Budget reactions: Optimism and relief to Sunak’s plans
Following Chancellor Rishi Sunak’s announcement yesterday, of a raft of new support measures alongside plans to shore up Britain’s finances in the wake of the coronavirus pandemic, the details of this year’s Budget gradually become clear to SMEs, entrepreneurs, startups and others in London and across the country.
Sunak set out extensions to the furlough scheme, business rates relief, the £20 uplift to weekly Universal Credit payments and the stamp duty holiday.
While the fineprint of some of Sunak’s Budget is still being scrutinised, Morning Wire zooms in on a few key decisions to see what those who are impacted the most make of the proposals.
Stamp duty
Developers and property firms welcomed the Chancellor’s extension of the stamp duty holiday. Sunak confirmed yesterday that the higher stamp duty threshold of £500,000 will remain in place until 30 June, an extension of the original 30 March deadline.
He also announced that the end of the tax break will be tapered, with the threshold being lowered to £250,000 until 30 September, before resuming its normal level of £125,000.
“The extension of the stamp duty holiday, and the tapering of support through to October will do wonders for the construction sector,” Andrew Huxley, managing director of building firm Besblock, told Morning Wire
Property platform Zoopla estimated that the extension to June means a further 234,000 buyers who have already agreed a sale will save an estimated £987m on stamp duty.
Huxley said that “housing sales had fallen off in recent weeks with the scheme set to end but now we could well enjoy a boomtime through the summer and beyond which will do everyone’s confidence the world of good.”
SMEs
Also announced yesterday was a £520m scheme to help provide MBA-style management training to up to 130,0000 British small to medium sized enterprises.
The new Help to Grow scheme will see the government pay UK business schools to provide 50 hours of free tuition to SMEs over twelve weeks, with with one-to-one support also offered from a “business mentor”.
Snuggy founder Jack Griffiths called the move “a great turnout for small businesses like us.”
“The schemes will be fantastic for us. I started my business with limited experience, and what I did know was largely self-taught,” Griffiths told Morning Wire
The 25-year-old was also relieved to hear the chancellor explain the small profits rate for corporation tax and that business rates holiday will remain until the end of June.
“For small business owners like myself, the thought of corporation tax rising to 25 per cent was incredibly daunting,” he said.
“To know the SME tax will still be held at 19 per cent is great news, as is the continued business rates holiday. Higher tax rates would be crippling to businesses like us, especially at this point in time as business owners navigate a difficult 12 months as we emerge from lockdown and wait for the economy to bounce back,” Griffiths added.
Arts and culture
Sunak announced to provide additional support for Britain’s ailing arts and culture sector as businesses prepare for reopenings in the coming months.
In his Budget, the chancellor pledged £408m for museums, theatres and galleries to help them survive until the end of lockdown.
Nick Ralls, who is chief executive of the Ironbridge Gorge Museum Trust, welcomed the chancellor’s support package for the arts sector.
“It’s been a tough and worrying 12 months for everyone and as we tentatively emerge from the lockdown restrictions, it will be more important than ever to ensure people can access museums and art galleries so we begin to reconnect again as a society,” Ralls told Morning Wire this morning.
Under the government’s plan for lifting coronavirus restrictions, cultural attractions will be allowed to open from 17 May. Many theatres and museums have been shut since March last year.
As part of the funding package, an additional £300m will be pumped into the £1.57bn Culture Recovery Fund, which has already provided emergency support to a string of theatres, galleries and music venues.
National museums and cultural bodies will also receive a £90m lifeline, while £18.8m will be provided for community cultural projects.
“The benefits they can bring after such an intense period of social isolation are immense, and while there’s been lots of talk about the financial recovery plans needed in the UK, I firmly believe that our sector has an important part to play in the emotional recovery of the nation,” Ralls said.
“The support being unveiled by the chancellor yesterday is simply vital,” he added.
Tech
Sunak also unveiled a raft of new measures aimed at boosting both startups and established tech firms yesterday.
The government introduced visa reforms designed to attract top talent, including a new unsponsored points-based visa for science, research and tech workers, as well as an expansion of the existing visa programme for scale-ups and entrepreneurs.
“The chancellor’s announcement that the government is committed to supporting the technology and life sciences sectors in the UK is naturally music to our ears,” said Ian Warwick, managing Partner at Deepbridge Capital.
Moreover, listing reforms outlined in a landmark government report calling for an easing of various share restrictions, including allowing Spacs to float in London, have also been hailed as a significant potential boost for the tech sector. For example, it would allow more investment in venture capital by pension funds.
“The commitments to attract ‘scientific superstars’ to the UK via visa reforms and the intention to unlock pension funds to support innovative companies, are welcomed,” Warwick told Morning Wire
“In the UK we have great academia, a history of innovation and, importantly, a great funding eco-system but there is always room for improvement and the consultation to better understand how pension funds can be accessed to support this eco-system will complement the great work already underway via the Enterprise Investment Scheme,” he added.
Sunak also confirmed the launch of a new £375m fund that will see the government invest in fast-growing UK tech startups.
Freeports
Finally, the chancellor also used the Budget yesterday to announce the locations of England’s eight new “freeports”, including one on the Thames Estuary.
The new economic zones, which offer tax advantages and customs relief to businesses, will provide an “unprecedented economic boost across the UK,” Sunak said.
In addition to the Thames port, the other freepots will be at East Midlands Airport, Felixstowe and Harwich, Humberside, Liverpool City, Plymouth, Solent, and on Teeside.
Speaking to Morning Wire, George Kieffer, chairman of Freeport East Project Board, said he is “delighted” to have been chosen by the Chancellor as one of the first new Freeports in the UK for a number of years.
He said Sunak’s announcement allows him and his team start building a global trade hub at the same time as accelerating opportunities in green energy and helping level-up the economy.
The sites will be eligible for Stamp Duty and business rates relief, as well as National Insurance relief for employers in some cases.
The policy is one of the centrepieces of the government’s bid to level up the UK economy over the coming years.
Julia Pyke, financing director of Sizewell C, said the announcement is “ a great step forward” for freeports as she expects it will “turbo-charge private investment in Net Zero nuclear and hydrogen technology.”
According to the Treasury the freeports will be up and running by the end of the year.