Shevaun Haviland, Director General of the British Chambers of Commerce
Following the Autumn Statement this Budget was always set to deliver less for business although changes to National Insurance will provide some momentum. However, beyond this there were no major announcements to help shift the dial on conditions for business. Business confidence is improving but the coming months will remain challenging for many companies. It is vital that the economy remains front and centre of the General Election campaign to come.
The prospect of an additional 200,000 entering into the workforce, due to cuts in National Insurance would make a significant dent in the job vacancies holding back our economy. It will also provide a welcome boost to economic growth. “Combined with the increased child benefit threshold, this should help business find the staff they so desperately need.
Michelle Ovens CBE, Founder, Small Business Britain
Today’s Budget delivered a glimmer of hope for the nation’s 5.5 million businesses, which are still struggling after a series of tough years. News the UK is in recession has hit confidence and small firms urgently need reasons to feel optimistic about 2024. The Chancellor’s move to cut national insurance, including for the 2 million self-employed, will certainly be welcomed as a boost for many of the UK’s sole traders, as well as for the wider economy.
And a number of small businesses will also be relieved not to face the VAT threshold, particularly with inflation shrinking revenues for so many. However, the sharp cliff edge of the VAT threshold does need to be looked at for the future, as it is creating a barrier to growth for many businesses. Continuing to raise the VAT threshold simply pushes out the problem rather than solving it more structurally.
Marco Forgione, DG at the Institute of Export and International Trade
Our members welcome the increase in the VAT threshold from £85,000 to £90,000 but we have been pressing for the threshold to be set at £100,000 after it’s been frozen for more than seven years. Small businesses are the lifeblood of our economy, and getting more of them trading internationally is essential to sparking growth in the UK economy. In UK only about 5% of MSMEs trade internationally in other major economies it’s much higher, in Germany more than 90% of MSMEs trade cross-borders.
The Chancellor rightly talked about encouraging more working aged people into work, tapping into the UK’s talent pool, but there was nothing about helping get the skills businesses need. We called for action to help MSMEs access the Apprenticeship levy and employ apprentices but there’s was a gap in addressing the wider skills agenda. News of additional support for Minister Ghani and the critical supply chain work is to be welcomed and will help build UK resilience. There is more to do though on the UK’s wider import strategy which has to form part of the UK long term plan for business growth.
Kevin Fitzgerald, UK MD at Employment Hero
No rabbits under the Chancellor’s hat today, in what was a frustrating Budget for leaders of small and medium sized businesses. Whilst it is right that the Government focuses on initiatives that will help individuals and household budgets during the current cost of living crisis, the Chancellor has provided little support for SMEs by way of meaningful tax cuts and investment for growth. A survey we conducted of 540 SME business leaders found that what they want most from the Government is tax incentives and relief measures, followed by funding for skills and workforce development, and support for technological adoption and digitisation.
Bruce Cartwright Chief Executive, The Institute of Chartered Accountants of Scotland
The Chancellor has again failed to offer enough support for small and medium sized businesses (SMEs), which make up 99.9% of UK businesses and are the life blood of the economy. Employment costs for UK employers are soaring, and the fact that the Chancellor hasn’t cut NICs for employers in this budget, as he has for employed and self-employed workers, places further strain on business as they face rising costs on all fronts.
We applaud the Chancellor for supporting those on lower incomes by cutting employee’s national insurance rates by 2% across the UK as this puts money into the pockets of working people. This is worth £450 each year for someone on the average salary. We also welcome the move to cut the NIC payments for the self-employed from 8% to 6% which is worth £350 pa. The Chancellor seemed to imply that he would have liked to have gone further over the long term. We would welcome further debate about simplifying the tax system and making it more easily understood.
However, by continuing to freeze the personal tax allowance, the government is putting more pressure on low paid workers, because as their earnings rise above the frozen threshold of £12,570, they will start to pay income tax. This might also negatively impact some pensioners, particularly those on the state pension who have other limited income, who could end up paying income tax on their pensions.
Richard Godmon, Tax Partner at Menzies LLP
This Budget was largely a case of too little, too late for most businesses. The Chancellor needed to use today’s announcements to shore up the stuttering UK economy. A roaring success it was not. While the headline announcement, a 2p cut to the National Insurance contribution rate, is clearly aimed at winning over disgruntled voters, many still won’t be better off due to the freeze in tax band thresholds – a measure brought in when the PM Rishi Sunak was Chancellor.
And as with last November’s Autumn Statement, it’s disappointing to see the Chancellor largely neglect British businesses with today’s measures. No such cut in the NI rate was announced for employer contributions, for example – a measure that would have been welcomed by struggling businesses in the retail and hospitality sectors especially. Today’s Budget has done more to secure media headlines than to secure long-term, sustained prosperity for British people and businesses.
