Budget could have gone further to tackle key issues facing business - Chamber

Business leaders in Greater Birmingham say the Chancellor’s Budget could have gone further to unlock growth and address fundamental issues facing many firms.

While Jeremy Hunt announced a number of measures that will be cautiously welcomed by businesses – including National Insurance cuts and additional support for childcare – Greater Birmingham Chambers of Commerce said the Chancellor “missed a trick in truly turning the dial” on key areas impacting business.

Key announcements in the Budget included:

• National insurance contributions for employees are being cut from 10 per cent to 8 per cent from April - impacting about 27 million workers - with savings of up to £450 a year
• Self-employed NI rates will drop by two percentage points
• The High Income Child Benefit Charge, which hits payments if one parent earns above £50,000 a year, is to move to a household-based system. The threshold will rise to £60,000 from April in the meantime. The top of the taper where it is withdrawn is raised to £80,000
• Full expensing for businesses will apply to leased assets in future "when affordable". Draft bill to be published shortly
• VAT registration threshold for businesses upped from £85,000 to £90,000
• £15m to the West Midlands Combined Authority towards cultural projects
• Eligible film studios in England will secure 40 per cent relief on their gross business rates until 2034. Tax relief made permanent at 45 per cent for touring and orchestral productions and 40 per cent for non-touring productions.

Henrietta Brealey (pictured), chief executive of Greater Birmingham Chambers of Commerce, said: “With a General Election expected at some point this year, it’s no surprise to see that the Chancellor used the limited fiscal headroom at his disposal to prioritise tax cuts for households – however, many businesses will be left feeling a sense of regret that more wasn’t delivered to unlock growth.

“There were elements in the Budget which were likely to be received positively such as delivering additional support around childcare measures and introducing cuts to employee NI contributions in order to plug labour market gaps.

“It was also pleasing to see an extension of the parameters of the full expensing scheme in order to encourage firm level investment, greater use of AI to drive public sector productivity gains and additional pension fund reforms in a bid to crowd in more investment.

“Recognition of the British Chambers of Commerce’s calls for the Government to match private sector investment to increase local planning capacity will also help speed up the delivery of regional infrastructure projects and create jobs.  

“From a local perspective, it was also reassuring to see money made available for the WMCA for culture projects – especially in the context of funding cuts we’ve seen announced by Birmingham City Council.

“However, many businesses will feel the Chancellor has missed a trick in truly turning the dial on the fundamental issues firms continue to grapple with.

“Extending the terms of the loan recovery scheme will be welcomed by many businesses still grappling with debts racked up during the pandemic, however raising the VAT threshold will do little to stop the so-called bunching effect.

“It was also disappointing to see that meaningful reform of the business rates system and the reintroduction of the tax-free shopping policy were completely ignored by Mr Hunt as both measures are more likely to offer a timely boost to the hospitality and retail sector than freezing alcohol duty.

“The prospect of an immediate General Election now seems more unlikely after yesterday’s announcements.

“However, we would urge the Chancellor to prioritise the long-term growth of the economy in the coming months as firms continue to crave stability in order to plan effectively and move forward with investment plans.”

Read this blog from Greater Birmingham Chambers of Commerce’s policy team, detailing all the key measures from the Budget.

Read more reaction to the Budget from Greater Birmingham Chambers of Commerce members.