Business leaders react to Sunak’s Spring Budget

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Business Leader has collated the views of some of the UK’s leading business figures, following Chancellor Rishi Sunak’s Spring Budget announcement.

Chris Evans, Vice President and UK Country Manager at Intuit QuickBooks commenting on the ‘Help to Grow’ scheme announced in today’s 2021 Budget: “It’s hugely promising to hear the Chancellor announce vital, practical support for small businesses in the new ‘Help to Grow’ scheme. We know from our own research(1) that through the pandemic, being able to digitally pivot has been critical for survival:  73% of small businesses told us they became more digital in 2020 and of these, 88% said it was key to their ability to continue operating. Providing access and support now for businesses to enhance their technological capabilities ensures they are able to ride on the digital wave that has helped so many to stay afloat during the pandemic.

“As the backbone of the UK economy, small businesses deserve our support and we simply must recognise that their contribution goes far beyond pure economic factors. Particularly over the past 12-months, we have seen the vital role they play in supporting local communities. Our research estimates small businesses gave a £18bn contribution in 2020 through initiatives such as volunteering and cash donations. We simply can’t afford to lose these businesses from the UK landscape: to do so would impact on all of us.”

Darren Upson, VP Small Business Europe at Soldo spoke to Business Leader on many aspects of the Spring Budget

On tax hikes: “While the Chancellor understandably needs to raise revenue to pay off the eye-watering amounts of cash borrowed throughout the course of the pandemic, we nonetheless worry about the timing of these tax hikes. The Chancellor must understand that many SMBs are still struggling. These increases could be enough to impair their future growth. Once lockdown is lifted, the UK will need SMBs to step into gear and bring the economy back to health. These tax rises may hamper their ability to do so.

“In the context of Brexit, the government needs to ensure the UK remains an attractive destination for business. The last thing it ought to be doing is risking putting off investors and entrepreneurs with what may be perceived as a punitive tax regime. Another crucial concern is that these tax hikes may discourage SMBs from hiring. With unemployment creeping up, this move could ultimately prove to be counterproductive.”

On the extension of the BBLS and CBILS deadline: “We welcome the extension of the deadlines for the repayment of BBLS and CBILS. In the words of the Prime Minister some months ago, we are not out of the woods yet. Many SMBs have been struggling to expand and may continue to do so for some time. As such, the postponement of loan repayments is a sensible move. This grants businesses breathing space to prioritise regaining strength and reacclimatising to normality as things begin to open back up. In the short-term, it’s in everyone’s interest that capital is directed towards business investment and expansion rather than lining the public purse. It’s encouraging to see that the Chancellor has recognised this.”

On Help to Grow: “We applaud the government’s new £520m Help to Grow scheme, which aims to help small and medium-sized businesses boost their productivity. It’s particularly exciting to see the digital element of this, with the offer of technology advice and discounted software. This is exactly the kind of creative thinking required to get businesses back on their feet.

“It’s good to see the government offering guidance and channelling resources towards a specific and sensible direction, rather than simply throwing money at businesses and hoping for the best. It’s clear that digitisation and cloud-based operational models are the way of the future, and businesses that don’t embrace this are going to have a difficult time competing in the post-Covid era. Finance decision-makers, in particular, ought to use this ‘great pause’ to reassess their business and payments strategy, ensuring that these are fully optimised for life beyond the lockdown.”

Clive Wratten, CEO of the Business Travel Association, gave his views on the lack of funding for the business travel industry: “The BTA welcomes the extension to the furlough scheme which will save jobs across the sector. However, business travel has again been excluded from vital grants at a time when travel management companies are precluded from doing their jobs by international travel restrictions. It is imperative that the new Global Travel Taskforce brings forward a framework in which business travel is fully integrated, and enables it to resume and contribute to the UK economy once more.”

David Beaumont, regional director for the South West at Lloyds Bank, shared his thoughts on the Chancellor’s commitment to maintaining the reduced 5% VAT rate for hospitality businesses: “Hospitality and leisure businesses remain the backbone of the region’s tourism economy and it’s encouraging to see the Chancellor’s commitment to extending the reduced VAT rate for a further six months and prolonging the business rates holiday. Many firms are continuing to navigate through the ongoing lockdown restrictions and finding innovative ways of working and the news today will put them in a stronger position to reopen their doors later this Spring.

“Today is a positive for firms and, coupled with Government’s roadmap to recovery, will go some way to helping them build back in the months and years ahead.”

Matthew Jellicoe, Co-founder of OnePlanetCapital, a new investment house focused on businesses tackling climate change, comments on the implementation of a National Infrastructure Bank announced in the Budget: “The transition to net-zero requires a paradigm shift across most aspects of society – from energy production through to transport and the way we live in general. Indeed, many scientists believe net-zero is unlikely without scalable carbon capture technology alongside these changes. A national infrastructure bank is a good idea in that it can take on large and long-term projects where private finance may often be reluctant. Strategy is nothing without implementation and for the government to be able to drive strategy and control the timings of projects it has to be able to cornerstone infrastructure investing.

