The March budget is an attack on UK entrepreneurs
Despite Rishi Sunak’s vow to “protect the jobs and livelihoods of the British people”, his Budget speech did little to support the businesses that are responsible for creating those jobs.
No-one can argue the devastating impact that the pandemic and subsequent lockdowns have had on British business, so it was clear that yesterday’s budget was going to require some creative solutions for balancing the books. And in fairness there are a number of solid measures that will protect jobs and incomes in the short term. But, like many strategies this government puts forward, it doesn’t seem to take into account the years to come. In fact it appears that this budget will actually make things more difficult for job creators in the long term.
Corporation Tax is set to increase from 19% to 25% from 2023 for all businesses with net profits in excess of £250k. Increasing corporation tax may look like a quick way to get some money in the government’s purse, but it will undermine confidence in UK businesses who not only want to protect current jobs but grow their business in the years ahead to create many more jobs. At this time more than ever, this confidence is something we desperately need.
Our own Group is in the fortunate position of having been able to expand our businesses during the Covid crisis, something that I’m very aware is not the case for many businesses across the country. But this budget does not create incentive for us to scale in the way we’ve been able to. Our technology business, Zeus Tech Solutions, has entered the US market just last month. We work for US clients on an outsourced basis with all staff based in the UK. Yet, based upon the Chancellor’s decision on corporation tax, the fact is that we will pay 4% more corporation tax due to our decision to retain our UK based team, rather than starting a new business in the USA with an American workforce.
Surely making it more expensive for us to create jobs for UK workers than just hire from the States can not be the Chancellor’s intention? If so, and bearing in mind the number of UK businesses who provide services to US clients, President Biden must have been punching the air yesterday afternoon!
Tony Danker, director general of the CBI summed it up well:
“Moving corporation tax to 25% in one leap will cause a sharp intake of breath for many businesses and sends a worrying signal to those planning to invest in the UK. The government must now have a laser-like focus on the UK’s competitive position in the round, including fundamental reform of the unfair business rates system. The UK must remain attractive for every type of business, from the innovation, high-growth UK homegrown firm to the global firms investing in the UK.”
I have to agree. This is a devastating signal that will be very difficult for UK businesses to overcome in the global market.
I’m sure not everyone will be looking at the budget in the same way I am. Many will just see positive measures like the extension of the furlough scheme, the increased access to grants for the self-employed and the top-up to universal credit. I fully appreciate just how important these support measures will be in the next 6 months. But it’s important to remember that all of these things are still temporary solutions meant to tide the nation over until the pandemic is in a manageable state. And they’re only effective if you have a viable jobs to go back to when they finish. At the moment that’s debatable.
This is the time when Rishi Sunak should be creating more opportunities for the nation’s business leaders to recover from a difficult 12 months, to start trading at full capacity again and to grow their market share. Only by increasing the strength of British businesses – and therefore growing the UK economy – can he truly guarantee the medium and long term protection of jobs and sustainable increase in opportunity for ordinary people.
Instead he chooses to tax businesses more, which will provide little positivity for UK businesses with ambitious growth plans in the years ahead.
And I do believe that the Chancellor understands this. This budget is a mixed bag but previous incentives brought in by Mr Sunak, such as the Covid Business Interruption Loan Scheme, have been a great success for supporting business growth. So why have we not seen more of that in this year’s budget, instead of the clear disincentive for international businesses to grow in the UK, rather than a country with a more competitive tax regime?
I’ve shared my own views before on what the Chancellor can do to support the growth of British companies and the subsequent job creation and economic growth that could come out of it. But the simplest solution is obvious: put people who understand business in charge of the plan for economic growth and job sustainability. Let the people who have been most successful in funding and delivering growth provide a platform for increased capital for entrepreneurial businesses capable of scaling jobs and profits in the years ahead. This is what I have proposed in my attached comment and I would welcome the opportunity to speak with the Chancellor about it.
There’s still time of course. These changes are not until 2023 so in the meantime let’s get around the table – the government, the investors and the entrepreneurs – and find a way forward that will protect jobs, allow businesses to scale and grow the economy. That is the way out of this crisis, not penalizing businesses for continued commitment to the UK.
Let’s work together so we don’t drive our greatest business leaders or potential investors away. So we don’t make it more expensive to create jobs in the UK. So we don’t take away the potential for tomorrow to pay for today. Let’s give businesses some support. Let’s do what we do best. Let’s get to work.