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North East business leaders react to the 2016 budget
Graham Robb writes........welcome to our blog page on budget day!
Our clients have all been following in the budget, which was more interesting than commentators thought it would be.
Lots of announcements affected their sectors and the North East. Buried in the small print was this corker….
Business, innovation and science
“The government will invest £15 million in the National Institute for Smart Data Innovation in Newcastle, subject to approved business case. This new facility will bring together industry, the public sector and universities to create the skills, ideas and resources needed to exploit the opportunities offered by Smart Data.”
Our client, Dynamo North East, had called for this last year and is delighted that it has happened!
My own view is this was a good budget for business and the self-employed, the cuts to small business rates will be welcome as will the reduction in corporation tax for all firms. In the North East the energy supply sector will be pleased that support is being offered to the oil and gas sector and businesses with delivery and transport costs will be pleased that the Chancellor wasn’t tempted to increase the rate of fuel duty.
The Northern Powerhouse has also taken some steps forward, the HS3 project has always found favour with IoD members and upgrading east west road links is a priority we want to see addressed as soon as possible. Both these transport priorities were addressed in the Budget as was the important acknowledgement that educational gaps need addressing, we hope that the £20million being committed to meeting educational challenges is spent effectively.
Let’s see what other businesses, connected to Recognition PR, had to say:
Entrepreneurs’ Forum Chairman Nigel Mills said: “I am pleased to see no changes to schemes that encourage investment in small business like SEIS and EIS. On the whole, this Budget delivers a number of opportunities for small and growing businesses, it is now up to the business community to take these and run with them. Business Rate reform will be a big help to smaller businesses, while the cut in Corporation Tax are an opportunity for all North East companies to scale up and create employment.
“The new £1,000 allowances for property and trading income could give some people the incentive they need to take their first step into the world of entrepreneurship. The Chancellor’s decision not to increase fuel duty a positive too, as it is estimated that this will save small businesses hundreds of pounds a year.”
“While fuel prices have fallen, the disproportionate amount of tax levied on petrol and diesel would have made a tax rise unjustified as well as being a real burden on those operating in the taxi, haulage and logistics industries.”
Jonathan Willett, a Director at Henderson Insurance Brokers Teesside office, said: “Last year’s Insurance Tax Premium increase from six to 9.5 percent caused consternation across a wide spectrum of business sectors because, unlike VAT, IPT is a non- reclaimable tax.
“This time the Chancellor has side-stepped potential critics with the 0.5 percent rise by directing the extra money raised to pay for flood defence systems. However, there is concern that the latest increase could be another step towards bringing IPT in line with the 20 percent VAT rate, a move already made by other EU member states such as Germany and Holland.”
Opencast financial founder Joel Marks said: “These are sensible measures to encourage savings and investment. Anything that encourages long-term savings is to be welcomed.
“The complexity of the pensions system has been incredibly off-putting for many. Chopping and changing of policy and lots of headlines about how lifetime allowances are being reduced means many people have decided they aren’t going to put any money away at all either because they don’t understand it or they don’t feel they would be getting enough to see them through their retirement.
“While this new ISA does nothing to cut through the pensions’ confusion, what it does do is encourage some much-needed simple long-term financial planning.”
Penny Marshall, Regional Director for the Institution of Civil Engineers in the North East said: “The confirmed financial backing for vital transport projects in the North is excellent news. The next step should be to underpin this commitment with an integrated plan embracing a mix of ambitious, transformational projects alongside smaller scale investments. If the plan can be developed swiftly, it will maintain confidence in the vision and enable the benefits to be felt sooner.
“While the headlines are focussed on important large projects, the upkeep of our existing infrastructure – from flood defences to local roads – should not be forgotten. We await details on any local authority cuts and the impact on maintenance budgets, and will continue to encourage a shift from reactive patch-up work towards a ‘whole life’ approach to infrastructure investment.”