“Large upgrades to rail infrastructure, the re-introduction of trams to city centres, tidal power plants – all of these type of long term projects will benefit from a National Infrastructure Bank. I spoke to a carbon capture Ph.D. scientist recently who said the technology was falling behind due to a lack of investment in infrastructure and plants to prove the technology viable.

“With a crisis as pressing as climate change, I do not think the government has any choice regarding setting up the NIB. EU banking facilities have to be replaced rapidly, and if the government wants to drive the ‘green industrial revolution’ it will have to walk the walk. The risks in large long-term infrastructure projects are always there, HS2 for example, and the climate change space is moving rapidly with no end game in sight, but if the bank can work with private finance I think a lot of these risks are mitigated.”

Anil Stocker, CEO of MarketFinance spoke to Business Leader about the Recovery Loan Scheme. He said: “The UK economy is in the biggest slump in over 300 years. We need the help of business as part of the recovery. This is the time businesses need confidence, confidence to invest for the future. The announcement of the Recovery Loan Scheme of £25k to £10m is a step in the right direction.  These will enable businesses to plan for the future, rebuild their working capital and strengthen balance sheets. They can now look beyond stop-start lockdowns and plan for the future. At MarketFinance, we have provided over £3b to UK companies and we know they are in it for the fight to protect and lift off their businesses. They want to become more digital, hire people, grow and make their communities prosperous. Banks have had a challenging time meeting the demands from businesses but as a fintech lender, we are proud to be here and support UK companies”.

CBI reaction

Tony Danker, CBI Director-General gave his immediate reaction to the Spring Budget to Business Leader. He said: “This Budget succeeds strongly in protecting the economy now and kickstarting a recovery. It leaves open the question of UK competitiveness long term.

“The Chancellor has gone above and beyond to protect UK businesses and people’s livelihoods through the crisis and get firms spending. Thousands of firms will be relieved to receive support to finish the job and get through the coming months. The Budget also has a clear eye to the future; to ensure finances are sustainable while building confidence and investment in a lasting recovery.

“The Chancellor has taken a welcome, broad view on how to stimulate growth from the new Infrastructure Bank, to Help to Grow and incentives to take on apprentices.

“The super deduction should be a real catalyst for firms to greenlight investment decisions. The boldness of the Chancellor on this measure is to be admired. But 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. We look forward to working with the government to achieve this.”

British Business Bank response

At today’s Budget, the Chancellor announced two new programmes to support businesses, which will be delivered by the British Business Bank.

Catherine Lewis La Torre, Chief Executive, British Business Bank, said: “The Chancellor has confirmed the British Business Bank’s central role in the next phase of the UK’s economic recovery from Covid-19. As businesses begin to plan for the post-Covid period, they will need targeted finance to support them. We welcome today’s announcement of two new schemes, one to provide debt finance to a broad range of businesses, and the other to invest equity alongside the private sector in fast-growing innovative firms. Both schemes will help drive the innovation and growth needed to support the UK’s long-term prosperity.”

Recovery Loan Scheme

The Recovery Loan Scheme will launch on 6 April 2021, following the closure of the current Covid-19 debt schemes – the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) and the Bounce Back Loan Scheme (BBLS) – on 31 March 2021. The Recovery Loan Scheme is scheduled to run until 31 December 2021, but this is subject to review.

The new scheme aims to help businesses affected by Covid-19 and can be used for any legitimate business purpose, including managing cash flow, investment and growth. It is designed to appeal to businesses that can afford to take out additional debt finance for these purposes.

Details of the scheme include:

  • Up to £10m facility per business:  The maximum value of a facility provided under the scheme will be £10m per business. Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts.
  • Turnover limit: There will be no turnover restriction for businesses accessing the scheme.
  • Wide range of products: Businesses will be able to choose from a variety of products: term loans, overdrafts, asset finance and invoice finance facilities.
  • Term length: Term loans and asset finance facilities are available for up to six years, with overdrafts and invoice finance available for up to three years.
  • Interest and fees to be paid by the business from the outset: Businesses will be required to meet the costs of interest payments and any fees associated with the facility.
  • Access to multiple schemes: Businesses who have taken out a CBILS, CLBILS or BBLS facility will be able to access the new scheme, although the maximum they are allowed to borrow will depend on their lender’s assessment and scheme requirements.
  • Credit checks for all applicants: Lenders will be required to undertake credit and fraud checks for all applicants. When making their assessment, lenders may overlook concerns over short-to-medium term performance owing to the pandemic. The checks and approach may vary between lenders.

Future Fund: Breakthrough

Future Fund: Breakthrough, which will launch in early Summer 2021, is a new £375m scheme that will encourage private investors to co-invest with government in high-growth innovative firms. These R&D-intensive companies accelerate the deployment of breakthrough technologies which can transform major industries, develop new medicines, and support the UK transition to a net-zero economy.

Due to high research and development costs, breakthrough technology companies typically require more capital than other companies to fuel the later stages of their growth. Future Fund: Breakthrough will target R&D-intensive companies seeking a minimum of £20m and will crowd in private sector investment to support their growth.

Future Fund: Breakthrough will be delivered by the British Business Bank, via its commercial subsidiary British Patient Capital.