Autumn Statement: Views from the North West business community

Following Chancellor George Osborne’s Autumn Statement yesterday (November 25), we collected the views of the North West business community to see what the region’s MDs, department heads and entrepreneurs had to say about the changes.

Housebuilding

The managing director of Sale-based Sequre Property Investment, Graham Davidson, said the Chancellor’s Autumn Statement made it clear that the North, in terms of housebuilding, is “here to do business”.

He explained: “The Northern economy is already gathering pace and the confirmation of investment in HS2 and HS3, creating better links between London, Manchester and other key Northern cities will ensure that the new homes and businesses in these areas are properly serviced.

“We welcome the announcement of investment in starter homes, which will help boost activity across all levels of the market, but this is the third time that this phrase has been mentioned and time will tell if it comes to fruition, as we know that developers are already facing a critical skills and materials shortage.”

Lora Roberts, a portfolio manager at Manchester estate and lettings agency Ascend Properties, reported seeing “a huge surge in interest for property in the North”, adding: “It is imperative that that the infrastructure network is now bulked up to cope with the increased demand”.

“Addressing the needs of renters should also be on the government’s agenda”

Anna Duffy, the head of property at law firm DTM Legal, which has offices in Chester and Liverpool, said she believes that investing in a “substantial” housebuilding project would help to relieve one of the North West’s “major issues”, potentially kickstarting economic growth in the region.

She said: “Earlier this year, the National Housing Federation predicted tackling the North West housing crisis would boost the region’s economy by up to £312m and create over 6,000 full-time jobs.

“Today’s announcements are a major step to achieving this, which will provide much-needed affordable homes for residents, bring wealth to the local areas and improve job prospects across the North West.”

The MD of Liverpool-based developer Promenade Estates, Daniel Hynd, was confident the government’s commitment to build 400k homes would work towards alleviating the home ownership crisis.

He said: “While building future homes is important, addressing the needs of renters should also be on the government’s agenda.

“The government can’t ignore the growing private rented sector and the appeal of renting. There is an increasing desire for properties which are flexible and high quality, especially amongst young professionals, who want to live close to where they work.”

Daniel added that while some people rent because they can’t afford a deposit, others turn to renting as a “lifestyle choice”.

“It’s important that the government and developers adapt to these evolving models of homeownership,” he added.

“Played correctly, this could help local authorities achieve their challenging homebuilding requirements.”

The head of real estate at the Manchester office of law firm Shoosmiths, Vaqas Farooq, believes housebuilders will be “enthused” by the announcement that a new round of sites for potential development are to be made available.

Vaqas said: “Played correctly, this could help local authorities achieve their challenging homebuilding requirements.

“But it is a once-only opportunity and councils must be very careful to ensure not only that they get best value for the sites but also that any plans brought forward for them are of the highest quality and the right strategic fit for the local community and economy.”

Rebecca Durrant, a tax partner at Manchester-based audit firm Crowe Clark Whitehill, welcomed the Chancellor’s plan to help people who want to get onto the property ladder, but warned: “This will not be helped by a further increase to Stamp Duty Land tax announced for the buy-to-let market, and this, combined with the interest restrictions announced in the Summer Budget, will have a cost impact for tenants.”

Transport

Martin Venning, a co-organiser of the UK Northern Powerhouse International Conference & Exhibition, welcomed the Autumn Statement’s focus on the Northern Powerhouse.

“To realise the commercial potential of these investments we need to harness the entrepreneurialism and innovation that typifies the great cities of the North.”

Martin said: “Our economy has for too long been dominated by London and the South East of England and George Osborne’s reiteration of support for the electrification of the TransPennine railway, £20m in funding for Transport for the North and investment in HS3 between Manchester and Leeds will help better connect the 15m people who live in the North of England.

“But the Northern Powerhouse requires the wholehearted backing of business. To realise the commercial potential of these investments we need to harness the entrepreneurialism and innovation that typifies the great cities of the North, and help local businesses grow.”

Dr Mike Kelly, the CEO and founder of DataCentred, a cloud services provider in Salford, said that although the Chancellor’s commitment to push HS2 closer to completion, businesses in the North will only truly flourish if they are “sufficiently digitally connected”.

Mike explained: “The scale of innovation and the number of businesses which choose to operate outside the capital are growing every day but have been largely overlooked by developments in other digital hubs such as London and Cambridge.

“There is no reason why cities such as Manchester and Leeds should not be seen as the ‘go-to’ locations for innovative enterprise technology.”

The northern infrastructure leader at professional services firm Ernst & Young, Nathan Marsh, praised the news that the Department of Transport’s budget will be boosted by 50%, a move that has “freed up some capital to help address one of [the Chancellor’s] biggest challenges for the ‘Northern Powerhouse’; directly financing its infrastructure, such as HS2 and Northern rail electrification.

“Many of the key projects in the North will fall under the £13bn earmarked specifically for Northern transport over this parliament, which was first announced in August.”

Speaking further, Nathan said: “It remains to be seen how the Government will raise even more capital for Northern infrastructure through alternative, innovative means.”

Chris Piggott, the technical director at Synextra, a cloud-based IT provider in Manchester, “massively” welcomed the government’s decision to invest £150m in smart ticketing.

“This is another a critical power enabler which will further whet the appetites of the international investors.”

He said: “Manchester sorely needs an integrated transport system to support its economic growth,

“Manchester is a thriving and flourishing city so it’s exciting to monitor developments and financial commitments after devolution and the Northern Powerhouse was announced this time last year.”

