Home Finance & Investments North East businesses give verdict on chancellor Rishi Sunak’s spring statement

North East businesses give verdict on chancellor Rishi Sunak’s spring statement

L-R: Bob Borthwick, Phil Pallister and Lee Watson

A well-publicised reduction in fuel duty and the introduction of zero rate VAT on energy saving devices in the home announced in the chancellor Rishi Sunak’s spring statement, has been welcomed by businesses in the North East.

However, Bob Borthwick, a director of Stockton-based Scott Bros, which is involved in recycling, haulage, and plant hire, said that the 5p reduction in a litre of fuel over the next 12 months would not have any meaningful impact on the mounting overheads of transport-based businesses.

He said: “While every little helps, it will not make a significant difference. From next month the government is ending the use of rebated red diesel, which is used primarily in the agricultural and freight sectors, and this alone will add £600,000 a year to our fuel bills. This, unfortunately, is a cost that we cannot absorb, and which will be passed down the supply chain.”

However, he supported the chancellor’s pledge to boost the level of innovation by reforming the research and development tax credit system – details of which will be announced in the autumn budget.

Scott Bros has already invested in creating a laboratory and employing a scientist to create commercial products from recycled materials, and recently made a breakthrough in its quest to create a brick engineered from recycled waste clay.

He added: “Encouraging greater investment and innovation enables small businesses to diversify, become more competitive and, in our own case, make a greater contribution to the circular economy.”

Phil Pallister, CEO of County Durham-based PHS, which installs and maintains home heating systems and provides insulation services, said:
“Making home energy systems like heat pumps and solar panels zero rated for VAT will make it more attractive for homeowners to make the switch to renewables.

“As an installer of these systems we work closely with homeowners to provide these solutions and expect an increase in enquiries as a result of the measures announced in the Spring Statement.

“It was also good to see insulation benefit from the VAT cut, as it is equally important to reduce energy wastage, which helps control household bills.”

Lee Watson, tax partner at Clive Owen LLP, which has offices in Darlington, Durham, Middlesbrough, and York, said: “As expected, there were a few changes to support the cost-of-living crisis being faced by the British public, with sharply rising inflation and increased fuel and energy bills.

“The National Insurance Contribution (NIC) threshold increase should result in an overall tax cut for employees earning less than £35,000, despite the 1.25% NIC rise which the chancellor is standing by, despite calls for a delay.

“One of the final announcements from the chancellor is one which is likely to grab a fair share of the headlines. Before the end of the current Parliament in 2024, the basic rate of Income Tax will be cut from 20% to 19%, a move which will impact the amount of tax that an estimated 30 million people pay.

“In terms of business support there were also a few positives with the chancellor announcing that he is planning to give further incentives to industry to invest more as part of a new culture of enterprise, including increased tax relief for innovation and training. He is also reviewing the Apprenticeship Levy.

“Also, it was announced that the Employment Allowance, which small businesses can apply for in order to reduce their annual National Insurance liability, is due to increase from £4,000 to £5,000 in April 2022. It’s estimated this increase could be of value to approximately half a million businesses.

“Finally, he announced that details of the long-awaited plan to reform tax credits received by companies for the research and development activity they undertake, is expected to be set out in the autumn budget. I feel that the chancellor is navigating a very difficult path with significant pressure on public finances and a public and businesses facing increased costs that need government support. Perhaps we can expect more in the Autumn Budget, but that feels very distant at the moment.”