The Chancellor’s Spring Statement may have had encouraging things to say on some fronts, vital concessions, in fact, given the multiple issues facing businesses as we move forward into April.
But industry leaders picking apart the implications of Rachel Reeves’ Commons speech last week were clear that one of the biggest disappointments centred on a neglect of the all-important entrepreneurial sector, especially in a year when, as reported here previously, nearly half of adults have considered starting a business of their own.
Alex Till, Chairman of National Enterprise Network, went as far as to say the Chancellor had effectively abandoned start-ups and small businesses.
“Enterprise Agencies across the country have become vital hubs for new businesses seeking support, advice and funding assistance,” he said.
“However, over the past year, funding for these agencies has virtually disappeared or has been reduced, with no indication from the Chancellor about future support.
“As a result, Enterprise Agencies are being forced to reduce operations, severely impacting the support available for new businesses. Combined with the upcoming increase in employee National Insurance, living and minimum wage and the new employment rights bill, this all represents a significant blow to the small business community.”
NEN says the majority of their members have already been reporting job losses, some of up to 50 per cent of their workforce as they have been sustaining critical roles and programmes since last year on their own reserves. Many are now expecting further cuts and possible closures from June.
Scott Dawson, CEO of the payment processing firm, DECTA agreed that the statement appears to have “overlooked” the immediate pressures faced by the country’s 5.5 million small companies.
“It’s disappointing not to see Labour focus more on SMEs, particularly with the rhetoric that they are the backbones of our economy and amid the certainty that we are in for more difficult times,” he said.
“The lack of any specific measures to alleviate the rising costs, such as business rates, VAT, or the increase in National Insurance Contributions, is a missed opportunity. As we know from working closely with SMEs, they are already under significant strain, with limited access to funding.
“Our upcoming research on the matter echoes this concern, with a majority of consumers believing the UK is not a favourable environment for SMEs and expressing worries about inflation and fraud.”
And while there was good news for those looking for work, given her £1 billion pledge for employment support, that will only be effective if businesses are properly supported to hire, train and develop their workforce.
Sean Reddington, CEO of the Thrive business consultancy, stressed the importance of investing in long-term workforce development, if businesses are to maintain a competitive edge by fostering employees capable of generating new ideas and capitalising on new opportunities.
“Startups are still facing rising costs, cautious markets and tight borrowing conditions, yet the appetite to innovate is stronger than ever. The issue isn’t ambition, it’s access. Businesses need to have support from the early stages of their journey,” he said.
And while he acknowledges Government support in AI and R&D, “a critical gap” remains: many entrepreneurs lack awareness of these grants and the knowledge to successfully apply them.
“Clearer communication and practical support would go a long way,” he added. “Backing early-stage businesses now will help them adapt, build smarter and scale faster. That means practical support, better access to funding, and policies that don’t just balance the books, but back the builders.”
Sabby Gill, CEO of Dext, the bookkeeping automation specialists, said: “With one-third of business owners losing sleep over concerns around paying staff, the absence of new tax increases in the Spring Statement offers some short-term relief, but for how long?
“With inflation remaining high and many of the changes from the 2024 Autumn Budget set to kick in soon, businesses are likely to feel the pinch even more.
“Business confidence has been smashed, and this could be the calm before the storm, with the big question now being whether Reeves is setting the scene for tax rises in this year’s Autumn Budget. As such, it’s critical that businesses are prepared; by leveraging automation and up-to-date financial data, businesses can mitigate risks and fuel long-term growth, even if we face a tougher landscape later this year.”
Some positive feedback came from Roan Lavery, CEO of FreeAgent, who was encouraged by advances towards the next phase of Making Tax Digital for Income Tax.
In particular, he welcomed the announcement that MTD for IT will be mandated for sole traders and landlords with income between £20,000-£50,000 from April 2028, something that will “provide some much-needed clarity for business owners so that they can begin preparing for the legislation”.
Reeves remained silent on pensions, although she had previously promised to maintain the Triple Lock for the duration of this parliament. However, over recent months, due to the current economic backdrop and the ‘need to raise some much-needed cash’, there has been much speculation around whether the government will stick to this, whilst amending the formula used to calculate it, making it less generous for pensioners.
Sarah Garnish, a Pensions Consultant at Quantum Advisory, said: “It seems quite clear that there are decisions that need to be made by the government around both the Triple Lock and tax-thresholds. Time will only tell as to who and what takes priority when making that decision.”
Related
Spring statement preview: Business need an olive branch