With the government due to announce a mini budget on Friday, Derin Clark talks to the region’s bosses to find out what support and policies they are hoping will be in the chancellor’s statement.
Firms across the region are facing a tsunami of challenges as they struggle to stay afloat during the current economic climate.
The scale of the problem has led to the government announcing an emergency mini budget, due to be revealed on Friday, September 23, to help tackle the crisis.
Candy Richards from the Federation of Small Businesses (FSB) has painted a dire picture of the economic outlook for companies in the region.
Candy Richards, development manager (East Anglia) at Federation of Small Business – Credit: Candy Richards
She said: “Thousands of small businesses have been pushed to the brink due to spiralling inflation and cost pressures.
“Our latest business survey showed that over 50pc of small businesses expect to stagnate, shrink, or close in the coming months.
“Therefore, it is vital that the fiscal statement delivers timely, bold plans to support small businesses to survive, thrive and grow.”
Along with soaring energy prices, local firms have also been dealing with rapidly rising inflation, plummeting consumer confidence, ongoing skills shortages and the high probability of a recession by the end of the year.
On top of this, some sectors – such as hospitality and retail – are still reeling from the affects of the pandemic lockdowns.
“We are calling on the government to deliver support to our retail, hospitality and leisure businesses so they have every chance to survive following the rise in energy costs,” said Stefan Gurney, executive director of the Norwich Business Improvement District (BID).
He added: “Our business communities need a reduction in VAT headline rate from 20pc to 12.5pc and business energy bills from 20pc to 5pc, 100pc business rate relief until March 31, 2023 and energy rate relief on all business energy bills.”
Dr Andy Wood OBE DL, CEO of Adnams – Credit: Adnams
Dr Andy Wood, CEO of Suffolk brewery giant Adnams, highlighted the importance of hospitality for the UK’s economy.
“Hospitality is a vital part of our economy and communities, it is an investment for the Treasury to continue to and look to support this industry as it generates over £59bn to the UK economy and over 2.5m jobs, which is over 7pc of workers in the UK.”
Dr Wood added: “Specifically for our industry, cutting beer duty, cancellation of business rates for the remainder of the year and permanently lowering VAT for all food and drinks sold in pubs would make a great difference.
“Longer-term asks on tax and deregulation, removing the disproportionate burden that the business rates system puts on pubs and replacing it with one that ensures our businesses only pay their fair share, creating a fairer and more balanced tax framework.
“I would call for a greater share of the levelling up agenda and more investment in our regions particularly in the East of England.
“Through introducing both emergency support and longer-term structural reform this will enable pubs, brewers and the wider hospitality sector not just to weather the coming storm but to continue to provide skills, jobs and prosperity to local communities in every part of the United Kingdom.”
The high price of gas has been contributing to the cost of living crisis – Credit: Office for National Statistics
Businesses in all sectors are feeling the affects of skyrocketing costs and for Ms Richards this is a key area that needs to be addressed on Friday.
“The energy crisis comes on top of challenges across the board for businesses,” she said.
“Inflation is pushing up input costs – having a significant impact on profits and driving up prices for consumers.
“And staff shortages mean small businesses are having to reduce operating times and increase wages to attract and retain staff.
“This comes at a time when many businesses have low cash reserves and are struggling to access credit.
“These pressures could be eased by delivering the promised reversal in the national insurance hike and increasing the business rates threshold to £25,000 which would lift around 200,000 businesses out of the business rates system altogether.
“A cut to VAT and fuel duty would also be a welcome step and help ease the ‘cost of doing business crisis’ engulfing small businesses.”
Paul Simon from the Suffolk Chambers of Commerce – Credit: Nicky West
Paul Simon from the Suffolk Chambers of Commerce is hoping for a reversal in the recent increase in the national insurance employer contributions, as well as a reductions in VAT on fuel and energy.
He also called for a “serious investigation into replacing the perverse and out-of-day business rate system”.
“Beyond this mini budget, if the government truly wants to deliver a growth agenda, it must also commit to backing much-needed capital projects here in Suffolk that will unlock this country’s true potential,” added Mr Simon.
“This must include investing in upgrades at Ely and Haughley rail junctions, improving the whole of the A14 in the county – and not just one or two junctions – and ensuring that we are at the front of the queue in terms of 5G infrastructure.
“Because of our strengths in growing sectors such as renewable energy, transport and logistics and the land-based sector, Suffolk businesses in particular need to be given the tools to properly do our job of fuelling, moving and feeding the national economy.
“We are looking to Liz Truss and Kwasi Kwarteng to do what is right for Suffolk and by implication the country.”
What will be in the mini budget?
Kwasi Kwarteng is expected to announce the mini budget on Friday – Credit: PA Wire
During Friday’s mini budget the government is expected to provide more details about the energy price cap for businesses and consumers.
It is also anticipated that there will be a reversal of the 1.25 percentage point rise in National Insurance, which was a key policy during Liz Truss’ campaign to be Tory leader.
The prime minister has also pledged to scrap the planned rise in corporation tax next year, which could be announced on Friday.
There are suggestions that the mini budget could see the removal on the cap on bankers’ bonuses – with the hope that this will lead to the UK becoming more attractive to the international financial sector.
Another announcement that could be made is the scrapping of Solvency II rules, which limits insurance firms’ investment.
Investment zones
During the mini budget chancellor Kwasi Kwarteng is expected to unveil the creation of a network of low-tax, low-regulation investment zones – one of which could be in Norfolk.
It is understood that 12 locations across the nation have been earmarked as investment zones, which are expected to be at the heart of the government’s plans to boost growth.
During her leadership campaign, Liz Truss said about the proposed zones: “Truss’ government will work with local communities to identify sites ripe for redevelopment, with a preference for brownfield sites, and transform them into investment zones – or what have been coined ‘full fat freeports’.”
Source:https://www.edp24.co.uk/
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