Andy Fishburn, MD, Virgin StartUp
Extending the Recovery Loan Scheme: The Recovery Loan Scheme has been a vital lifeline supporting start-ups to scale and succeed in the UK. It’s extremely positive that the government has invested £200m and extended this until 2026. If we can encourage more investment in small businesses across the UK we encourage further diversity and growth across the small business eco-system. The next question is, what happens when we get to 2026? Hopefully there are plans in place to tackle this sooner and continue to help the start-up community.
Anthony Impey MBE, CEO of Be the Business
While it was encouraging to see the Chancellor announce plans to tackle public sector productivity, it was disappointing that private sector productivity is still missing from the top of the political agenda. With UK productivity lagging so significantly behind our G7 counterparts, stimulating demand for productivity-enhancing measures among the 5.5 million SMEs that make up 99.9% of the UK business population has never been more crucial. In fact, if every micro, small and medium business were able to maintain a 1% improvement in productivity over a five-year period, this would add £94 billion to the UK economy annually.
We know that productivity is the single biggest determinant of living standards. The UK’s flatlined productivity has enormous implications for all of us. Whichever political party is in power next year, it will need to address the UK’s lagging productivity to deliver sustainable economic growth for all.
Sean Cockburn, Director at Mazars
The attractiveness of a buy to let portfolio, even for those accidental landlords, has nosedived in recent years and the trend continues in this Budget. The Chancellor announced the removal of the tax favoured Furnished Holiday Letting regime and also the abolition of Multiple Dwellings Relief for SDLT. The one slight respite is the reduction in the higher rate of CGT on the sale of residential property from 28% to 24% which will help those who wish to exit or reduce their interest in the property market.
Chris Sparling, Senior Director CX, Reputation
The Budget was an anxious moment for businesses across the UK – not least the hospitality and retail industries. The extension of the alcohol duty will benefit 38,000 pubs across the UK who are already grappling with flailing consumer confidence and the ability to spend. Coupled with changes to personal finance, we sit at a moment when customers may be more able and willing to spend.
For businesses to make the most of this, listening to your customers and meeting them where they are is more important than ever – especially if we are to create environments where they want to spend their hard-earned money. This is a feat that can be difficult in an increasingly digitalised environment. In a world where customer touchpoints can be found everywhere from reviews, to business listings and social media, investing in the right skills to understand all this is vital. Employees with the right skillset will be best positioned to provide exceptional guest experiences.
Mansion House reforms/pensions
Roi Amir, CEO at Sprout.ai
The UK has been sleeping on a significant pool of capital for too long. It’s great to see Chancellor Jeremy Hunt recognise the potential that pension funds hold, and we welcome the new investment and innovation opportunities that this will bring. The Mansion House reforms will foster an environment that bolsters fast-growth companies, unlocking enormous potential for innovation that will stand the UK in a solid position for AI leadership, as early-stage startups are encouraged to remain on home soil.
The potential of these pots is significant, and Anne Glover has already stated that even a small portion of larger funds’ total assets would deliver better returns for investors compared to the current conservative approach. The win is three-fold – startups are supported and the funding gap is plugged, pensions themselves will be bigger for us in the future, and local economies will be driven by innovation.
David Holt, Partner and Solicitor at Potter Clarkson
The UK is home to some of the world’s most promising early-stage innovation. It’s encouraging to see that unlocking previously untapped capital to fund this is a top priority for the government through the Mansion House reforms. Hopefully, a larger pool of potential investors will be unlocked.
It will be interesting to see how this new investment form is approached going forward. Specifically, whether investments will be made with long-term, mutually beneficial gains in mind, rather than the short-term sprint for revenue as with angel and venture capital investments. Of course, this is a good start to unlocking potential, but to make the most of it, the government needs to consider specific incentives to encourage investment in unlisted companies, so they have the opportunity to grow.
Tim Mills, Managing Partner – ACF Investors
After years of discussion, it’s encouraging to see The Chancellor continue The Government’s support to progressing pension reform and confirming the potential it brings to deliver capital to our most exciting early-stage companies. With cross-party consensus and the continuing role of the British Business Bank, these reforms put the UK on the front foot in an increasingly competitive global tech and investment landscape.
Women’s health:
Priya Oberoi, Founding General Partner of Goddess Gaia Ventures:
The Chancellor’s commitment to investing £45m into medical charities is just a drop in the ocean. Goddess Gaia Ventures is laser-focused on unlocking significant investment for women’s health – which is historically and brutally underfunded. I am convinced that actually, this investment is not going to come from the public sector – just look at the inadequate £3m token donation to cancer charities in the budget today. Of that, only 4% will go to women-specific cancer treatments, which is only £120k to support the one in three women in the UK that will get cancer in their lifetime.
