Concerns raised Spring Statement measures don't go far enough to support firms

Concerns have been raised measures announced by Chancellor Rishi Sunak don't go far enough to support struggling businesses.

Anton Gunter, MD of Telford-based Global Freight
Anton Gunter, MD of Telford-based Global Freight

Business leaders in Shropshire said some of the measures announced in his Spring Statement – including the cut to fuel duty – will only offer light relief to businesses and consumers against the backdrop of rising fuel, energy and food costs.

It comes as the Chancellor said fuel duty will be cut by 5p a litre from until March 2023.

Anton Gunter, managing director of Telford-based freight forwarding company Global Freight Services, said: “We very much welcome Chancellor Rishi Sunak’s decision to cut the duty on fuel but in our view he hasn’t gone far enough to ease the growing financial burden currently being felt by consumers and businesses alike.

"Against the backdrop of rising inflation, increasing energy prices and the ongoing economic uncertainty due to the pandemic and political unrest in Ukraine, we’re just not sure how much of an impact 5p will have in real terms, if any. The savings will be minimal.

“We understand the Chancellor is facing a difficult situation balancing rising public debt, but the next few years are likely to be tough for everyone and he needed to extend more support to the public and businesses at this critical time.

“Transportation costs will continue to rise, food prices are soaring and energy costs are at the highest rate in years and we can’t see any of that changing any time soon.

“For many people, they are facing a difficult and uncertain financial future.

“What would be nice now is to see the large fuel companies following the Government’s lead and lowering their own profit margins to help ease mounting fuel costs for those that need it most.”

Kevin Burrows, founder of Iron & Fire, a speciality coffee roaster based in Shrewsbury, said: "With fuel costs rising so significantly, any move to mitigate these rises is welcomed.

“We provide customers with comprehensive coffee machine servicing and training which requires our team to travel the length and breadth of the country – any slight reduction in fuel costs will, therefore, have a positive impact.

“However, there is a bigger issue at play here. For us, the cost of green coffee beans has gone through the roof in the past two years and a significant percentage of these increases can be attributed to transport costs.

"Simply, the UK’s rail network isn’t sufficiently set up to deal with transporting freight and we’ve been relying far too much on road transport since the 1980s. Ultimately, moving more road freight to rail would be the best long-term solution."

Also announced in the Spring Statement was that the National Insurance threshold will be raised by £3,000, meaning people must earn £12,570 per year before paying income tax or NI.

Mr Burrows said: “The decision to raise the threshold at which workers pay National Insurance, whilst keeping the health and care levy in place is a welcome decision.

“Anything that supports lower income workers is hugely positive and we’re firm believers in giving these people every opportunity which is why we’ve been actively involved in the Kickstart programme.

“The further commitment to cut income tax by the end of this parliament should provide additional assistance to those on lower incomes, but 2024 is still a long way off so let’s not celebrate that quite yet.”

Simon Hobbs, chief executive of Kinaxia Logistics which owns Telford firm Maidens, said: “With inflation currently at 6.2 per cent and expected to reach an average of 7.4 per cent in 2022, the cost pressures on businesses are huge and little has been done to address this in the Spring Statement.

“The increase in the national insurance threshold by £3,000 is good news for our employees, as this will help reduce the imminent 1.25 per cent increase in National Insurance payments that are effective from April 6.

“Yes, the 5p per litre reduction in fuel duty from 57.95p per litre to 52.95p is a help, and we will pass this reduction on to our customers as soon as we receive this benefit in our costs, but given that fuel has risen by circa 30p per litre in the last six months, it’s a small contribution to the increases we’ve all incurred.”

Wellington-based supported employment and training charity Landau welcomed the Chancellor’s move to increase the threshold for NI payments.

As a charity that supports some of the most vulnerable and lowest paid workers in society, chief executive Sonia Roberts said increasing the threshold for NI contributions to £12,570 was absolutely the right thing to do as people face spiralling living costs.

She said: "People are facing huge economic pressures and the squeeze on household finances for many is a very real challenge. Across our organisation, we work with some of society’s most vulnerable individuals helping them to gain the skills they need ready for the world of work and unfortunately it is these individuals that are at the lower end of the pay scales who are set to suffer most from the rising cost of living.

“Increasing the national insurance threshold will put money back into people’s pockets and help them to face soaring prices but unfortunately, it is not enough.

“Many people are facing crisis point and with inflation set to continue rising, utility bills increasing, food getting more expensive and wages remaining static, the financial squeeze is only going to get worse.

“From speaking to our service users, we know that they are concerned, and we are supporting as many as we can into jobs to try and ease the burden, but it will be a challenging year ahead for everyone.”

Christopher Greenough, chief commercial officer at Shrewsbury-based manufacturer SDE Technology, said: "With the tremendous pressures on business over the last two years, in terms of material price rises and extended supply chain lead times, it is vital that Mr Sunak now supports UK manufacturing.

"The current fuel prices and the proposed National Insurance rise from April 1, may be the final straw for some, already struggling businesses.

"If we are to have a strong economy moving forward, then we must be able to control the production of vital goods, and have a robust and flexible manufacturing sector. Now is the time for this Government to dig deep, with funding, support and tax cuts to allow business to build back better.

"We need a cut in fuel duty, to allow the movement of goods around our country."

Other measures announced by the Government included VAT relief being extended to cover energy-efficient investments, and plans to reduce the basic rate of income tax from 20p to 19p by end of the current parliament.

Richard Sheehan, Shropshire Chamber’s chief executive, said: “We would have liked to see more done by the Chancellor – but he could have done much less. These are all welcome announcements which will go some way to helping to offset the fastest rises in the cost of living in a generation.

