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30
Oct
Harrogate district business groups react to Budget
Chancellor Rachel Reeves today gave the first Labour Budget for 14 years.
She announced £40 billion worth of tax rises, including increased National Insurance contributions from businesses and a hike in capital gains tax.
Ms Reeves also confirmed the government will impose VAT on private school fees — which could have significant impact on local fee-paying schools.
Rates of income tax and National Insurance for employees will remain unchanged, while the national minimum wage for over-21s will be boosted from £11.44 to £12.21 per hour from April.
The Stray Ferret contacted business groups and organisations across the Harrogate district to get their opinions on the Budget.
‘Strikingly targeted against supporting businesses'
Harrogate Business Improvement District manager, Matthew Chapman, told the Stray Ferret the Budget was “always going to be challenging”, but felt businesses have been hit particularly hard.
He said:
Today’s decisions felt strikingly targeted against supporting business.
For example, an increase in the minimum wage by almost 7%, an increase in National Insurance contributions from employers and business rates relief dropping to 40% from 75% are all concerns for the business world.
In a consistently turbulent high street, these changes are just adding to the daily hurdles our BID members already face.
Mr Chapman also said many issues raised by local businesses were overlooked by the Chancellor.
He added:
The obstacles raised by our local business community impacting day-to-day operations - including a lack of police, not enough investment into town centre infrastructure and ongoing calls for a business rates reform - were not mentioned or broached, which feels rather distant from reality.
However, Mr Chapman called the continued bus fare cap – which will jump from £2 to £3 in January – as well as additional investment into tackling homeless a “glimmer of positivity”.
The government's "appetite to work with local leaders and mayors" was also welcomed by Mr Chapman.
'Not welcome news'
Ian Howard, a member of the management team at Harrogate District Chamber of Commerce, said the Budget would have "a significant impact on many businesses in the Harrogate district".
Mr Howard said the focus on improving public services and the state of public finances was welcome in principle but many of the measures introduced will increase the tax burden on local businesses, especially smaller businesses.
He added:
Increases in the National Insurance paid by companies and increases to the minimum wage will hit employers in key local industries like the hospitality sector and are likely to lead to slower growth across the district. Increases in Capital Gains Tax will reduce the attractiveness of investment in smaller companies and increases to the levels of tax paid by private equity investors will make it more challenging for our high growth businesses to attract funding.
Whilst we are confident that our thriving local businesses will be resilient in the face of this Budget, this will not be welcome news for many businesses in the Harrogate area.
Fuel duty
Derek Hutton, the president of the Boroughbridge and District Chamber of Trade, felt businesses could be "detrimentally" affected by some of the changes.
Mr Hutton, who stressed the views given are his personal opinions and not reflective of the chamber as a whole, told the Stray Ferret:
The rise in employers' National Insurance is unwelcome, [although] the raising of the Employment Allowance will counter the blow for many small businesses.
The rise in minimum wage will be significant for a number of our members, particularly those in hospitality and leisure.
Mr Hutton did welcome the continued freeze on fuel duty for businesses requiring deliveries or logistical services.
However, he raised concerns about the £1 increase in bus fares. Mr Hutton felt this “could well reduce” the number of visitors travelling to Boroughbridge and, by default, decrease footfall for local businesses.
Uplifts will cause ‘real headaches’ for employers
West and North Yorkshire Chamber of Commerce gave a mixed response to the Budget.
It welcomed the Chancellor’s commitment to delivering the Transpennine rail route upgrade between York and Manchester, which would run via Leeds and Huddersfield.
However, the chamber felt the uplifts in employers’ National Insurance contributions and minimum wage would increase overheads for businesses when “costs are already under significant pressure”.
Mark Casci, the chamber’s head of policy and representation, said:
It is of course welcome to see the Chancellor commit to improvements in Yorkshire via enhanced devolution and infrastructure improvements.
However, the increases to National Insurance contributions for employers and minimum wage will mean real headaches for businesses, particularly smaller firms, and mean that any plans to invest or create jobs will now become far more difficult. Tax is now the number one cost pressure cited by businesses here in Yorkshire and that situation will be exacerbated by these decisions.
In the months ahead, employers of all sizes will be hoping to see the cost burden they face begin to recede, so that they can invest and innovate to drive the national economy forward.
The Stray Ferret also contacted Harrogate District Chamber of Commerce, Ripon BID and Knaresborough and District Chamber.
We did not receive responses at the time of publication.
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