Chancellor Rachel Reeves delivered a ‘no pain, no gain’ Budget with Liverpool city region business leaders offering a cautious welcome. Report by Jennie Lewis and Tony McDonough
In the first Labour Budget speech for more than a decade, Reeves echoed her commitment not to increase taxes on working people, but put pressure on businesses with higher rates of employer National Insurance Contributions (NICs).
The Chancellor, and the first woman in UK history to deliver the Budget, pledged to fix the foundations and deliver change, but warned that change must be felt.
She said: “Along with the pride that I feel standing here today there is also a responsibility to pass on a fairer society and a stronger economy to the next generation of women.”
“This is a moment of fundamental choice for Britain. I have made my choices.”
The Chancellor also gave the go-ahead for a £56m investment by Homes England to speed up the regeneration of a major brownfield site within Liverpool Waters and bring life back to the city’s historic northern docklands.
This funding will support the creation of a new public park and vital infrastructure that will accommodate approximately 2,350 new homes and is all part of the government’s plans to build 1.5m new homes across the UK in the next five years.
Employer NICs will increase to 15% from April, while the threshold will be reduced from £9,000 to £5,000, raising around £25bn over the next five years.
Greg Johnson, managing director of Warwick North West, a window and door manufacturer based in Bootle, says it is a measure that could be painfully felt.
He says: “It is not so much the 1.2% rise in employer contributions, but the lowering of the threshold that could hit business owners hardest.
“Warwick employs more than 120 people at our factory in North Liverpool. By some very quick and loose calculations the cost implications for me as a business owner could be close to £100,000.
“We are very lucky to be in a position to be able to stomach the blow in the short term. Many other businesses might not be so lucky.”
Greg welcomed some of Rachel Reeves’ comments though, adding: “I thought on the whole the announcements were palatable, there were perhaps not quite the many nasty surprises many of us anticipated.
“I’ll be interested to see the detail on Labour’s commitment to affordable housebuilding in the coming weeks.”
In a more positive move that was welcomed by Metro Mayor Steve Rotheram, the Chancellor also outlined relief for retailers, hospitality and leisure businesses.
He said: “On the whole, I thought it was a very balanced Budget. More pressure on businesses was expected, but the Chancellor sweetened the pill with lots of positives that can only lead to economic growth.
“The visitor economy in the Liverpool city region is worth around £6.25bn. It is proportionately one of the biggest sectors of any of the Mayoral combined authorities, so to hear there will be help available for those businesses is very welcome.
“Liverpool hasn’t anywhere near maximized opportunities within the sector, and with that help perhaps we can.”
This sentiment was echoed by chief executive of Downtown in Business, Frank McKenna, who said rate relief for leisure and hospitality businesses was great news and unexpected.
He added: “All in all, I don’t think there were any great surprises. The increase in taxes is absolutely essential.
“If you talk to a lot of business owners, they will agree that it’s an okay strategy, but its how they re-invest the money they raise.
“If in 12 months’ time people feel like things are improving, in terms of infrastructure, transport, the NHS, housing, which all impacts on business, people will be ok.
“But far too often in this country we have seen big investments being made and business owners not getting value for money.
“It’s essential that the government gets a grip on that and ensure that the money being spent is providing a return.
“The public transport system in London, for example, is night and day to what we have in the North. It is quicker and easier for me to get to London than it is to Leeds.
“We have to start to drag the Northern rail system from the 19th century into the 21st – it’s those sort of things that I want to see progress on.
“The Chancellor must also work with her regional mayors and ensure that devolved authorities are given the cash they need to be able to get on and sort those issues out.”
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Colin Sinclair, chief executive of KQ Liverpool and Sciontec, picked up on a similar point, saying: “New integrated devolution settlements for Manchester and Birmingham hopefully signals a future direction of travel which will soon allow the Liverpool city region to enjoy similar meaningful powers over spending in our local area.
“For Liverpool to be truly connected to the UK and the world, it needs 21st Century transport infrastructure, so we would have liked more direct commitments to investment in the city region in the context of the Transpennine route upgrades.
“This brings the ambitions of the Mayors’ shared plans for the Manchester Liverpool Railway Board into even greater focus.”
Chief executive of The Liverpool BID Company, Bill Addy, says he feels optimistic about improved dialogue between national and local leadership.
He said: “For the first time in over a decade our national, regional and local Government are all now aligned through the same party. It gives me great confidence that they might finally begin to talk to each other.
“It is reassuring too, to see a Budget that is not about short termism, but that outlines steps for future growth.
Bill, who represents the interests of Liverpool City Region’s Accommodation BID, which supports the attraction of events and conferences to Liverpool, was also in support of relief for retail, leisure and hospitality businesses but says further commitment is needed to repair the country’s high streets.
“Business rates reform is long outstanding” he suggested.
Paul Cherpeau, chief executive of Liverpool Chamber, said the imperative at this Budget was for the government to provide confidence and reassurance to businesses.
“It is clear the Chancellor has sought to provide longer term clarity across a range of areas,” he said, “but there are also a number of issues which will no doubt leave businesses fearful.
“Businesses will be encouraged by a new long-term programme of public investment and capital spending on infrastructure upgrades and boosting high-growth sectors.
“Hospitality and leisure operators may give a cautious welcome to permanent reliefs for business rates and the cut in draught alcohol duties, hopefully giving them some breathing space and a level of certainty moving forward.
“However, increases in employers’ National Insurance Contributions, the significant reduction in the threshold and the increase in the National Living Wage will leave many businesses worried about how they will be able to afford those extra payments, never mind recruit more employees.”