This week’s budget made all the right noises about grants and recovery, but is it really going to help the smaller retailers bounce back, grow and thrive?
We talked to a bevy of industry experts to find out what they think the Budget really delivered and how it made impact SMEs. And it makes for sobering reading…
CAS PATON, FOUNDER AND CEO OF ONBUY.COM
The announcement of The Super Deduction initiative by the Chancellor this afternoon is a welcomed step forward to support the future of British entrepreneurship. In association with the restructuring of corporation tax and £5bn allocated to restart grants, it is clear that the Chancellor has prioritised growth in this year’s budget.
The newly announced package encourages reinvestment, will help smaller organisations to recover and thrive, and will aid the development of new homegrown British industries. These are all absolute necessities to recover from the impacts of COVID-19 and as we enter our first year outside of the EU.
With Capital Gains Tax remaining stable, I am confident that this moment marks the start of the modern-day roaring twenties. With the enhanced levels of financial and training support pledged by the government, I foresee a boom in the number of small businesses launching over the next year, and fast-growing firms like OnBuy accelerating even more quickly.
The knock-on effect of this boom has the potential to be massive; increased employment, an uplift in spending, and a high energy performing economy to support the next generation of talent.
The UK has always been hailed for its innovation and now we will be able to retain this position in the digital age and in a time of world economic recovery. We’ve seen leaps in technological and digital innovations from British businesses in the past five years and these now have the ability to rocket in size and profit. I’m also pleased that the introduction of an ‘online sales tax’ has not come to fruition – a step which will allow Britain to further grow its own eCommerce industry, supporting our retail ecosystem and allowing us to compete on a global stage.
I encourage entrepreneurs, investors and business leaders alike to find confidence and courage in the package announced this afternoon, to support the UK’s recovery from the pandemic and begin rebuilding our country’s economy.
DAVID JINKS, HEAD OF CONSUMER RESEARCH, PARCELHERO
It was all-too obvious that, despite the £65bn the Chancellor claims to be spending, there was not enough cash to splash to save many businesses. Today’s Budget was a start, but much more needs to be done now to save independent local retailers and small manufacturers struggling with the double jeopardy of Brexit and Covid.
Looking at the measures Sunak has introduced, there are undoubtedly some strong initiatives, such as the extension of the furlough scheme to September that could save thousands of jobs. On the other hand, there will be new employer contributions to the scheme. In addition, the rapid phasing-out of full business rates relief will be grim news for many retailers.
The rise in corporation tax, from its current level of 19% to a higher-than-expected £25% from April 2023 will help plug the hole in the nation’s finances. However, is now really the time to start rebuilding the UK’s coffers at the expense of business? No matter how delayed, manufacturers and retailers are already struggling under the burden of Covid.
The new rate won’t apply to businesses with profits of less than £50k and only businesses with profits of over £250,000 will pay the full tax. Nonetheless, the Government has, on the one hand, introduced measures to help businesses but, on the other hand, raised their tax burden. It’s simply robbing Peter to pay Paul.
The increased corporation tax will also do nothing to encourage European companies looking to create UK arms to maintain a relationship with Britain post-Brexit.
The extension of the “holiday” on business rates for retailers and other SME businesses until the end of June has been widely welcomed, though less generous discounted rates for the rest of the year are disappointing. The holiday also simply kicks into touch the real issue: Britain’s business rates are horrific.
They are higher than in any nation in the EU. There needs to be a new solution, potentially one in which the property landlord, rather than the business occupying the premises, pays towards rates.
Offsetting business rates with a threatened new 2% tax on e-commerce sales will simply leave many retailers paying double taxes and will further endanger many of our favourite stores.
The new Help to Grow scheme for small businesses is a good idea but may wither on the vine because of insufficient funding. Digital training for small businesses is an excellent concept. However, a reported budget of £520 million is a drop in the ocean compared to the sea of debt many fledgling businesses have accumulated during lockdown.
EMMA JONES, FOUNDER SMALL BUSINESS NETWORK AND BUSINESS SUPPORT PROVIDER ENTERPRISE NATION
Today’s Budget was strong on support programmes continuing until September, inevitable in its corporation tax hike, but lacking when it comes to a plan to reduce small business dependency on state hand-outs and getting into debt.
For enterprise to flourish, start-ups should be encouraged, and small firms given the confidence to grow. Today’s Budget offered critical support to the self-employed and smallest of firms until September, and a Help to Grow scheme for those with 5+ employees beyond the Autumn.
We welcome Help to Grow and look forward to working with government to ensure this scheme is relevant for businesses and delivered in an environment in which they already operate ie through existing small business networks and private sector advisers.
We would have liked to see more of an emphasis on ways in which smaller firms can trade their way back to health through making sales at home and abroad. Hopefully this will be delivered through a consumer comeback from the great British public.”
RALPH ROBINSON, HEAD OF RETAIL AND CONSUMER MARKETS AT BJSS
As British retailers of all sizes sat glued to their screens watching Rishi Sunak deliver his career-defining budget, we expect mixed reactions.
Some announcements such as the extension of furlough, holidays on business rates and restart grants of £6,000 for each premises are positive and will cheer retailers who are navigating these challenging trading conditions. Several retailers will be further buoyed by the announcement of £15bn of Green Bonds and exemptions from the new 25% corporation tax for smaller businesses.
That said, physical retail will continue to face an uphill battle with further increases to operational costs. The ‘restart grants’, for example, will only put a small dent in the existing debts owed to landlords, and the six percentage-point increase in taxation will likely be passed onto cash-strapped consumers who are becoming increasingly price sensitive.
The reality is that prosperous brands will look to invest in in-store innovation as a way of supporting the resurgence of their high street operations. But many brands are perilously at the edge of survival and will struggle to fund innovation. Sadly, this will lead to more retailers facing the threat of being bought out by online-only brands and rivals this year.
TOBY RYLAND, CORPORATE TAX PARTNER AT ACCOUNTANCY FIRM HW FISHER
This rise in corporation tax will have a detrimental impact on SMEs. Large corporates have been relatively unscathed in the last year whereas SMEs have suffered more acutely during the pandemic, a rise in corporation tax will be a further unwelcome hit to their bottom line. We would urge the Chancellor to consider a tiered system where SMEs pay a lower rate of corporation tax than large companies.