Leaders back Budget but baulk at corporation tax rise

The UK business leaders have largely backed Chancellor Rishi Sunak’s Spring Budget in which he revealed extensions to the employment schemes and more support for firms ravaged by Covid-19 but rises in corporation tax to 2010 levels have been met with dismay.

Sunak said the the Coronavirus Job Support Scheme and Self Employment Income Support would both be extended until September across the UK, while £5bn in Restart Grants – a one off cash grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses – would be made available in England.

It will also extend the Film & TV Production Restart scheme in the UK, with an additional £300m to support theatres, museums and other cultural organisations in England through the Culture Recovery Fund.

Other measures include an extension to the VAT cut to 5% for hospitality, accommodation and attractions across the UK until the end of September, followed by a 12.5% rate for a further six months until March 31 2022.

Meanwhile 750,000 eligible businesses in the retail, hospitality and leisure sectors in England will benefit from business rates relief.

However, the sting in the tail is the £50bn in additional corporation tax over the life of the Parliament, delayed until 2023 and offset by deductions that companies can make of £1.30 for every pound they invest in their businesses.

Advertising Association chief executive Stephen Woodford said: “Today’s Budget demonstrates the hard work ahead for the Government, business and society. But as the vaccine roll-out continues and the economy reopens, we must look forward and advertising lies right at the heart of a successful recovery.

“Businesses will be relieved the furlough scheme has been extended and the reassurance that this gives to their activity. Every firm wants to return to normality and bring back staff members where they can, but this needs to be done gradually and as lockdown easing dictates.”

Woodford also welcomed the “positive news” that the creative industries have been recognised as a key contributor to economic recovery and said the AA supported the increased funding for the sector.

“The announced new business grants and growth schemes for SMEs are also very welcome. The multiplier effect of advertising as an engine for growth for businesses of all sizes is well known and we look forward to working with Government to see how the advertising industry can contribute further to support business and jobs growth.

“At this precarious time, Government should be mindful of putting new and unnecessary barriers on the road to recovery. This can be achieved by continuing the welcome emphasis on securing trade deals with different markets and delivering agreements on services with the EU. It is just as vital that any further regulation on advertising in areas such as HFSS and gambling is proportionate, effective and efficient, or it may well cost more jobs and harm economic activity, just at the time when these are most needed.

“The pandemic has caused an economic crisis, but it has ultimately been a health emergency for people and communities in the UK and around the world. As such, the social rebuilding of our country is as important as the economic resurgence. We welcome the emphasis on skills and jobs in the Budget and businesses in our industry are committed to upskilling talent to equip them for the changing jobs market we face, maximising the potential of the growth in digital and improving performance on inclusion and climate change.”

Meanwhile, Elle Nadal, director of marketing, EMEA at cross-channel customer experience platform Iterable, said: “The new measures will be vital news for brick-and-mortar retail stores, particularly for non-essential retail forced to close during lockdown. Business leaders will be keen to use the package of government support to ease the transition out of lockdown, protecting jobs and helping the sector to bounce back from the darkest days of the pandemic.

“It is crucial that the Treasury is now taking the time to consider and plan for the future of the retail sector. The business model of retail shifted inexorably during the pandemic to put even more emphasis on online over in-store, and we are likely to see this hybrid model become more permanent in the months, and years ahead.

“Customers have flocked to the convenience and personalisation available online. We expect to see retailers continue to maximise ecommerce sales, offering customers unique deals and a more flexible way to browse – perfectly complementing the in-person shopping experience.

“Customer habits have changed during the pandemic, potentially forever, and the high street must change along with it. There is a need now for bold ideas to reimagine the in-store experience. The Chancellor’s newly announced £100 limit for contactless payments also offers a wealth of opportunities, diminishing the need for queueing space and enabling business to find new ways to delight the customer.”

The National Centre for Universities & Business, which represents leaders across higher education and business and aims to tackle issues of shared interest, says the Chancellor has taken a positive step forward in prioritising the UK research base.

NCUB chief executive Dr Joe Marshall commented: “The Government has made clear its ambition for the UK to become a science superpower. The Budget announcements today illustrate a strong commitment to making this happen.”

In particular, Marshall said the super-deduction tax incentive for companies with cash reserves which invest in new materials and creating jobs, will encourage and help businesses to invest, including in research and innovation.

He added: “This is critical to help businesses build back better and lay the foundations for an innovation-led economy. Coupled with other measures to stimulate R&D investment such as exploring changes to pension investment rules and tax credits systems, these are important steps towards developing a more resilient economy. Today’s announcements help us move towards greater prosperity, as well as tackle the seismic challenges of climate change and the fourth industrial revolution.”

However, while CBI director general Tony Danker welcomed most measures in the Budget, he warned: “Moving corporation tax to 25% in one leap will cause a sharp intake of breath for many businesses and sends a worrying signal to those planning to invest in the UK.”