Business and employer groups express concern over new budget measures

The Federation of Small Businesses said the move to freeze thresholds will hit small businesses while growth measures will not be enough to spark needed economic recovery.

FSB national chair, Martin McTague, said the budget is high on stealth creation and low on wealth creation, piling more pressure on the UK’s 5.5 million small businesses, their employees, and customers.

“While tackling inflation is essential, so are measures to create conditions for prosperity, growth and support enterprise. Today is a missed opportunity to avoid further economic slowdown,” he said.

“Small businesses, which account for more than 16 million jobs in the UK, were already facing an acute cost of doing business crisis through soaring costs, falling revenues, shrinking availability of affordable finance, and a rise in invoices being paid late.

“On top of all that, they now face even higher taxes, cuts to innovation, and a recipe for a longer and deeper recession.

“The slashing of dividend taxation allowances will be a bitter blow to hard-working owners of small, limited companies trying to pay the bills, earn a living and grow their business. This is a group which was excluded from direct support during the darkest days of COVID-19, then more recently pushed out of the cut in National Insurance.

“The changes set out by the Chancellor will leave a company director earning £40,000 a year more than £500 worse off than an employee earning £40,000 and paying income tax and National Insurance.

“Freezing the threshold for employer National Insurance at a time of such high inflation is a stealthy hike in the jobs tax, just as recessionary pressures threaten an increase in unemployment. Alongside the understandable rise in the Living Wage, this Budget will ramp up the costs of employment without offsetting that with measures to reduce other business costs. The few saving graces here are the retention of the Employment Allowance at its current level, which was hard fought for by FSB, and the continuation of the lower National Insurance rate for the self-employed and employees.”

British Chambers of Commerce director general, Shevaun Haviland, said while the Chancellor has stayed true to his word in focusing on financial stability and targeting support for the most vulnerable in society, in the teeth of a recession, this statement will not increase business confidence.

“Businesses will look at the announcements and welcome support with business rates, and retention of the employment allowance, though the reduction in the dividend allowance will impact many smaller firms,” she said.

“Almost half of businesses tell us they will find it difficult to pay their energy bills once the Government’s Energy Bill Relief Scheme ends on 31 March 2023. The sooner we get clarity on where future support will be targeted the better.

“It is good news to hear plans to improve energy efficiency across the economy, but we need to see greater urgency as firms battle with their bills in the here and now.

“The Government must do more to improve conditions for businesses to invest and grow, otherwise we will be starting from a weak base to power our recovery once global economic conditions stabilise.

“The Chancellor’s Statement is light on green innovation, doesn’t address current labour shortages and has nothing on boosting export led-growth.”

Helen Dickinson, chief executive of the British Retail Consortium, said high inflation remains a major threat to the UK economy.

“Inflation is making people poorer, damaging consumer confidence and holding back demand. It pushes up the costs to businesses which further increases prices for consumers,” she said.

“As the retail industry enters the crucial Christmas period, it is vital that inflation is brought to heel. 

“Retailers are working incredibly hard to support customers — expanding value ranges, fixing the prices of essential items, and offering discounts to vulnerable households. This Autumn Statement supports that commitment by reducing upwards pressure on prices in the short term, and helping retailers protect jobs, keep shops open, and protect the vibrancy of local communities. 

“The Government has taken an essential step towards longer term reform of the broken business rates system by announcing the scrapping of downwards phasing of transitional relief. This decision means that April’s bills reflect market conditions and retailers will pay only what they owe, rather than being forced to overpay their rates bill when the value of their property has already fallen. This represents the first step towards a more fundamental reform of the broken business rates system.” 

UKHospitality CEO Kate Nicholls said the Chancellor painted a grim picture of what the country is facing and Britain’s hospitality businesses are already in the midst of severe economic turmoil.

“Survival this winter is the priority for venues across the country and there is the very real possibility that a significant proportion of our sector will not survive the winter. It was crucial that the Government addressed this today,” she said.

“I’m pleased that the Chancellor has listened to the vast majority of UKHospitality’s proposals on business rates, covering a freeze in the multiplier, extended reliefs and no downward transition. This means those seeing their valuations decrease will see the benefit in their bills immediately, at the same time as increases are capped.

“However, it remains the case that the current system is outdated and not fit-for-purpose. The Government made a manifesto commitment of root and branch review and it’s essential that this delivered as soon as possible.

“What we failed to hear from the Chancellor was any plan for economic growth, despite him recognising its importance. Businesses create jobs, deliver higher wages and contribute millions in tax revenues but without a serious plan from the Government, margins continue to be squeezed without a path forward to growth.

“There is nothing to give firms confidence, let alone invest, and we need to see an urgent plan for economic growth and how business will be at the centre of that. UKHospitality stands ready to work with Government to develop such a plan and on the essential package of energy support post-April.”

Andy Chamberlain, director of policy at the Association of Independent Professionals and the Self-Employed, said after the financial damage of the pandemic, exclusion from support, the changes to IR35 taxation, the recent tax hike on dividends, and the impending corporation tax hike, this latest attack is further salt in the wound for anyone working through their own company.

“The government is making it harder and harder for those who work for themselves. Of course we need to raise tax to pay for vital public services, but time and again it seems our very smallest businesses are the first targets. We’ve already seen the number of self-employed fall dramatically since the pandemic — the government seems intent on reducing that number further. By slashing the dividend allowance, the government has once again demonstrated that it does not support small business,” Mr Chamberlain said.