Business community reacts to Chancellor’s Autumn Statement

Business leaders from across the North-west and the rest of the UK have shared their reactions to yesterday’s Autumn Statement from recently-appointed Chancellor, Jeremy Hunt.

In his first Autumn Statement as Chancellor, Jeremy Hunt set out a number of major tax increases and spending cuts across the economy with the backdrop of high inflation and a 1.4% contraction to the economy predicted for next year. A summary of key announcements can be found here.

Businesses have had a mixed reaction to the Chancellor’s statement, acknowledging the difficult financial situation facing government after the pandemic, but equally warning of how consumer spending and confidence would be further hit by tax rises and high energy bills.

Chris Fletcher, the Policy Director for Greater Manchester Chamber of Commerce commented:

“It was clear coming into this that there was very little room for manoeuvre by the government set against a worsening economic background.

“But Mr Hunt was clear that the statement did lay out tax rises and spending cuts equalling around £54bn designed in his words to provide stability, increase growth and protect public services.

“The content contained a huge amount of announcements reflecting that every area of government spend was under review and apart from a few, big headline announcements it is clear that the savings and tax increases are spread across a raft of policies with many being kicked down the path to be dealt with by the next government.

“From a business perspective it was good to hear confirmation about infrastructure spend being kept at previous levels although increases are not on the long-term agenda. This will allow vital infrastructure projects like HS2 to Manchester to proceed and the trimmed down version of Northern Powerhouse Rail to at least still be on the books.

“The growth priorities of energy, infrastructure and innovation all make sense and whilst it could have been easy to cut these by maintaining current spending plans the government has shown it recognises the fact that on-going investment in infrastructure and growth measures pay benefits over the longer term.”

Hospitality has been one of the most hard-hit sectors by both the pandemic and the subsequent squeeze on the cost-of living: UKHospitality Chief Executive Kate Nicholls welcomed proposals on business rates was sceptical that the Autumn Statement would give the hospitality sector confidence to invest in further growth:

“Survival this winter is the priority for venues across the country and there is the very real possibility that a significant proportion of our sector will not survive the winter. It was crucial that the Government addressed this today.

“I’m pleased that the Chancellor has listened to the vast majority of UKHospitality’s proposals on business rates, covering a freeze in the multiplier, extended reliefs and no downward transition. This means those seeing their valuations decrease will see the benefit in their bills immediately, at the same time as increases are capped.

“However, it remains the case that the current system is outdated and not fit-for-purpose. The Government made a manifesto commitment of root and branch review and it’s essential that this delivered as soon as possible.

“It was also encouraging that the Chancellor confirmed that energy support will continue post-April for the most vulnerable sectors, of which hospitality has already been recognised.

“What we failed to hear today from the Chancellor was any plan for economic growth, despite him recognising its importance. Businesses create jobs, deliver higher wages and contribute millions in tax revenues but without a serious plan from the Government, margins continue to be squeezed without a path forward to growth.

“There is nothing to give firms confidence, let alone invest, and we need to see an urgent plan for economic growth and how business will be at the centre of that. UKHospitality stands ready to work with Government to develop such a plan and on the essential package of energy support post-April.”

Greater Manchester Night Time Economy Adviser, Sacha Lord, also feared that spending on luxuries like hospitality would take a hit without further support in the face of high inflation. He said in a statement on Twitter:

“Operators are being squeezed beyond their ability, and I fear we will now see huge cuts in staffing, reductions in opening hours and venues closing at a faster rate faster than seen during the pandemic. It is a very sad state of affairs.

“We will now see a downturn in consumer spending over the coming weeks and months, at a time when operators need the most support as they recover from the hangover of pandemic related debt.

“Disposable income underpins the UK economy and I’m hugely concerned that the policies outlined today, will create a severe contraction in the sector. Spending on luxuries such as dining out, is naturally the first to go in times of cutbacks.”

On infrastructure, Manchester Airports Group CEO Charlie Cornish had a mixed response the Chancellor’s HS2 and Northern Powerhouse Rail commitments:

“The UK needs to be serious about levelling-up in the long-term, which is why today’s commitment to Northern Powerhouse Rail and HS2 is welcome, especially in the context of current economic pressures.

“It is disappointing the opportunity is not being taken to deliver NPR in full, including a new line from Manchester to Leeds via a station at Bradford, which would maximise the benefits of this once-in-a-generation investment.

“We remain committed to working in partnership with government on ensuring the North realises its full potential.”

Responding on behalf of local councils, Cllr James Jamieson, Chairman of the Local Government Association, welcomed measures that would allow authorities to deal with current financial pressures:

“Local government is the fabric of the country, as has been proved in the challenging years we have faced as a nation. It is good that the Chancellor has used the Autumn Statement to act on the LGA’s call to save local services from spiralling inflation, demand, and cost pressures.”

Despite the boost to council coffers through greater flexibility to increase council tax, Cllr Jamieson also called for government to do more to help councils meet rising social care costs in the wake of the pandemic, as well as managing economic uncertainty more widely. He continued:

“The revised social rent cap for next year is higher than anticipated and councils will still have to cope with the additional financial burden as a result of lost income. Councils support moves to keep social rents as low as possible but this will have an impact on councils’ ability to build the homes our communities desperately need – which is one of the best ways to boost growth – and retrofit existing housing stock to help the Government meet net zero goals.

“Financial turbulence is as damaging to local government as it is for our businesses and financial markets and all councils and vital services, such as social care, planning and waste and recycling collection, and leisure centres, continue to face an uncertain future. Councils want to work with central government to develop a long-term strategy to deliver critical local services and growth more effectively. Alongside certainty of funding and greater investment, this also needs wider devolution where local leaders have greater freedom from central government to take decisions on how to provide vital services in their communities.”