The director of Manchester- and London-based Select Property, Giles Beswick, said the increased spending on transport capital spending meant that construction of HS2 to link up the Northern Powerhouse can get underway.

Giles added: “This is another a critical power enabler which will further whet the appetites of the international investors who hold the key to transforming this region into a global centre for economic success.”

Devolution

Simon Goacher, the head of local government at law firm Weightmans, which has offices in Knutsford, Liverpool and Manchester, said: “Today the government has yet again boosted the Northern Powerhouse – with Merseyside announced recently as one of the next devolved powers.

“It is clear that the devolution agenda has the potential to transform the way in which public services are delivered in England and it will be interesting to see if that potential is realised.”

Simon said there is “compelling proof” local authorities can deliver the highest public sector savings while delivering “innovative, effective and integrated services”.

He continued: “Given the Scottish referendum and a wider dissatisfaction with national politics, there is a growing acceptance and desire for devolution up and down the country. The promised devolution is steaming ahead - giving local authorities the greatest opportunity in years to spend money and make savings in way that suits their local area.”

Adam Burke, director of rating in the North West for real estate advisory firm Colliers International, was more skeptical. He said: “Business rates are kicked into the long grass yet again by this Chancellor. And with a record-breaking 255k ratings appeals outstanding, the system is creaking.

“With further complications to the way local authorities are funded, the question has to be asked whether the so-called ‘devolution revolution’ is a work of fiction – what business can plan beyond the next 12 months for what they will pay in business rates?”

Peter Taaffe, a managing partner at accountancy firm BWMacfarlane’s Liverpool practice, said the announcement heralded more good news for councils.

Peter said: “George Osborne has devolved powers to increase council tax locally – a move that could of course help desperate councils - but may impose a tax increase on us all by the back door.

“I’m not entirely sure how it will impact business overall.”

Tax

John-Paul Dennis, a partner at law firm Kirwans and the firm’s head of private client, called Osborne’s U-turn on family tax credits “amazing”, saying he believes the decision will likely bring fresh support for the Chancellor from a number of quarters.

“Anything that reduces bureaucracy and drives efficiency is a good thing, especially for SMEs.”

Jane Parry, the managing partner at accountants PM+M, said the U-turn was “the biggest not-so-big surprise”.

She explained: “In theory, it is positive news for employers as their lower paid employees will not be financially worse off. However, in the medium to long term, businesses will be hit by increases in the cost of employing these people when the National Living Wage is phased in.”

Jane also said that news of the £450m boost for the Government Digital Service, and the roll-out of digital tax accounts, will help the North West’s economy.

She added: “Anything that reduces bureaucracy and drives efficiency is a good thing, especially for SMEs.”

Jayne O’Boyle, a tax Manager at Haworths Chartered Accountants, which has offices in Accrington and Bentham, said: “The Chancellor’s U-turn decision to abandon tax credit cuts altogether rather than ease their impact, I think is a positive outcome of the Autumn Statement today.

“As he delivered what he called ‘a big spending review from a government that does big things’, George Osborne had been expected to squeeze other budgets to cover the £4.4bn tax credits cost. Yet after his nose I expect was somewhat bloodied in a vote by the House of Lords, he’s now said this isn’t needed because of higher tax receipts.

“Surprisingly, the hype surrounding proposed IR35 changes which could have had a massive impact on contractors across the UK was not mentioned, yet proposals to raise £5bn in a fresh crackdown on tax avoidance was announced. And I expect the talk of further restrictions on pension tax relief will come in the next Budget announcement in March 2016.”

Tim Adcock, a tax partner with North West accountancy firm Mitchell Charlesworth, was thankful the announcements were “relatively light on drastic tax legislation” in comparison to the March and summer Budgets.

He continued: “However, the devil will always be in the detail. At this stage it appears the key announcements for our clients will be the change to the Capital Gains Tax due date on the sale of residential property to 30 days, the additional SDLT on buy to let for second homes and the half a percent increase to the Apprenticeship Levy.”

“We will need to see the detail to understand the level of benefit to businesses in the North West.”

Mitchell Charlesworth’s corporate finance partner, Brian McCann, was confident that many of his firm’s clients will welcome the extension to small business rates relief.

Brian said: “However, on many of the other announcements we will need to see the detail to understand the level of benefit to businesses in the North West.”

Paul Brown, a tax partner at Greater Manchester-based accountancy and business advisory firm HURST, said: “Some of the more extreme changes predicted by commentators were absent. Importantly for SMEs, the entrepreneurs’ relief scheme seems to have largely untouched save for some technical changes which may actually benefit those in genuine joint venture arrangements.

“From a tax point of view, the Autumn Statement does seem to have been rather benign.”

John Lyon, the managing director of accountancy practice ‎Independent Contractor Services Ltd, said: “Following tax hikes on dividends announced in the Summer Budget, which will harm freelancers, contractors and small business owners, the government looks to restrict relief from travel and subsistence expenses and close the net on ‘disguised employees’ working through umbrella and personal service companies.

“From April 6, those caught by IR35 will no longer be able to claim the aforementioned expenses against their income.

Despite a note of pessimism in the industry, John was optimistic for the future.

He said: “The next 18 months are going to be interesting, and will provide opportunities. Of course it is a challenging time, but it has been challenging for years. Whatever happens, we need to roll up our sleeves and get on with it. Changes in legislation are part and parcel of this industry and we can move between the icebergs, we just need to have the attitude to embrace change and adapt.”

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