Chancellor of the exchequer Jeremy Hunt delivered what he termed “a budget for growth” today (15 March), detailing plans intended to boost businesses and keep workers in the job market.
Hunt told the House of Commons the UK will avoid a technical recession this year, according to figures from the Office for Budget Responsibility. The economy is forecast to shrink 0.2% in 2023, but will avoid two consecutive quarters of decline.
The British economy is “proving the doubters wrong”, Hunt claimed, citing forecasts predicting the UK economy will grow every year after 2023. It is forecast to grow by 1.8% in 2024, 2.5% in 2025, and 2.1% in 2026.
However, the chancellor also said the UK needed to do more to tap into its “extraordinary potential” as a hub for business investment.
He announced 12 “investment zones”, comparing them to London’s Canary Wharf, which are designed to be centres of economic activity across the UK. The government has identified areas for these in locations such as the West Midlands, Teesside and South Yorkshire.
Hunt also confirmed the expected increase in corporation tax from 19% to 25%, which will be implemented in April. This rise is unpopular with some sections of the Conservative Party and was scrapped under former prime minister Liz Truss and her chancellor Kwasi Kwarteng.What is the impact of marketing’s age diversity ‘blind spot’?
Tax reliefs for the creative sectors were announced, however, designed to protect these industries from economic pressures. Meanwhile, the chancellor increased the small business investment allowance to £1m, meaning small businesses can deduct money they invest into areas like IT or equipment from their taxable profits.
Elsewhere, pubs have been struggling with higher costs and constrained consumer spending, with nearly 400 pubs “disappearing” in England and Wales in 2022, according to figures from real estate advisor Altus Group.
The chancellor announced what he termed “a new Brexit pubs guarantee” to protect what he said are “treasured community institutions”. From 1 August, the duty on draught products in pubs will be up to 11p lower than in supermarkets. The freeze on alcohol duty will continue until August.
While Hunt had pitched today’s budget as one geared at encouraging business growth, he was criticised by the CEO of the British Retail Consortium (BRC), Helen Dickinson, for not addressing issues with business rates.
“Many businesses are weighed down by a myriad of higher costs right through the supply chain,” she says.
“Government must do more to limit one of the biggest drags to retail investment, which is oncoming regulatory burdens heading down the track, or risk a crash in business investment and further inflationary pressures.”
Encouraging people back to work
Job vacancies and the difficulties in filling them have been another issue top-of-mind for many businesses since the pandemic.
Excluding students, there are seven million “economically inactive” working age adults, Hunt reported. There are currently around one million job vacancies in the UK.
“That’s a potential pool of seven people for every vacancy,” Hunt said.
He outlined older people as one group he wanted to see stay in the jobs market for longer, telling MPs: “Older people are the most skilled and experienced people. No country can thrive if it turns its back on such a wealth of talent and ability.”
To encourage older people to stay in work for longer, the government is abolishing the pension lifetime allowance and increasing the annual tax-free allowance on pensions from £40,000 to £60,000.Is an ‘obsession’ with digital skills excluding talent from the workplace?
He is also introducing “returnerships”, designed to equip older returners to work with new skills and build on existing experience.
Parents, particularly mothers who want to return to work but feel unable to due to childcare costs, are another group the chancellor is targeting his measures at.
He is extending the 30 hours of free childcare a week for working parents to one and two-year-olds. Childminders will be incentivised to join the profession through £600 payments. The funding for nurseries will also be increased to £204m from this September, rising to £288m next year.
The Chartered Institute of Marketing’s CEO Chris Daly has welcomed the government’s “back to work” budget focus, stating it is essential for the growth of the marketing industry.
However, he says Hunt’s budget marked a “missed opportunity” to reform the Apprenticeship Levy, something which he says is vital to allow businesses to upskill their staff.What to consider when setting up an apprenticeship
“If we are to weather the storm ahead, we need to give organisations the best environment to work in and develop their talent,” he say.
Agreeing, the BRC’s Dickinson claims businesses have lost £3.5bn in unused Levy funds over the past three years.
“To break this cycle of wasted investment, it is vital that Government allows businesses to use their hard-earned Levy funds for a wider array of skills courses. Without spending a penny, the Chancellor would increase investment in our workforce, helping businesses to prepare the UK economy for the skills it needs,” she says.