George Rafferty, Chief Executive of NOF Energy, said: “The Chancellor’s announcement demonstrates the importance of the UK oil & gas industry to the British Economy. Halving the supplementary charge and effectively removing the petroleum revenue tax should send a message to the international operator community that the North Sea is still viable location for investment.
“With between 12 and 24 billion barrels of oil still to be extracted from the UK Continental Shelf, the North Sea remains an important part of Britain’s energy mix. This improved investment environment, supported by the industry’s own efforts to improve operational efficiency and the supply chain’s commitment to developing technology-led solutions, has the potential to bring real benefits to companies operating in the sector and the wider UK economy.”
Chris McDonald, CEO, Materials Processing Institute, said: The Chancellor's downward revision in the growth forecast is not unexpected, but this did seem to be a Budget that would help SMES. Through our SME Technology Centre and the Materials Catapult proposal we are discussing with Government, the Materials Processing Institute is supporting the growth of technology driven small businesses and we understand the barriers to growth that exist.
“The Chancellor's announcement on business rates and on the future reduction in Corporation Tax will leave more funds available for small business to invest and grow their enterprises.
“The further news on tax allowances for micro businesses and start-ups should encourage greater entrepreneurial activity. It can create clusters of technology-focused micro-businesses that can grow around, and be supported by regional research and development facilities.
“We see this as positive for the materials, processing and energy sectors that we support and for the Tees Valley region, where we are working to attract and grow more SMES in these fields.”
Reacting to new measures announced by the Chancellor to encourage saving, Colin Fyfe, chief executive of Darlington Building Society, said:
“Anything that encourages people to save for the future is to be welcomed and the Chancellor announced a number of interesting schemes. The new lifetime ISA is a simple mechanism for younger people to save for their first home, their retirement and anything in between. The Government ‘bonus’ of £1 for every £4 saved should act as a real incentive.
“This, together with the raising of the limit for ordinary ISAs and the savings scheme for lower-paid workers, makes it a good Budget for savers.”
North East LEP board member and mayoral candidate Jeremy Middleton said: “The extra focus on improving northern schools is fantastic news. For the North East to reach its full potential we need to ensure our young people have the skills they need to get the jobs that exist. Moving all schools towards academy status can free up fantastic heads to create fantastic schools, but will only achieve limited results without a comprehensive programme of business engagement delivering work experience and careers guidance for each and every student.
“A number of other measures announced by the chancellor should be positive for the region. In particular improving our links to the North West by dualling the A69, and supporting our manufacturing sector with tax cuts for the energy industry. I was disappointed not to see protection for Newcastle Airport from potentially aggressive Scottish tax policies, and will continue to call for matching powers for the North East.”
Yarm School headmaster David Dunn has welcomed the Chancellor’s announcement on extending the school day with extra-curricular activities.
Mr Dunn said: “The importance of extra-curricular activities cannot be underestimated so any financial encouragement to help schools to provide these for students has to be welcomed.”
Yarm School already provides a vast range of extra-curricular activities, run by teachers, including drama, music, sports, chess and outdoor education.
Mr Dunn added: “We’re very fortunate to be able to provide all of these activities for our pupils. Most are run by teachers who say that interacting with pupils outside of school hours allows them to hone individual students’ talents, along with improving their academic work in the classroom as a result of enhanced relationships and increased confidence. It would be great if the Government’s new initiatives gave schools who aren’t currently able to provide such activities the opportunity to do so.
“Of course, it’s vital to provide a great academic education, but it’s also imperative to provide students with so much more. The ethos should be about creating holistic students, who are well-rounded, and able to thrive not just in school, but when the time comes to enter further education and the world of work.
“Encouraging students to take part in extra-curricular activities such as music, the arts, sport and outdoor education provides them not just with enjoyment, but with other skills, abilities and characteristics such as positivity, ambition, confidence and team-working abilities which will stand them in good stead as their embark on their adult lives.
