Autumn Statement: Yorkshire businesses react to George Osborne’s new economic plan

After revealing the Autumn Statement and Spending Review to the nation yesterday, George Osborne announced cuts to the transport, energy, business and environment sectors, and gave protection to policing, health, education, international aid and defence budgets.

During in his hour-long speech, many were left surprised that the Chancellor abandoned his recent plan to cut tax credits, but he also showed support to the country’s SMEs in the form of the small business rate relief scheme.

As there has now been 24 hours to process Osborne’s announcements, Bdaily wanted to ask Yorkshire businesses for their reactions to Autumn Statement.

Dave Sunter, Business Development Manager at Leeds-based Stonebridge Offices, said: “In the run up to today’s Autumn Statement we hoped for positive changes to drive our small businesses performance in the UK economy. I’m glad to hear Mr. Osborne has paid attention to recent lobbying business groups and now plans to help 600,000 SMEs by extending the rate relief scheme. However, we’ve seen no new information on a business rates review, which could have further bolstered small business confidence.

“Smaller businesses will also no doubt be pleased some clarity has been provided on the apprenticeship levy introduced in the Summer Budget, which is to be capped at 0.5% of an employers pay bill to raise funds of £3bn per year. With larger companies likely to be impacted heavily by this, we’d like to see smaller businesses equipped to be able to continue education and skill building of apprentices to further boost economic return.

“That being said, Osborne’s Autumn Statement was largely very broad. It is prudent of our small businesses in the North to be aware of shifting costs and ensure flexibility and room for manoeuvre in ever-changing business climates and a growing economy.”

Matthew Briggs, non-executive director at Leeds-based networks, IT and security services firm, Dynamic Networks added: “There’s been a lot of talk following the Autumn Statement about the end of austerity, but in reality I think we’re far from the end of austerity.

“The £27bn the Chancellor has found, which has enabled him to make a U-turn on the proposed tax credit cuts, is a tiny figure in the grand scheme of things and there’s certainly no room for businesses to be complacent.

“That said, news for construction and housebuilding – both industries in which we are actively involved - is very positive indeed. The Chancellor’s commitment to 400,000 new homes is a big step in the right direction and is welcome news for our business.

“The increase in stamp duty on buy to let landlords might impact the house buying market slightly, but on balance I think it’s a positive picture for housing and construction, which will have a knock on effect on businesses like ours who supply into those markets.

“Overall, from a Dynamic Networks perspective there is plenty of good news in this week’s announcements, and we look forward to seeing some of these measures being put in place.”

Nick Houghton, managing director of Guiseley headquartered insurance, financial and health and safety services group, JM Glendinning, commented: “There’s plenty in the Chancellor’s statement that points towards long-term thinking - including investment in infrastructure and digital services – and the move from ‘repairing to rebuilding’ is encouraging. We Brits have a reputation for taking a pessimistic view, but the fact that the UK has experienced the fastest growth among the G7 countries every year since 2010 should not be overlooked.

“I’m very happy to see the Chancellor announcing more support for smaller businesses looking to invest in apprentices. This is something we’ve introduced in our business this year, and something we’re very keen to invest in and develop. Greater financial support and more power and autonomy for businesses to train and shape the people they need will help forward looking businesses build a highly skilled and engaged workforce, as well as helping young people build careers that aren’t hampered by debt.

“The 17% cut to the Business Innovation and Skills department is a concern, but may just reflect the fact that the government feels businesses need less help as the economy improves.

“Overall, I’m encouraged by the long-term thinking demonstrated today and the Chancellor’s ‘fixing the roof while the sun is shining’ analogy. Saving in the good times to help pay for the bad is a concept that’s very familiar to us in the insurance world, and – I believe - an approach that makes sound business sense.”

Simon Gray, partner at accountancy firm Hentons, also said: “Given the negative sentiment running up to this budget statement, it had plenty for the small business to feel positive about.

“The employment allowance was raised from £2k to £3k, which will incentivise small businesses to grow. It was good for Yorkshire, with new Enterprise Zones announced, and billions in infrastructure for the Northern Powerhouse.

“Additionally, it launched a £400m fund, bringing together the Yorkshire and Humber, North West and Tees Valley LEPs, to be used to invest in smaller businesses, subject to European funding arrangements.

“And, 600,000 small businesses will benefit from business rate relief for another year, however we have no new information on a business rates review. As always, the devil is in the detail, but this was a pro-business budget.”

Richard Little, Tax Partner at KPMG in Yorkshire, concluded: “While entrepreneurs across the patch may be breathing a collective sigh of relief that the rumoured cuts to entrepreneurs relief did not come to fruition, there is a risk that replacing innovation grants with repayable loans will be a false economy, with the unintended consequence of stifling innovation, rather than encouraging it.

“There is a certain psychology attached to indebtedness, rather than the incentivisation attached to grant funding. So while any increase in availability of finance will always be welcomed, young fast-growing businesses don’t necessarily want to be burdened with short-term cash interest and the longer term spectre of repaying loans.

“Such foundation capital is particularly vital, for example, to the region’s start-up tech businesses and those that need to invest in building their intellectual property before they can turn a profit; exactly the kind of businesses we need to encourage.

“Whilst it is evident that the Chancellor is seeking to create a supportive ecosystem for the UK’s SMEs, there was nothing in his statement today that will leave them with anything real to celebrate.

“New and expanded enterprise zones, on Humberside, the M62 Corridor and York will be helpful and a low cost way for the Chancellor to show commitment to the SME community. However, the success of existing enterprise zones in the region is still largely untested.

“Some sectors did better than others as the Chancellor announced (again) funding for small house builders, recognising the integral role they play in the supply chain in order to get these new homes built.”

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