Business and political leaders from Stockport and across the North-west have broadly responded warmly to the Chancellor’s 2022 Spring Statement, however, many have argued that more could have been done to support the economy amid rising cost-of-living.
Yesterday (March 23rd), Rishi Sunak announced changes to National Insurance thresholds, a cut to fuel duty and VAT on energy saving measures as a means to help curb the impact of rising inflation, particularly fuel and energy costs; a summary of announcements is available here.
Commenting on the Spring Statement, Phil Hitchen, managing director of Stockport bus and coach hire company Belle Vue Manchester, welcomed cuts to fuel duty and help for lower earners:
“The 5p a litre saving on fuel is a godsend and the increase in the national insurance threshold is a welcome measure for lower earners.
“The zero VAT rating for greener homes is also encouraging.”
Phil also expressed his support for economic sanctions and a £400 million support package for Ukraine as Russia’s invasion of the country enters its second month:
“It was good to hear the Chancellor state that the continued sanctions on Russia are working. This action appears to be having an effect, with the Russian markets almost closed and inflation there at 20 per cent. These actions might slow down their invasion of Ukraine.”
Anthony Painter, Director of Policy at the Chartered Management Institute, also acknowledged the help of fuel duty, but said more needed to be done to prevent the rising cost of living reducing demand for goods for consumers; he said:
“It is critical that the Government does as much as possible to shield households from potentially crippling increases to prices – which risks detracting from long-term aims. There was some help today but with energy price rises remaining high and continued uncertainty from the Russian invasion. Still more was needed to protect those with lower incomes. This is likely to need re-visiting sooner rather than later.
“The rapidly rising cost of living has a knock-on effect on employers: reducing demand for goods and services at a time of increasing business costs and putting pressure on employees. In the public sector, rising costs create enormous internal pressures as workers, including in the health and care sector, face real wage cuts.”
Sandra Rowley of Stockport-based fintech and card payment solutions provider, takepayments, welcomed the little discussed increase to the Employment Allowance to help small businesses with their National Insurance Contributions as small businesses were ‘bracing for a difficult few years.’ She commented:
“Small business owners across the nation will welcome today’s announcement of the £1,000 increase in the employment allowance, as small business owners continue to face challenging financial implications caused by the ongoing staffing crisis.
“Our recent survey revealed one-fifth of small business owners already increased salaries for open job vacancies in 2021 in order to attract workers, while a further two-fifths of business owners plan to do so over the course of 2022.
“The increase from £4,000 to £5,000 will bring some financial ease from these salary increases. However, as inflation continues to rise and the cost of living crisis remains, small business owners are bracing for a difficult few years as consumers feel the financial pinch.”
Greater Manchester Mayor Andy Burnham, also welcomed the reduction in fuel duty, but argued that many of those in Greater Manchester who rely on public transport will see not their travel costs change. The Mayor also expressed his belief that omissions in the Spring Statement risked widening regional inequality:
“It was clear that the Chancellor had chosen to prioritise some people with the cost of travel, but not all.
“He had prioritised motorists but has not done much, if anything, for those people who can’t afford to run a car and are reliant on public transport.
“If you look at the North of England, what you will find is that there are more people living here who can’t afford to run a car and are reliant on public transport.
“But there are also more people here who are dependent on benefits for their income, either in work or our of work.
“Therefore if you put those two factors together and you consider what the Chancellor has announced, you can’t come to anything other than the conclusion that this is a package that will not close regional inequality and possibly could see it widening over the course of this year.”
Andy Burnham also confirmed that he is set to bring forward his own package of measures to support those in the city-region on the lowest incomes with the rising cost of living.
Kate Nicholls, Chief Executive of UKHospitality, also criticised the Chancellor’s Statement for its omissions. She described that by not extending the reduced 12.5% VAT on the hospitality and tourism sector as a ‘massive missed opportunity.’ She said:
“This is a real setback for thousands of UK hospitality businesses still suffering the devastating effects of Covid, and facing a tidal wave of rising costs. For many businesses, the removal of the lifeline of a lower rate of VAT might prove fatal. For a heavily, disproportionately taxed sector a return to 20% dashes the hopes that many businesses could begin to recoup some of the losses of the last two years.
“Operators in the sector – large and small – have several hurdles to clear on the road to recovery: huge accumulated debts; unprecedented rising costs for energy and raw goods; a chronic shortage of staff; and a fundamentally unfair and crippling business rates regime we’re desperate to see reformed.
“Locking in VAT at 12.5% would have given hospitality businesses a major boost, and helped the sector in its ambition to lead the UK back to post-Covid prosperity. As it is, thousands of jobs could be lost, the UK will remain uncompetitive versus international rivals, and already hard-pressed consumers in the midst of a cost-of-living crisis will see price rises in their favourite pubs, bars and restaurants, further fuelling inflation.”
The lukewarm reaction from the business community has also been matched by a similar response from the public. A snap poll of over 1000 individuals conducted by Opinium on the afternoon of 23rd March found that while most supported the Chancellor’s announcements, nearly two-thirds of those asked felt the government needed to do more.
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