“Not only that, but the knock-on benefits for the economy are manifold. Clearly, the priority of extra-curricular activities is not to provide childcare, but a longer school day does give parents the opportunity to work later without worrying about school pick-up. Moreover, with employers regularly citing a lack of employability among school leavers as one of their main issues, focusing on extra-curricular activities provides another way to imbue students with the skills and attitude needed for life in business.”
Richard Hogg, Managing Director of Jackson Hogg Recruitment. said: “Cuts to the Supplementary Charge on Oil and Gas, and the abolition of Petroleum Revenue Tax should be very welcome news in the North East, as they should help to stabilise business in the energy sector and manufacturers that supply it.”
“The Chancellor’s announcement of extra help for northern schools could be good news for employers in the long run if it helps to close the skills gap, more information on how this policy will work would be very helpful.”
George Hardey, Head of Tax at Tees Valley based Accountants and Business Advisors Waltons Clark Whitehill, said: “The increase in the Personal Allowance and the threshold for higher rate tax will be welcome news to the vast majority of people, although in many households these savings will be partially offset by the increase in Insurance Premium Tax. Changes to how businesses will be taxed are a little more complicated but should be popular with small and medium sized firms, business rate reform has been expected for years.
“The Chancellor’s decision to tighten the leash on the much maligned one-man Personal Service Companies will be unwelcome in some quarters, but will be considered a welcome simplification of the tax system by others. Further changes to Stamp Duty Land Tax could be seen to target larger businesses but equally smaller businesses may benefit from it.”
Entrepreneur Gareth Thomas, Managing Director of precision plastic injection moulding firm Icon Plastics, of Eaglescliffe, said: “Many of the Budget announcements are a case of jam tomorrow rather than today. A case in point is the latest cut in Corporation Tax, which will not come into effect until April 2020.
“Companies that buy raw materials from Europe and pay in Euros are facing increased costs now as uncertainty caused by the forthcoming Euro referendum has hit the value of the pound.”
Sean Bullick, CEO of NE1, Newcastle’s Business Improvement District (BID) has welcomed measures in the Chancellor’s budget to improve northern transport links and business incentives.
Mr Bullick said: “The Chancellor’s announcement on HS3 is to be welcomed. It’s only right that the North East economy should have the same chance to boom through high-speed rail as the rest of the country.
“With extra connectivity between the northern cities, we have real opportunity to get the whole of the north working together to achieve the aims of the Northern Powerhouse.
“Not only that, but Newcastle will further benefit from tourism as visitors will have the ability to reach us quicker for a day-trip or a weekend break in the city, while the workforces of northern cities will enjoy much greater fluidity of movement. Improvements to the A66 and the A69 road network will also lead to similar benefits.
“It’s great to see incentives which could help small businesses looking to start-up or to make the move from online only to physical premises in our town and city centres.”
Mr Bullick added: “London already has this ability, so why shouldn’t we be able to seize the same opportunity to improve our own economy? Surely that is what the Northern Powerhouse is all about."
Business Battle-axe Amanda Vigar, Managing Partner at V&A Vigar & Co (Darlington) LLP, has welcomed the tax breaks being extended to small business.
Amanda, who publicises her hard-hitting views via a Business Battle-axe blog (http://businessbattle-axe.blogspot.co.uk), said: “Entrepreneurs and smaller enterprises form the lifeblood of the UK economy and, therefore, it was important that there were reliefs to establish a more sustainable economic base to support the small business community.
“An extension of the business rates relief for small companies, a reduction in company Corporation Tax and the abolition of class 2 National Insurance contributions will help bolster a spirit of enterprise and help people who have the courage and flair to be self-employed.”
Mohammed Bashir, founder of Boro Taxis, said: “There will be an enormous sigh of relief across the whole of the transport sector that speculation about a 2p rise in the level of fuel duty did not end up as one of the Budget’s money-raising measures.