Suffolk bosses left cold by Budget which fails to turn dial

With the big announcement of a 2% cut in Employees' National Insurance already out of the bag, it was clear the emphasis would be on the voting public - leaving companies with low expectations about what Jeremy Hunt might deliver.

A freeze on alcohol and fuel duty was welcomed but expected - as was a raising of the VAT registration threshold from £85k a year to £90k to help small traders. But among the notable absences was any progress on business rates reform.

Steve Magnall - owner of the Two Magpies Bakery chain which operates across Suffolk and Norfolk - said he was frustrated that so little is being done to help small and medium-sized enterprises (SMEs) - the "lifeblood" of the UK economy and local employers. 

“It’s a non-Budget for SME businesses," he said.

Although inflation has dropped form 11% to 4% during his tenure, this was driven by external factors such as lower energy costs - not government policy, he added.

"Keeping the 5p duty cut on fuel means we aren’t paying 5p more. It’s not a cut but a continuation of the same.

"VAT moving from £85k to £90k as start point is irrelevant again. Inflation has been as high as 11% so effectively is just an inflationary adjustment."

Child benefits and public services were funded by an extension of a windfall tax on utility companies, selling NatWest bank share and changes to the non-dom tax status by limiting it to four years, he said.

"Why not force prices down so it goes into businesses' or people’s pockets directly?" he said.

At the same time, business rates reform for small and medium businesses was ignored and Corporation Tax could have been reduced from 25%, he added.

Meanwhile, employers face a 9.6% rise in the Living Wage from April - and this would impact business "immensely", he warned.

"We employ 192 staff, have a wage bill of around £3.8m which feeds back into the local economy, but we get no help.

"We barely made a profit last year - 5p in the pound - and we continually invest in staff and sites, but this is hard to do if margins are continually eroding and the government can’t smell the coffee.”

Rob Breakwell of canned cocktails company Niche Cocktails near Framlingham, welcomed the freezing of food and fuel duty and an ISA allowance for investment in UK companies - but felt overall that the Budget was merely "fiddling around before the election".

"I don't think any business thought it would make much difference. It's the next Budget after the election everyone is interested in," he said.

"As a country I think we need to have more of a conversation about tax and spend overall."

Overall, he felt raising the wage threshold for receiving Child Benefit would have more of an impact in how much spend people felt they had versus the NI cut.

Meantime, GDP (Gross Domestic Product) per capita was falling, he said, quoting Torsten Bell of the Resolution Foundation.

Mr Bell argued that this was what ultimately mattered for living standards. "This is a proper recession just being hidden by having more people - GDP/capita declined 0.7% in 2023 with falls in every single quarter," said the economist.

"Overall the tax burden has grown for everybody because of the freezing of tax thresholds," said Mr Breakwell.

There would need to be "meaty cuts" to meet the forecast in spending.

He felt there were those who were still holding on to their cash because of economic turbulence but a cut in VAT could get people spending again he suggested.

He pointed to 2009 after the Credit Crunch, when VAT was lowered to 15% and brought significant sums into the economy.

"There was an opportunity to make a change there to make it more attractive for people to go to pubs and bards which have had the most torrid winter ever."

His verdict was that Mr Hunt's budget would have little impact. "It really doesn't feel like it's turned the dial."

Nick Mackenzie, chief executive of Bury St Edmunds brewing giant Greene King, was equally unimpressed - and felt that the Budget would do little to help beleaguered hospitality businesses.

"A freeze in alcohol duty is welcome, but it is significantly outweighed by the continuing increases in the cost of doing business," he said.

"Rising business rates and wages continue to disproportionately impact pubs, therefore it is disappointing the Chancellor has, once again, missed opportunities to reduce VAT for hospitality and reform the rates system.

“We’ve invested heavily in our pubs and our teams, bringing long-term social value to communities across the UK. But the sector needs wider regulatory reform if it is to continue to create hundreds of thousands of jobs and support the nation's economic growth.”

Kevin Craig, chief executive of Ipswich-based PR firm PLMR Genesis, said after 14 years in power, the Conservatives had failed the economy.

"I see some measures today which are directed at some areas in the East of England which will be welcomed but overall, working people will be worse off today," he said.

"Despite the NI change the tax burden is at a 70-year high and the average household will be worse off.

"Many of our staff are still struggling with the huge mortgage rises inflicted by the Conservative Party.

"It's great to see the Chancellor copying some Labour policies - eg, the Non Dom measures - but nothing on business rates.

"As a businessman, as a home owner, today has left me disappointed and the election can't come soon enough.

"Instead, we should be having a national debate about how we can kick start our economy through stability, reform and investment. We didn't get that today."

But Carole Burman, chief executive of regional HR consultancy, MAD-HR welcomed a decision to take account of whole household incomes when awarding child benefit. 

“As an HR business, we look at today’s Budget from the perspective of how it will be felt by our clients, and in turn, how their employees might feel about some of the specific changes.

“The heavily trailed cut in National Insurance contribution will generally feel welcome for a lot of employed people, but at the same time, that will push a percentage of employees in to paying higher tax, so some businesses may find their staff seeking conversations around this area.

“One area which has always been contentious has been the issue of whether ‘whole household income’ is taken into account, and it’s notable that this is now being looked at.

"This sits alongside the chancellor announcing an increase to the hours of available free childcare, which will again make it ever easier for clients like ours – and a business such as MAD-HR – to attract and retain parents who can achieve more balance and be rewarded at the same time.”

Colin Low, managing director of independent financial advisers Kingsfleet of Ipswich felt the chancellor had listened to lobbying on focused tax incentives for investing in British business.

"There is to be a review of where pension investments are made to see if more pension assets can be invested both in British businesses and in high-growth areas where UK smaller companies require patient capital," he said.

The chancellor provided the potential to increase annual ISA contributions through the British ISA which would allow a further contribution of £5k, he explained.

"It makes good sense to incentivise investment in British business through the tax system.  The fore-runner to ISAs, PEPs, did exactly this when they began but this is a good start at re-focusing the investor to support entrepreneurship and business growth in the UK."