“But will they be enough to prevent many of our companies being forced to raise their prices to combat the rising cost of doing business? That’s far from guaranteed.

“Rural counties such as Shropshire, with a poorer public transport infrastructure than urban areas, have been feeling the biggest impact of the current fuel price rises which means we have taken the full force of the cost-of-living crisis. So the fuel duty cut is certainly welcome.

“However, we also have many homes and businesses off the main power grid who rely on heating oil which has more than doubled in price since the start of the year, and the huge impact of this must not be overlooked.”

He added: “Businesses don’t want to be constantly asking for Government help, but these are extraordinary times, and it is successful and financially solid businesses which will drive the recovery in our economy."

Brian Evans, managing partner at law firm Lanyon Bowdler, said: "The 5p per litre cut in fuel duty is to be welcomed; as well as affecting personal motoring costs for hard-pressed households, transport costs have an impact on the cost of most goods so this will help consumers and businesses alike.

"I’d have liked to see a delay in the National Insurance rate increase. On the face of it, the announcement of an increase in the threshold from which NI is charged sounds good, but it only gives back half of what the Chancellor is taking away as a result of rate increase.

"There’s some additional help on business rates for retail, hospitality and leisure businesses and some small and medium sized-businesses might gain from training and advice under the enhanced help to grow schemes, but I feel the Chancellor could have done more to help businesses and consumers weather the current inflationary storm."

Commercial finance company Q Financial Services – which has offices in Shrewsbury and Wellington – has warned the economy is likely to remain fragile for some time to come.

Senior mortgage and protection adviser Dan Harris said that rising inflation, soaring energy costs and the war in Ukraine would all add to a period of continued uncertainty for households and businesses across the country and urged anyone concerned to seek professional advice.

“The Chancellor has little room for manoeuvre in the current climate and we welcome some of his measures to reduce the impact of this cost-of-living crisis.

“But despite this, things are likely to remain difficult for some time. We have seen three interest rate rises in recent months and although the rate remains at a historically low level, this is undoubtedly causing some anxiety among mortgage holders.

“Added to this there remains considerable pressure on food and energy bills, inflation forecasts remain high and the situation in Ukraine means that global markets are likely to be nervous for a long time yet.

“That means that both businesses and households are likely to face a financial squeeze and we would urge everyone to review their finances and seek advice and support where appropriate. This is a prudent step at any time, but particularly in the current climate."

Telford-based battery and energy storage pioneer AceOn said the Chancellor’s move to scrap VAT on renewable energy products was a "good starting point" but called on the Government to be more ambitious in its support of green technology.

The Chancellor revealed that he is removing the current VAT levy on some green products such as solar panels and heat pumps for the next five years.

AceOn Energy managing director Richard Partington said the move was welcome – but needed to be backed up with a raft of further measures to support the renewable energy sector.

“We have been calling for the axing of VAT on renewables ever since it was increased in 2019.

“With prices for conventional energy spiralling out of control and a growing realisation that we are in the last chance saloon as far as climate change is concerned, this is long overdue but still very welcome news.

“But the Chancellor cannot now sit back and think he has done everything he can to drive the uptake of the clean, renewable technologies which will help this country address the climate change crisis.

“There was no announcement of new, large-scale energy spending or a windfall tax on fossil fuel companies, which would help move the needle firmly in favour of the green economy.

“There needs to be more action to make the installation of renewable energy an integral part of housing policy – both in new and existing homes. Intelligent use of incentives to help consumers and businesses make the switch from fossil fuels is vital if we are to achieve our zero carbon targets.

“If the Chancellor is serious about reducing energy bills for homes and businesses, he needs to do more to encourage uptake of battery storage. This is a clear and effective way to make energy more sustainable and drive down bills for years to come.

“We would also like to see greater support for our social housing sector so that housing associations and local authorities can invest fully in the new, green technologies which will provide clean power for generations to come, help tenants lower their bills and also start building the national energy security which we so urgently need in light of the current situation in Ukraine.”

Mandy Thorn MBE, chair of the Marches LEP, the body which drives economic growth across Herefordshire, Shropshire and Telford and Wrekin, gave a cautious welcome to the measures, which she said would put more money back in people’s pockets, but said that ongoing Government action was vital to support the region’s business community.

“The move to scrap VAT on renewable energy products will help all our efforts to drive the uptake of clean, sustainable power and work towards a zero carbon economy.

“By developing renewable technologies we can help companies drive down their energy bills, cut their emissions and protect the planet, as well as strengthening this country’s energy security so that we are no longer so fully exposed to global forces.

“We support many of the other measures to help with the cost of living crisis announced today, including the cut to fuel duty which will help businesses cope with a steep rise in operating costs.

“But the business sector will need continuing support as it emerges from the pandemic into a range of new challenges. Inflation today hit a 30-year high at 6.2 per cent, wage costs are rising, we are in the middle of a recruitment crisis and energy bills show little sign of easing in the short term.

“Against this backdrop I was disappointed the Chancellor did not go further by removing VAT from energy supplies to domestic premises and reduce VAT to commercial entities.”

Beth Heath, founder of Shropshire Food and Drink, added: "Whilst there were some positives from the Spring Statement announcement, only time will tell if they will have enough of an impact on Shropshire's independent food and drink businesses, who are facing enormous pressure from the spiralling energy and fuel costs, and the knock on effect of consumers being forced to tighten their purse strings due to the cost of living crisis."

Sorry, we are not accepting comments on this article.

Top Stories

More from the Shropshire Star

UK & International News