The Chancellor’s commitment to continuing the Mansion House reforms, to make it easier for pension funds to invest in the UK’s startups – as well as reversing the ill-sighted changes to the ‘sophisticated investor rules’ – is a step in the right direction. These changes are encouraging to see as this will provide the capital that is needed to make steps towards change in the women’s healthcare sector, as well as reaping the benefits of a £1 trillion market.
It would be sagacious if the government could reprioritise and stop wasting their time and money on ‘promises’ they are making to leveraging innovation within the healthcare sector – whether that’s AI or drones – but they need to focus on what can be done to reduce the burden on the likes of the NHS if we invest more heavily into health innovation and precision medicine. We need to fund not only cures, but also preventions.
R&D tax credits
Seb Wallace, Investment Director, Triple Point
Despite reforms to R&D tax credits being made at last year’s Autumn Budget, these were never truly put into practice. That’s why today’s Spring Budget was so important for startups – but Chancellor Jeremy Hunt unfortunately neglected to mention these changes. HMRC’s handling of R&D relief has put unnecessary pressure on startups across the country – laying a significant financial burden at the feet of many early-stage businesses. Today, these companies needed clarity on the reform promised around the administration and implementation of these taxes. Not doing so means that startups will continue to struggle and we risk a scenario where UK-based companies begin outsourcing their R&D practices to reduce costs.
Angel Investment
Emma Sinclair MBE, Founder and CEO of Enterprise Alumni
By reversing legislation on the definition of high net-worth individuals that would have disproportionately affected female entrepreneurs and female angel investors, the government has listened to the voices of women in business and acted swiftly. My hope is that we channel this momentum to continue pushing for real change in favour of women led businesses in terms of funding.
Sarah Turner, Home Grown Ambassador and CEO & Co-Founder at Angel Academe
There are common myths surrounding angel investing that put women off, you have to either be extremely wealthy, an exited entrepreneur or from a private equity background. This is not the case. The reversal of the angel investment threshold is fantastic news. In a nutshell, if you have more women angel investing, it means more money for female founders. We need more intelligent people, who have achieved success in their career or who own a business and therefore have the financial capacity to angel invest in our ecosystem.
Frances Spooner, Partner at Marriott Harrison
The Chancellor’s decision to reverse the changes introduced in January to angel investment rules will be broadly celebrated today by the UK’s high-growth sector, putting to rest a change that sat at odds with the government’s otherwise steadfast support for the UK’s entrepreneur and start-up community.
But to say this change is ‘positive to see’ might be a step too far; instead, it could be said that the Government is simply backtracking on an error in judgement that could have been avoided with the right consultation process. The Government has failed to consider how the changes created more barriers to entry for under-represented investors and founders, in an ecosystem that was already struggling with and trying to tackle issues around lack of diversity.
By consulting just a few founders and investors in this space, it would have quickly become clear that the willingness of, and ability for, people to invest in early stage start-ups is both nuanced – so the related rules and restrictions need to be set appropriately to allow people who can, to take proportionate risks – and relatively predictable, with people tending to invest in companies that align with their interests and values and in founders who look like them and speak to them, i.e. women tend to invest in women. You restrict a female angel investor from investing by putting in place more barriers, and female founders will suffer.
As someone who is passionate about trying to get more money into the hands of women, this is a very welcome reversal.
Green Investment
Sebastian Peck, Managing Partner, KOMPAS VC
It’s encouraging to see the Chancellor committed to providing investment into offshore wind and carbon capture and storage (CCS). But for budgetary measures to deliver any value, the government needs to do the fundamental work of setting clear and comprehensive policy targets and committing to them. Investors are not looking for handouts, but for a clear policy framework and predictability in the way political commitments are carried through.
VAT
Conor Sheridan, CEO & Founder of Nory AI
While it’s encouraging to see the Chancellor raise the VAT threshold from £85,000 to £90,000, more must be done to help the hospitality sector fully recover. There needs to be a reduction in the VAT threshold to match the rest of Europe if they want to see the sector remain as such a significant contributor to domestic GDP and employment. The Government are creating a self-inflicted vacuum of both revenue and great entrepreneurs / talent that will invariably go elsewhere.
Secondary markets – Pisces
David Strong, Head of Venture Capital and Partner at Marriott Harrison
The creation of new secondary markets for private companies through the Private Intermittent Securities and Capital Exchange System (Pisces) is an interesting development, which follows similar markets created in the US about a decade ago. For high growth and venture backed companies, many will see this as an opportunity given the dip in valuations over the last 2 years which has led to many investors wanting to get liquidity as a full exit seems further away.
This also follows the trend of increasing secondary possibilities, with many crowdfunding platforms opening up secondary markets and a number of prominent VCs raising secondary only funds. However the recent furore over Carta’s secondary platform shows that most private companies still want to tightly control secondaries, which we expect means they will take a cautious approach to Pisces.
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