Chris Fletcher, Policy Director at Greater Manchester Chamber of Commerce, looks through the detail of last week's Budget.
There’s a phrase often used about the ‘devil being in the detail’ following Budget speeches. When the Chancellor sits down there’s a mad scramble to download the ‘red book’ as its called and all the numerous papers that are released by the Treasury justifying or explaining in more detail the workings behind what the Chancellor has announced.
There’s always something hidden away in the small print that may have slipped past everyone and these are the nuggets that, more often than not, turn up a few days later and start to put spokes in the wheel and ambitious plans start to look more realistic and, ultimately, less attractive. They’re often the ‘dodgy’ policies or the ones that result in some unintended consequences that derail financial plans.
Well, last week’s Budget speech was a real tradition-breaker. Not only was it the first ever by a female Chancellor but it also saved an awful lot of time wading through the paperwork for the ‘bad news’ by making it one of the centrepiece announcements in the Budget.
I am of course referring to the Employers NIC hike to 15% on salaries above £5000 from April up from 13.8% on salaries above £9100.
In over 20 years in this job I’m struggling to recall any other budget measure aimed directly at business that is, potentially, so hard hitting and, coupled with next April’s increases in Minimum Wage rates, leaves many business owners scratching their heads a little about how to cover these financial hits.
Now, for the smallest of businesses there was some relief with changes made to the rates and guidelines they pay which does act as a protective buffer and, of course it is right that there is some mechanism to help lift those workers on the lowest wages. It is also true, as we’ve said before, that the government’s finances are in a parlous state when investment is so desperately needed. So you cant argue against doing the right thing but it has to be done in the right way.
I’m not sure last week’s Budget successfully delivered the latter part of that. Actually I’m certain it didn’t.
I’ve spoken with a few businesses who are looking at significant increases next April, increases in the tens of thousands of pounds and not for massive workforces, but for quite modest sized businesses, 20 – 30 employees.
I’ve seen and heard a lot of people commenting that surely business can afford this out of their profits. The Chancellor herself came up with this corker about it being “the right thing for businesses and the wealthiest” to pay more. The lazy narrative in that statement is quite stark - if you own a business then, by association, you’re wealthy.
Make no mistake this hits business in every sector from care providers, doctors surgeries, hospitality , manufacturing, engineering, construction, even the Chamber itself!
For many sectors it could be the death knell for some businesses struggling with higher costs, overheads and an increasingly difficult financial landscape. Think about what’s happening on your high street.
We’ve heard from businesses now reviewing their plans to recruit staff and expand.
In 2022 the Russian invasion of Ukraine caused a seismic shift in energy prices that created outrage and concern about the impact on business. I believe this could have an equally devastating impact and this has been brought about by our own government.
So, what are we doing about it?
Firstly, we are going to keep monitoring the impact of this and make sure government knows and understands what this will mean for business. It’s more important than ever that at this time we fulfil our role as the voice of business. If you have calculated what impact next April will have on your business please let me know on chris.fletcher@gmchamber.co.uk all information will be treated confidentially but it is important we can put numbers in front of ministers.
Secondly, now is the ideal time to maximise your membership to help with cost management, business support, advice and growing your network to keep your sales pipeline healthy. To find out more about this and how we can help you get in touch on benefits@gmchamber.co.uk .
We knew taxes would have to go up, the last decade has stripped the cupboard bare, however to do this is such a cavalier and what seems such a misinformed fashion threatens to undermine the government's own message and ambitions for growth. It is also quite insulting to the thousands of business owners and their employees who are the lifeblood of the economy and who will, in the end, be responsible for the growth this government and indeed the country needs.