As Chancellor Rishi Sunak prepares to unveil the government’s spending plans in Wednesday’s Budget, debate continues to rage as which taxes should be increased to help begin to repay the £270 billion borrowed so far to fight the pandemic.
With many commentators agreeing with the Bank of England that the roll out of vaccines will signal a rapid economic recovery later this year, it is argued that now is not the time to impose extra costs on businesses and consumers.
Despite many measures already being heavily trailed, the Chancellor is still likely to have a few surprises up his sleeve.
Here, business leaders from across the North East region, representing a range of sectors, reveal what they hope to see included in the Budget.
John Elliott, chairman of County Durham-based Ebac Limited, said: “The Chancellor needs to think radically, but simply. Make tax easier to collect and much more difficult to avoid; replace corporation tax with a turnover tax and replace income tax with sales tax. This could add billions to the Chancellor’s coffers, particularly from those giant entities that avoid paying their UK taxes.
“Rather than making growth the Holy Grail, focus on supply rather than increasing demand to balance the books. If should be more profitable to invest in real businesses than buying shares on the stock market and we should encourage internal investment rather than inward investment. We will never have a strong economy without a solid, British-owned manufacturing base.”
Lee Watson, tax director at Clive Owen LLP, which has offices in Darlington, Durham and York, said: “Quite honestly, this is such a difficult Budget to attempt to predict as there has been nothing ordinary in the last year. Tax rises seem inevitable but there needs to be a balance between tax rises and encouraging consumer spending.
“It would not be a typical Conservative approach to make the richest pay more tax, but this seems the most likely source of tax revenue in these unprecedented times. Rumours are abounding regarding increases to the main capital taxes – capital gains tax and inheritance tax – or even the potential introduction of a “one-off” wealth tax are under consideration.
“I anticipate that we may see a rise to corporation tax – perhaps back to the tiered (sorry!) system where there were multiple rates of corporation tax and basically those companies with more profits, paid tax at a higher rate. Whilst this was quite painful for those of us in tax to work out, the Chancellor won’t be too fussed about that.”
George Rafferty, chief executive of North East-based national energy sector business development organisation NOF, said: “There are indications that the furlough scheme will continue in line with the easing of lockdown restrictions, however there are some sectors that would benefit from a further, flexible version of the scheme.
“There is a time lag as a result of projects in manufacturing and engineering-related sectors, which are taking longer to feed into the supply chain and a flexible furlough scheme would allow businesses to retain skilled staff until the workflow reaches them.
“The Budget also presents the opportunity, through the levelling up agenda, to increase collaboration between the Northern regions of the country, leading to the development of solutions that will help our low carbon, net-zero economy. We have some strong individual regional supply chain clusters, combining their capabilities would enhance our industries.
“A form of targeted R&D grant or tax relief to help companies that work in collaboration could help strengthen the links between different parts of the country leading to technology-led innovations that would help the UK better compete on a global stage.”
Ian Henderson, founder and managing director of Boiler Plan UK, based in Cramlington, said: “I’d like to see the Chancellor do more to stimulate the development and growth of the green technology required to decarbonise the UK’s heating systems, which remains one of the main sources of carbon emissions.
“The industry needs greater support if it is to produce affordable mass-market alternatives to gas boilers as well as in the training and retraining of heating engineers to install and repair that technology.
“I’d also like to see the government not only commit to, but extend, funding to the Green Homes Grant Scheme designed to encourage householders to improve the energy efficiency of their homes – a key part of this country’s commitment to achieving its net zero target by 2050.”
Sharon Lane, managing director of Tees Components, which is based near Saltburn, said: “I am keenly awaiting confirmation of the location of the new Northern Economic campus and would love to see this in the Tees Valley.
“R&D tax credit continues to be a vital support to SMEs innovating to react to changing market conditions, particularly for projects which might otherwise have too much commercial or technical risk.
“SMEs in engineering and manufacturing have also had significant spends on making their premises Coved-safe, so far without any financial support. I would like to see backdated grants or even tax relief to acknowledge and assist Covid-19-related investments, which have enabled these sectors to continue operating where staff cannot work from home.
“For the longer term, we are entering an exciting period where the environmental agenda and the expertise of industry are converging to help the country achieve its net-zero ambitions. Skills development is already high on the government’s agenda as is innovation and both areas should continue to form part of the Chancellor’s financial strategy.”
Nic Smith, managing director of Gateshead-based Commercial Maintenance Services UK Ltd, said: “I would urge the Chancellor to resist taxing business to help pay for Covid-19 support measures.
“Raising corporation tax will act as a further brake to the recovery of the economy at what is a critical period as businesses begin to emerge from lockdown.
