Chancellor makes progress on business rates, but inflation and tax clouds gather, say small firms

• Budget not enough to meet ambition for high-growth, high-productivity, high-wage, low-tax economy

Responding to the Chancellor of the Exchequer Rishi Sunak’s Budget address, Federation of Small Businesses (FSB) National Chair Mike Cherry said:  

“This Budget has delivered some measures that should help to arrest the current decline in small business confidence.

“But, against a backdrop of spiralling costs, supply chain disruption and labour shortages, is there enough here to deliver the Government’s vision for a low-tax, high-productivity economy? Unfortunately not. Where inflation and forthcoming tax hikes are concerned, the clouds are gathering.    

“It’s good to see the Chancellor embrace our recommendation for business rates reform: changing the system so it stops hitting small firms that invest to make their premises more sustainable with higher bills.  

“That said, much more will be needed to support small employers in the months ahead. Our call for an increase in the Employment Allowance to £5,000 would have made a real difference to efforts to increase wages, retain staff and create jobs as we head into the critical festive season.  

“Wider rates reform is positive, especially the promise of a substantial discount on bills for the hard-hit retail, leisure and hospitality industries, alongside cancellation of an increase in the rates multiplier.    

“Ambitious investment in skill development is much-needed, and should rightly go some way to putting vocational training on a par with academic qualifications.  

“We look forward to more detail on how funding for T-levels, apprenticeships, bootcamps and lifelong learning will reach the smallest businesses that make the biggest impact when it comes to creating opportunities within local communities.

“Vital too is expanded funding for the British Business Bank, empowering it to extend the reach of its work and add to its thousands of existing success stories across the UK.

“We’ve always said that it doesn’t make sense for those travelling overseas to pay less in air passenger duty than those who choose to support UK holiday destinations. Today’s reforms to the levy mark a victory for common sense.

“Reform OF R&D tax credits is needed – expanding eligibility to cover productivity-enhancing intangibles, not least cloud computing, marks a step forward. We hope the adjustments announced today lead to more small firms benefiting from reliefs that many have, to date, found a challenge to access.  

“If the OBR’s concerning inflation forecasts come to pass at the same moment when national insurance contributions and the living wage rise significantly, many small firms will be considering their futures – we’ve already lost close to half a million over the last year.

“National insurance contributions serve as a jobs tax, one which threatens to seriously hamper our economic recovery over the coming months if the planned increase to them is left unaddressed.”