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A response to the Budget 2018 – Ruth Duston OC, OBE

 

October 30, 2018

The Chancellor has declared that austerity is coming to an end, and certainly his Budget on Monday was more positive and optimistic in tone than the last few years.  But how will businesses feel the impact and how did London fare?

While our exit from the EU seems to dominate the national debate at the moment, Brexit was barely mentioned in the Chancellor’s speech – clearly he wanted this to be seen as a “life beyond Brexit” Budget, albeit one that is largely deal-dependent. While hardly featuring, Mr Hammond did announce an extra £500 million for preparations for Brexit and hinted that there could be an emergency budget in Spring.

There was some good news for businesses, but your view on whether you are a winner or a loser might depend on how big your company is. This is arguably the most small-business friendly budget this Chancellor has ever delivered.

For smaller firms taking on apprentices, the Government will half the amount they have to contribute from 10 per cent to 5 per cent. Start-Up Loans funding will be extended to 2021, helping 10,000 entrepreneurs. The Chancellor’s support for smaller businesses is to be welcomed. It’s good that the Government is taking steps to reinforce apprenticeships as the way to boost skills and productivity. We are facing huge challenges in our economy due to relatively poor productively and a skills shortage. Any measures that seek to tackle these growth hinderers must be supported.

Business rate bills have been cut by one-third for the next two years for all retailers in England with a rateable value of £51,000 or less, delivering an annual saving of up to £8,000 for up to 90 per cent of all independent shops, pubs, restaurants and cafes. While no doubt welcomed by the businesses affected, it is questionable whether this measure will be enough to halt the decline of our high streets – and is likely to have relatively little impact in London. A much more radical approach is needed – some driven by Government but also a fresh and innovative approach by retailers is required too.

The digital services tax on “global tech” companies is forecast to raise over £400m when it comes into effect in 2020.

On infrastructure, the Chancellor has scrapped the PFI funding programme and very clearly stated that major infrastructure projects will largely be funded privately.

To ensure that major infrastructure projects still go ahead it will be vital to understand how Government will accelerate and advocate infrastructure investment in the future, and crucially support the public / private partnership working that is already happening.

Just look at the examples of Strand / Aldwych and the redevelopment of Victoria Station. Both major transformation projects were kick started by the private sector, led by BIDs. Ongoing support and commitment by all our public sector partners is vital to maintain the momentum around projects such as these.

London was notable by its absence from the Budget yesterday. The Chancellor talked of investing in the regions and bolstering the Northern Powerhouse. Investing in other parts of the country is a positive thing but it need not, and cannot, be at the expense of the capital.

Currently London out performs the rest of the UK economy and it generates almost as much tax as the next 37 largest UK cities combined.

London is the UK’s only global city and we must continue to compete with other cities around the world like New York, Singapore, Tokyo and Paris. If London starts to fall back then we risk losing a big chunk of business to these other global cities.

The Chancellor sent a clear signal to international visitors that the UK is open for business by announcing that travellers from outside the EU will be able to start using ePassport gates at UK airports.

Access to these gates will now extend to travellers from the US, Canada, Australia, New Zealand and Japan, meaning people from these countries can pass through electronic passport control more quickly. With the long queues at border control at Heathrow over the summer this is a good move by the Chancellor, and will be welcomed by businesses in the capital.

Some great opportunities lie ahead for BIDs, with businesses playing an even greater role in delivering area transformations. While austerity may indeed be coming to an end, there is no sign that the public purse strings will loosen any time soon. Partnership between the public and private sectors is set to continue and grow, and BIDs are already demonstrating the power for good that great collaboration can be.