When Rishi Sunak steps up to the Despatch Box next Wednesday to deliver the Budget, CEOs will be listening for any announcement of support to help them through one of the toughest periods for businesses in living memory.
Businesses are facing spiralling raw material costs, staff shortages, and rising energy prices. The CBI said this week that manufacturing costs in the UK are rising at the fastest rate since 1980.
Further financial support to navigate this environment is at the top of many business owner’s wish lists when it comes to the Budget. Todd Davison, managing director of Purbeck Personal Guarantee Insurance, said: “They need more forms of financial support to build their resilience, to get them through the year ahead.”
Reports suggest Sunak could announce an extension to the Recovery Loan Scheme, which lets businesses borrow up to £10 million with an 80% guarantee from the government. The scheme is currently due to wind up at the end of December.
Beyond sweeping support, sectors have their own specific budget requests. Retailers and property firms have been asking for reform of business rates — a tax on shops and properties — for years. Business tax experts Altus Group estimates that business rates bills will increase by £1.04 billion in England from April next year. Some £251 million of that will be shouldered by the retail sector.
Helen Dickinson, who leads the British Retail Consortium, says: “It is vital that we see meaningful change to bring down the business rates burden”.
It looks unlikely. Nimesh Shah, chief executive of tax advisory Blick Rothenberg, said governments have been ignoring business rates for years because it is “too difficult and too expensive” to reform.
The retail industry also wants to see reform of the Apprenticeship Levy to ensure that firms are able to use it effectively to upskill their workforce. Tech firms want more funding for training too. Tony Lysak, CEO of the Software Institute, said the government’s digital skills camps have so far been “pointless and generic”.
Investment in people, skills, and innovation is high on the agenda for the life sciences industry. The BioIndustry Association (BIA) wants more support in the form of a higher budget for Innovate UK and more support for growing businesses through the state-backed British Business Bank.
In the City, banks and asset managers want the government to tweak rules to help keep British finance competitive outside of the UK.
Elsewhere, brewers and spirit makers want alcohol duty to be cut to help them stay competitive as input costs like CO2 rise. The pub sector warned this week that 20,000 boozers could go under if beer duty rises.
Publicans may have some joy. Reports suggest Sunak will overhaul alcohol duty to simplify the system, with some taxes tipped to fall.
But for most sectors the budget is unlikely to offer much cheer. Economists are expecting a fiscally neutral budget with few surprises. With national debt standing at £2.2 trillion, there are unlikely to be any major giveaways. Sunak is focused on trying to turn the money taps off, rather than loosening them.
Businesses and citizens are already facing the highest tax burden in 70 years. Changes to National Insurance have already been announced - slammed as a jobs tax by employers - and corporation tax is set to rise to 25% by 2023. The chancellor is tipped to reduce the surcharge on bank profits next week, which will help ease the pain in the City but not erase it.
Business groups say the chancellor is at risk of undermining the already fragile Covid recovery and are calling for him to delay or reverse the planned tax hikes.
“We cannot take the economic recovery for granted,” said Tony Danker, chief executive of the Confederation of British Industry (CBI). “There is a fundamental inconsistency where the Government wants to unlock business investment, but its tax policies do the opposite.
“You cannot will the ends and ignore the means to turbocharge the economy. Every economist and business leader knows it.”