Friday 3 March 2023
The London Chamber of Commerce and Industry (LCCI) is calling on Chancellor Jeremy Hunt to address four key issues in the upcoming Spring Budget which plague the British economy.
The Government must provide support and solution to high energy costs for small and medium sized enterprises in addition to large businesses. Reform of the Apprenticeship Levy along with return of VAT rebate for overseas tourists is crucial to speed up the UK’s economic outlook. It is vital that the Government implements a clearly prioritised, long-term and targeted plan for the UK business recovery.
LCCI urges the Chancellor to include the following key measures in the upcoming Budget:
- Energy hedging scheme for SMEs – Even though large businesses can hedge against high energy prices, SMEs cannot. The energy price support mechanism is locking out too many firms such as hospitality and this is an unsustainable position for the economy to flourish. LCCI proposes a sandbox approach with the participation of the Government where detailed proposals would be worked up within eight weeks. An energy hedging scheme would allow large numbers of small businesses to join government-backed fixed rate energy schemes, providing energy bill stability.
- Relief for SMEs:
- There needs to be clarity over future government support with energy costs. This will enable businesses to plan for the future and will help promote long-term investment.
- Business rates relief / reform – smaller businesses have less scope to offset business rates and other costs.
- R&D tax reliefs for SMEs – The changes made to the Research & Development Expenditure Credit (RDEC) in the Autumn Statement will pose challenges to SMEs. With reduced access, many SMEs may struggle to secure adequate funding to progress R&D and ultimately new UK based innovations.
- Return of VAT rebate for overseas shoppers and exhibitors – There is evidence that luxury shopping by overseas visitors is shifting from London to Paris and Milan due to the abolition of the VAT Retail Export Scheme (RES). A VAT rebate return is needed to reverse this trend in order to preserve London’s global reputation as a leading shopping destination. There must be clarity on the offsetting of VAT rules for overseas exhibitors to ensure that all UK exhibition centres maintain their international competitive advantage.
- Long-term investment in skills infrastructure and reform of the apprenticeship levy – LCCI’s latest skills survey found that two-fifths (40%) of London businesses identified that skills shortages are restraining their growth. It is imperative the Government prioritises upskilling and implements long term skills investment so that the economy can return to a rate of productivity growth that will raise living standards. The Apprenticeship Levy is also in vital need of reform. Ever since the levy was introduced, businesses have complained about their inability to spend it due to strict usage rules. These rules must be reformed to enable businesses to make the most of this progressive scheme.
Richard Burge, the Chief Executive Officer of London Chamber of Commerce and Industry (LCCI), said:
“For too long we have waited to see the Government implement a long term, strategic and credible economic plan that will put the UK firmly back on the path towards growth. The Spring Statement is the Chancellor’s opportunity to lay this out and reinvigorate business confidence. Improving the operating climate for SMEs will be crucial to its success, and it is vital that the Government looks properly at the support they need with energy costs, reduced business rates and providing R&D tax relief. SMEs are the lifeblood of the UK economy, but without adequate support they will fall off the cliff edge they have teetered on for so long.
“London businesses will be key drivers of the UK’s eventual economic recovery, but current trading conditions are not conducive for growth. Investment in businesses and their future is critical if the Government is to fulfil its promise to kickstart the journey towards growth.”
Businesses have long teetered on an economic cliff edge and are desperate to see the Government deliver on its long-awaited promises and to see tangible progress against the five priorities set out by the Prime Minister at the beginning of this year.