In his Spring Budget today (3 March 2021), Chancellor Rishi Sunak has announced extensions of the furlough scheme, the business rates holiday and support for the self-employed.
But does it go far enough or is what has been announced more of a sticking plaster which assumes a return to normal economic activity too soon?
More support for business
As part of his three-part plan to “protect the jobs and livelihoods of the British people” the Chancellor announced an extension of furlough scheme until the end of September.
The move will enable employees to continue to receive 80 per cent of their salary, with employers expected to make a 10% contribution from July, rising to 20% from August.
Meanwhile support for the self-employed will also be extended until the end of September, with some 600,000 more people eligible to claim SEISS grants.
Importantly, the 100% business rates holiday will remain in place until the end of June, before being discounted by two thirds for the rest of the year – a welcome move indeed for many businesses and retailers.
However, whilst the extension of furlough and business rates relief are likely to be appreciated by the many business that are still in forced closure, enabling them to gradually roll back restrictions and increase activity, the fact remains that they continue to struggle with ever increasing debt on rent or mortgage payments which are still owed.
As for the proposed capital allowance ‘super-deduction’ which will allow companies to upgrade and improve the plant and machinery elements of their real estate assets, the devil will be very much in the detail, but it does have the potential to improve investment in real estate plant and machinery.
The extension of the Stamp Duty holiday and gradual ratcheting up together with 95% mortgages, will continue to enhance the property market. However, what is missing is any commitment to increase the number of affordable homes.
Freeport investment to drive economic growth
The announcement of eight special economic zones or freeports across the UK, is hoped to make it easier and cheaper for companies importing and exporting goods, to do business.
As a business with a significant presence on the south coast, we find the plans for the Solent Freeport incredibly exciting.
Following the Solent Local Enterprise Partnership’s (LEP) bid, a £2 billion freeport plan is hoped to generate some 25,000 jobs across the region, where businesses will benefit from cheaper customs – with favourable tariffs, VAT or duties and lower taxes, “tax breaks to encourage construction, private investment and job creation.
It is fantastic news for the region which boasts two major ports, a regional airport and Science Park and represents perfect timing as we are experiencing strong demand for commercial properties in the region from the maritime, science and research, logistics and defence sectors.
Additional announcements included:
- £5bn grant scheme to help English high-street shops and hospitality businesses
- Additional £400m for the arts sector
- £1.65bn towards the UK’s COVID-19 vaccination rollout
- ‘Fast-track’ visa scheme to help tech firms source talent from overseas
- Extra £126m into the government training scheme
- ‘Help to Grow’ Scheme for SMEs, offering MBA-style management training
- £150m community finding to help local communities take over local pub or sports clubs
Overall, this Budget contains several welcome announcements on issues such as business rates relief, SEISS grants and furlough and we very much look forward to how the Solent Freeport develops.
However, we would have liked to have seen more sweeping changes to the High Street up and down the UK, and there lacked enough financial stimulus to shift the UK to Cardon Zero by 2030.
As usual with the Budget, more detail will come out over the coming days and we will keep you posted as things develop
For a full summary of what was announced in the Budget click here.