CHANCELLOR Kwasi Kwarteng billed last Friday’s (September 23) ‘mini-budget’ as the ‘Growth Plan 2022’ but it has received a mixed reaction in and around Tunbridge Wells.
The Chancellor has introduced the biggest programme of tax cuts for 50 years using more than £70 billion of increased borrowing.
While the measures saw the pound plunge to an all-time low against the US dollar earlier this week, the local business community has been more buoyed by the mini-budget.
Tim Aker, Kent and Medway Development Manager at the Federation of Small Businesses (FSB), said measures such as cancelling the planned increase in corporation tax, were ‘pro-business’.
“The Chancellor has delivered pro-small business measures today and has rightly recognised that removing taxes on jobs, investment and entrepreneurs is essential for our economy,” he said.
“Ministers need to be relentless in removing barriers to small business success – especially with the current headwinds. The Government has today signalled its determination to back small firms and we look forward to working with ministers and departments to put in place measures to help small businesses grow and succeed.”
Thomson Snell & Passmore’s head of corporate and commercial business, Joanne Gallagher, saw the announcements as ‘firmly aimed at kickstarting business growth’.
“While the longer-term economic impact of these tax cuts remains to be seen, we certainly think they will be welcome news to our corporate clients across the mid-market space in the South East and nationally,” she said.
The Chancellor also cut income tax – notably abolishing the top rate and reducing the basic rate to 19 per cent from next April – along with confirming previously-announced plans to cancel a rise in National Insurance (NI).
TSP’s head of employment Nick Hobden said it was a boon for employers.
“They will recognise that putting more money into the pockets of staff by a reduced tax burden may mean that there is less pressure to award higher rates of pay increases in the coming year,” he said.
Addressing the property sector, Mr Kwarteng offered a stamp-duty cut and plans to both simplify planning and increase sales of surplus government land for housebuilding.
At Maddison’s Residential, founder Deborah Richards suggested the change could ‘make moving house more affordable and encourage both buying and selling’.
“The double-digit price growth of the past two years has been caused by demand outstripping supply, so if more houses come to market, prices should calm,” she said.
However, Alex Greig, founder of Fuggles Beer Café, who is also vice-chair of the TW Business Improvement District (BID), played down many of the mini-budget’s measures.
He told the Times: “Of course, it depends on the style of business. If you are a small or medium-sized business (SME), today (Friday) was not particularly meaningful.
“The actual benefit of the tax cuts and reversal on NI really isn’t that great for the majority – it barely touches the sides in comparison to the knock-on effects of inflation, energy costs and interest rate rises.
“We could have done with a VAT cut – that would benefit companies of all sizes.”
By contrast, Mr Greig explained: “The corporation tax cut is meaningless if you’re not making any profit, and NI [employer contributions] are such a small amount that it’s not relevant to most SMEs – particularly if you don’t have a lot of staff in the first place.
“In the short term, there’s not a lot there [in the mini-budget] to get excited about,” he added.
The Energy Bill Relief Scheme, which was announced before the mini-budget, was ‘much bigger news’, he said, but warned that the initial support was only for six months and it was not clear what government support would come afterwards.
He said: “We need more clarity and understanding to make decisions and commitments.”
Mr Greig continued: “From the BID’s point of view, the BID is apolitical but I think what has been announced is a very small step in the right direction, but stronger support is needed, especially for SMEs.
“The BID would always urge people to use their high street, local suppliers, pubs and restaurants, accounting firms. That’s what we really need to do.”