“It would be more constructive to use the levers of government to encourage rather than stifle enterprise, investment and growth. I believe measures that stimulate business and economic growth offer a longer term and less damaging solution.”
Bob Borthwick, a director of Scott Bros, which is based at Thornaby, near Stockton-on-Tees, said: “Generally, the chancellor needs to put some incentives in place that will support the hospitality and leisure industry, which has been one of the sectors hardest hit, so it can recover and once again begin to thrive.
“Any reduction in VAT would also help stimulate the economy, giving people the confidence to go out and spend.
“As a family-run firm involved in the circular economy, Scott Bros would also welcome any measures that incentives the recycling and reuse of materials.”
Patrick Lonergan, director of Newton Aycliffe-based Patrick Lonergan Recruitment, said: “The Chancellor need to ensure that whatever he announces, economic recovery is at the heart.
“The roadmap out of lockdown gives us hope that the shoots of recovery may be just around the corner, but any incentives Rishi can provide to encourage employers to retain and grow their existing teams when normality resumes, will be essential in ensuring that the virus pandemic doesn’t translate into record unemployment.”
Gavin Coldwell-Smith, CEO of Washington and Wynyard-based developer, Hellen’s Group, said: “Boris has announced his roadmap out of lockdown, now, Rishi needs to set out his economic roadmap. Businesses need to be able to plan for the next 12 months and for that to happen they require some clarity.
“In November, the Chancellor announced the £4bn Levelling-Up Fund but we have had no further detail since. It has the potential to be transformational for the North and could be one of the few positive changes to come out of the COVID-19 crisis.
“Let’s also hope that one or both the regional offices for the Treasury or the UK Infrastructures Bank comes to the North East or Tees Valley. And at least one successful Freeport bid in either the North East or Tees Valley. Why not award two to our region? This would represent a real statement of intent by the government to level things up.”
Martin Anderson, managing director of Stockton-based Lemon Business Solutions said: “As the managing director of a North East-based contact centre, we are looking to the Chancellor to hold off on any corporate tax rises until the recovery is well underway, thus allowing us time and space to invest in, and grow, our business in what we anticipate being a period of exponential growth in the outsourcing sector, which will ultimately help us deliver growth, prosperity and jobs to the Tees Valley region.”
Richard Ponton, investment director at Newcastle-based estate and letting agents Walton Robinson, said: “Rumour tells us that the stamp duty holiday is likely to be extended for another three months, until the end of June.
“This is great news for those buyers and sellers already committed who find themselves currently in a race against time. However, it will introduce a whole new raft of time-sensitive transactions agreed from after the extension is announced. This will increase the pressure on all parties again. When we hit mid-May, and it becomes apparent that many deals will fail to benefit, we will be back to where we are now.
“Unless agents can fore-warn the parties of what to expect, and buyers and sellers take this on board. Perhaps even agree deals on the basis that SDLT is likely to be payable and split the benefit if it completes ahead of time.”
“No one expected the delays we are experiencing – perhaps we should have anticipated this – but if the extension is confirmed, all parties need to be realistic and learn from the last eight months.”
Geoff Hogg, chief executive of Middlesbrough property developer Chalones Group, said: “While the short-term measures to steer the country through the remainder of the pandemic are crucial, we also have to look to the longer term and in particular the importance of levelling up the economy.
“This includes the plans to relocate the Treasury to the North, with Tees Valley an ideal candidate. It would send a positive shockwave through our area, attracting more inward investment from companies that will need new office space and homes for their employees. We have the capabilities and infrastructure to make this happen, hopefully the Chancellor will give us the opportunity to prove it.”
Ken Campling, chief executive of Darlington-headquartered The Bannatyne Group, which operates health clubs across the North East, said: “There are four things the Chancellor could do to support business, and the health and fitness sector specifically. Extending the business rates holiday for another year would make a big difference and continuing the Job Retention Scheme is vital. Although we can open our health clubs, not all staff will be back at work until we are able to offer classes again, and fully open the café bars.
“I would also ask the Chancellor to standardise the rent moratorium and make the responsibilities of landlord and tenant clear. Individual negotiations are time consuming and can be frustrating. Finally, there is a real disparity between the fitness industry and hospitality and leisure businesses with the latter receiving a VAT rebate. Mr Sunak should extend it to health clubs and gyms and acknowledge the role the sector is playing in supporting the nation’s health and wellbeing.”
Karl Pemberton, managing director of Teesside-based Active Chartered Financial Planners, said: “This Budget gives the Chancellor the opportunity to properly reward the hard-working, frontline workers who have given their all in the last 12 months. But equally, he needs to work towards balancing the books and to do so without tax rises that stifle business growth at a time when we need the private sector to bounce back.
“Slow and steady wins the race and any changes he implements should be gradual and sustainable.”