Businesses express mixed reactions to budget proposals

Charles Nicholds, managing director of Murphy & Son, a Nottingham-based supplier for the brewery and winemaking industry, initially described the budget as “a bit giveth and a bit taketh away.” He expressed approval for the tax reduction on draught alcoholic beverages, amounting to approximately a penny per average pint. However, he voiced apprehension regarding the rise in the national living wage, stating it would have a “much bigger impact” on brewers’ costs. He commented, “Yes they might be saving a penny on duty but actually their overall costs are going to go up.” Mr. Nicholds was among the business leaders observing Rachel Reeves’ statement during a roundtable event arranged by the East Midlands Chamber. An audible gasp was heard from some attendees when the chancellor confirmed that numerous employers would be required to contribute more to National Insurance. Mr. Nicholds stated, “We’ve got 70 members of staff. I haven’t done the numbers but that’s going to hurt us pretty hard.” He further mentioned that his company intends to hire additional staff, but recruitment might now need to be postponed. Sarah Loates operates her own HR consultancy firm, which is located in Derby. She indicated that as a microbusiness, she anticipates benefiting from an expansion of the Employers Allowance—the sum companies can reclaim from their National Insurance bill—from £5,000 to £10,500. Nevertheless, similar to Mr. Nicholds, she noted that the budget presented both advantages and disadvantages. She explained, “Bigger picture, a lot of our clients are the size of Charles’ [Murphy & Son], and if they’re having to tighten their belts, that means inevitably they would be spending less with businesses such as myself.” Kevin Harris expressed less enthusiasm. He is a partner at RSM, an audit and tax advisory firm, operating from its Leicester office. He characterized the economic growth forecasts from the Office for Budget Responsibility as “underpowering.” He commented, “Given all that investment that’s likely to go into the economy over the next five years, growth under 2% per annum didn’t really seem that inspiring. I was expecting it to be better than that.” While he welcomed the ongoing freeze on fuel duty, he echoed the concerns of others regarding employers’ National Insurance contributions. He stated, “In a business that employs many thousands of people as mine does, that’s going to put an enormous amount on to workforce payroll costs.” Laura Shepherd, director of strategic partnerships at Loughborough College, welcomed a specific announcement. She indicated that an additional £300m allocated to further education is expected to help bridge the pay disparity between colleges and schools. She remarked, “If you’re a maths teacher in a college you’re going to be paid significantly less than a maths teacher in a school, yet colleges are seen as helping government respond to supporting the skills system and growing businesses in the area.” She questioned, “If we can’t attract high quality teachers with pay, how are we going to get them into our organisation?” Scott Knowles, chief executive of the East Midlands Chamber, commented that the budget generally appeared to be “a really tough budget for business.” He further stated, “This additional cost burden, for many, might be too much and you might see businesses deciding not to recruit that extra member of staff. It might have an impact on what pay awards are able to be afforded next year.” He also expressed disappointment regarding the minimal mention of the region in the chancellor’s address. He observed, “We heard lots of references to Manchester, to the West Midlands, to the devolved nations. There were a couple of scant references to investment in aerospace in the East Midlands.” He concluded, “You can’t help but feel that disappointment that the East Midlands once again didn’t seem to feature prominently in the thinking from London.”