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Gloucestershire Business News

Spring Budget 2023: what's the broader view?

Casting wider for the implications of yesterday's spring budget, Punchline has been gathering key perspectives from organisations and trade bodies who keep a keen eye on government policy.

Here's a round-up of some of their most significant takeaways.

Representing pubs, restaurants, hotels, attractions and night clubs, UKHospitality wonders if Mr Hunt has been listening to its particular issues on childcare.

Chief Executive Kate Nicholls said: "With hospitality businesses continuing to struggle with vacancies running at 56% higher than pre-pandemic levels, the measures announced today are significant in incentivising people back into work and hopefully alleviating labour shortages. The wider economic forecasts also give us encouragement that consumer confidence and spending are in for an upturn, albeit over time.

"The significant reforms to childcare and the measures to help the over 50s re-enter the workforce are both areas on which UKHospitality has been calling for action and we're pleased the Chancellor has recognised the help it can offer tackling the enormous vacancies in hospitality.

"Maintaining current levels of energy support to consumers, freezing fuel duty and inflation reducing will help hard-pressed households and increase disposable income, which will be a huge boost for venues in desperate need of trade.

"This will be particularly needed as the sector is still set to see huge energy price increases when current support ends in April, which unfortunately was not addressed. It remains the case that we need to see urgent action on the market failures identified by Ofgem in its non-domestic review update yesterday. The current timeline of further action by the summer is not good enough.

"The reduction in draught duty is positive and we hope this will incentivise more visits to our pubs, restaurants and hotel bars. Addressing draught duty is a good start and I would urge the Government to consider rolling out this type of tax cut across the wider drinks market.

"With duty primarily paid by suppliers, such as breweries, it's essential that any benefit is passed through to venues to help deliver the government's objective of reducing inflation and growing the economy."

Given the growing transition to EV motoring, the RAC welcomes no change on fuel duty, but sounds a strong warning over VAT charges for EV drivers on the move.

RAC head of roads policy Nicholas Lyes said: "We welcome the Government's decision to keep the 5p fuel duty cut in place for another 12 months. The cut has given drivers some much-needed relief in what has been the most torrid year ever at the pumps, with price records being broken even after duty was cut. Given the importance of driving for consumers and businesses, duty should be kept low to help fight inflation."

However Mr Lyes added: "We're disappointed the Government has not brought the 20% rate of VAT on public charge points down to match the 5% levied on domestic charging. A third of drivers do not have access to a driveway or a garage so will continue to be put off going electric or, if they have already have, penalised by high public charging prices, exacerbated by paying more in VAT than they should have to."

And potholes may not be filled by Mr Hunt's earmarked cash.

He added: "While welcome, another £200m is unlikely to make a big difference to the overall quality of our dilapidated local roads.

"We need to significantly increase funding for local road maintenance and improvement so councils can resurface roads properly, rather than patching them up and hoping for the best. Last year the Government spent £1.125bn on local roads in England, which is in stark contrast to the £7bn that went into major roads from car tax, despite local roads covering so many more miles."

From a food and drink perspective, the Food and Drink Federation wants more haste on recycling initiatives.

Karen Betts, chief executive, said: "It's good to see the announcement of full expensing – this is a welcome boost to businesses investing in tech across our sector, and supports increased productivity. We also welcome the decision to extend the current climate change agreements for two years. This provides certainty for businesses as they invest in energy efficiencies, and time to design a smart replacement scheme.

"The measures announced to encourage people back into work are timely, but with vacancies in food and drink manufacturing double the national average, our sector needs more help, for example hands-on apprenticeship support for SMEs, to ensure labour shortages aren't a drag on growth nor a risk to the resilience of the UK's food and drink supply chain.

"It's disappointing, too, that the Chancellor passed up the opportunity to reform the Apprenticeship Levy, which would have enabled companies in our sector to use levy funds in more flexible ways to help ensure they have the right workforce they need to succeed."

And on packaging she warned: "Here we need government to match our industry's ambition to reform recycling for everyday plastics and packaging. Current government plans for the introduction of Extended Producer Responsibility and a Deposit Return Scheme fall a long way short of international standards, and do not dovetail with the troubled Plastics Packaging Tax. If they are not careful, government action is about to force avoidable additional costs onto consumers right at the time we're all working to bring down inflation."

Formerly the Engineering Employers' Federation, Make UK represents manufacturers in the United Kingdom.

Stephen Phipson, Chief Executive of Make UK, said childcare reform was welcome, but: "Companies will be disappointed... that there is no extension of support for energy with the rapidly approaching cliff edge of the current scheme ending, while the planned changes to R&D tax credits remain and will be unwelcome for SMEs in particular as they are implemented in April.

"Looking forward, given the bigger picture at play and, in the face of the firepower that the US and EU are bringing to bear with their huge incentive programmes to bolster onshore manufacturing, the UK needs transformational reforms that look to the long term, with the aim of equipping businesses and individuals for the scale and pace of the challenge we are facing.

"This can only be done through building on the Chancellors' five key areas of growth with a radical, ambitious modern industrial strategy and policy agenda that has science, technology and innovation at its heart. Industry will welcome his reference to 'Industrial Strategy' and stands ready to work with and, support him, to reshape our economy and boost growth."

James Brougham, senior economist added on the issue of full expensing: "Industry will welcome this boost to investment which is key to unlocking improved productivity for both the sector and the wider economy. Nevertheless, investment intentions have been dwindling over the past year as businesses have been forced to take a shorter-term view with their capital in the face of an onslaught of costs, despite thee significantly more generous, super-deduction scheme.

"To see the Government's ambitions of growing investment, the focus must now be placed on removing wider challenges so industry is afforded the privilege of taking a longer-term view to investment. While the implementation of this new policy for three years compared to the two of the super-deduction allows more time for considered investment planning, a longer or permanent implementation would better fit the longer investment cycles of the sector. Concerns also remain for those smaller businesses with less access to capital, as it is those companies who are more likely to lease or buy second-hand plant and machinery, of which both methods of capital investment are excluded from the announced scheme's benefit."

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