……………………………….
THIS BUDGET has been rumoured for some weeks to be quite painful and there was a lot of worry from small business about just how tough it might be.
Across the FSB we have been doing a lot of lobbying over the last few weeks and months with the new government and made it clear that any more tax hikes or increased costs will cause a big problem for small businesses.
We had expected a raise in National Insurance Contributions from early on and national living wage increases are something many employers have been needing to keep up with any way they can. The National Insurance Contributions increase, while of course not welcomed, was smaller than the rumours had suggested.
The FSB had lobbied hard for and are very glad to have won in this Budget a significantly increased Employment Allowance which is what shelters the smallest businesses. This has gone up to £10,500 – more than double the previous level.
We think that is probably the most important thing in helping the smallest businesses in the face of other rising staff costs and many FSB members have already been feeding back their relief in winning this important change.
While it was a smaller rise than feared, the impact of the NICs hike will have an impact. Whether you are a fishing tackle shop with one or two staff or a small manufacturer with 50, usually your biggest business cost already will be your employees. So any policies that raise those costs even higher and make it more difficult for a small business owner to take on staff or invest in training, technology and machinery is going to cause far-reaching impacts down the line.
Let’s not forget that 99% of all businesses in Northamptonshire and in the UK are small businesses and well over 60% of the UK’s jobs are with small firms. So this is not an insignificant impact.
It certainly is fair to assume that jobs in general will be impacted, whether it is fewer jobs, hours, pay increases or staff benefits. If a small business is having to make a decision about wage increases or hiring more staff – and these costs are going up – on top of paying its invoices, business rates and rent, they will think twice, particularly if that firm’s customers are also feeling the squeeze.
We have concerns for the businesses that will also struggle with the high costs of the government’s 26 new employment law plans, on top of these other cost rises. We have been very clear in our warning of the difficulty SMEs will be confronted with in meeting all of these changes at once and we are already experiencing a huge increase in calls to our employment helpline from businesses worried about the costs and implementation of all these changes.
But the Budget is about much more than tax and wages.
There are pages and pages of detail to go through and it will take time to see how this all settles. We need to look at more of the detail around issues such as innovation, digital skills and technology – key areas that will allow small firms to be more competitive and boost their productivity and the UK economy.
The FSB has been working with the University of Northampton over the last few months to map out and highlight the opportunities for innovation in Northamptonshire businesses so this will be a key area for businesses in our county.
There was some help for high streets in the Budget, although the FSB’s high streets report in the summer outlined a raft of support recommendations and we will be looking at the detail to see whether any of this practical support for business has been taken on.
There was mention of cracking down on shoplifting, which we know in Northamptonshire and many high streets is a big issue. And, of course, business rates were another big topic on which the FSB has been lobbying hard, with a discount for retail, hospitality and leisure being extended – albeit reduced to a 40% discount.
However, this does prevent a cliff edge for those businesses in the toughest sectors.
Our roads and transport are key for businesses in this county and so the decision not to raise fuel duty is welcome, as is further funding to tackle potholes, which are unsurprisingly always a top bugbear for FSB members I speak to.
Construction is a very large sector in Northamptonshire and we are also glad to see the commitment to prioritise small housebuilders when it comes to housing investment.
Entrepreneurs’ relief – now branded Business Asset Disposal Relief – has been retained up to £1 million, which is something the FSB has campaigned hard for. Any entrepreneur has taken on risk, hard work and personal investment to build a business and create jobs so the incentive needs to be worth the fight.
Overall, the true test of this budget will be whether small businesses create that growth that the UK economy needs so much. Going forward, we hope to see this new government prioritising small businesses and everyday entrepreneurs in our communities rather than large corporates and reacting to the needs of the small businesses – the 99% of businesses – and what they need.
……………………………….
Stay connected with Northamptonshire business through Business Times. Join our exclusive community for the latest news, insights, updates, features and thought leadership.
Stay informed – subscribe now at bit.ly/437DsSm. Unsubscribe at any time.
The post Budget REACTION: The true test of this Budget will be whether small businesses create the growth that the UK economy needs so much appeared first on Business Times.