy and positioned as much-needed support for the NHS.  

“Chancellor Sunak has, in many ways, missed the opportunity to soften the edges of the tax increases and credit crunch facing many self-employed people currently. After two years of feeling unsupported and a drop in the number of people working for themselves in that period, this is a group of people the Chancellor has recognised for their entrepreneurial spirit and what self-employed people contribute to the economy.  

“The cuts to fuel duty will be welcomed by many self-employed people. It was a good move as this is the most obvious way to help families and target support to a greater proportion of society, as well as supporting businesses managing costs. 

“It was interesting to hear about the potential incentives for investing for growth, skills and innovation in the UK – but there was nothing similar for the self-employed. It would be an excellent move to see how a similar incentive for investment could be replicated for people who are self-employed and grow their own enterprises. 

“Looking ahead, the UK’s four million self-employed people need clear direction and advice from the Government on taxation and specifically Making Tax Digital. More than half of the self-employed people in the UK aren’t aware of the changes and how their obligations will differ – the Government needs to make this crystal clear and provide freelancers and the self-employed with everything they need.”