Chancellor Rishi Sunak has unveiled the contents of his Budget in the House of Commons, setting out the government’s tax and spending plans for the year ahead. Sunak announced new measures to support business and jobs through the pandemic and the UK’s long-term economic recovery, alongside tax-raising plans to help rebalance the public finances.
Key points of note from the budget included the extension of the furlough scheme until the end of September, the 5% VAT rate for hospitality firms to be maintained, £5bn in restart grants for shops and other businesses in England forced to close, and £6,000 per premises for non-essential outlets due to re-open in April, and £18,000 for gyms, personal care providers and other hospitality and leisure businesses.
Hospitality and leisure businesses will continue pay no business rates for three months, before beginning repayments at a discounted for the remaining nine months of the year, in a £6bn tax cut.
Kay Buxton, chief executive of Marble Arch London BID, welcomed the added financial support for businesses, however said that it remains a critical period for businesses, and that the Government “Must continue to provide economic support for as long as it takes to get operators back on their feet.”
John Webber, Head of Business Rates at Colliers, said the Chancellor missed a golden opportunity to reassure businesses and clarify his business rates strategy in the Budget: “We had hoped there would have been something more to say today – it’s been disappointing that yet again he has failed to grab this opportunity. Only skimming the surface on this issue will have dire consequences for many struggling businesses across the board.
Melanie Leech, Chief Executive, British Property Federation said the Government has had ‘long enough’ to fix business rates: “The business rates system is clearly broken. Business rates should be responsive in real time to market changes – rather than based on historic, out-of-date rental values – so that they are fair and sustainable. Government has had long enough to reflect on how business rates could be improved. When temporary relief ends, the Government must be ready with a new regime which best future-proofs the system as our economy continues to evolve.
“The Chancellor has provided a significant package of additional support for retail, hospitality and leisure which should give the minority of businesses who have not yet engaged with their property owners a platform to do so. Property owners – local authorities, pensions and savings funds – are owed more than £5bn and have had no direct support from Government. That cannot continue and those funds are urgently needed to invest in the recovery of our town centres.
“Everyone agrees the majority of tenants and property owners are working well together – with tenants being transparent about their finances, and property owners supporting those in distress with emergency relief and new, longer-term rent payment arrangements. New, stronger relationships have been built through this process. Nevertheless, there is a minority where relationships have broken down and become toxic, and the moratorium must end to unlock the stalemate and allow the market to re-set and recover.
Mike Flecknoe, Head of Rating UK Valuation & Advisory at Cushman & Wakefield said: “As much as the Budget announcements on business rates are welcome, it still leaves many sectors unsupported and paying full rates during the COVID crisis. Their only potential solution is concluding material change rating appeals which may generate backdated rate refunds. However the appeal process means delays during a time when many businesses need support.”
Josh Myerson at Montagu Evans said it is welcoming to see some of the expected business rate relief, albeit in a far more restrained fashion than anticipated, but that “the Budget was probably more interesting for what it didn’t say about rates than what it did.”
James Singer, associate director at Nexus Planning, echoed this sentiment saying that whilst the rates holiday was welcome, the announcement “avoids the wider question of reform.”
Melissa Minkow, Retail Industry Lead at software company CI&T called the grants no better than a “sticking plaster” unless the government intends to repeat them on a cadence that can allow for long-term recovery.
Charlie Wright, director of Epos Now, said the restart grants and extension of the furlough scheme are going to be essential for small businesses to survive: “As our research shows, the restart grants are a much-needed lifeline for retail and hospitality businesses, many of which have been relying on the current monthly grant system to just stay above water.
“Staff wages are the most costly outgoing for most of these businesses, and social distancing requirements may mean they’re only able to bring home half of their usual takings. Extending the furlough scheme gives small businesses, which are the lifeblood of the UK economy, the opportunity to survive the difficult transitional months before restrictions end and workforces can return in full”.
Chris Brook-Carter, chief executive of retail industry charity retailTRUST, welcomed the extension of the furlough scheme, saying it will: “Safeguard retail jobs during the uncertain reopening period ahead.
“The UK’s more than four million retail workers have been hit hard financially, emotionally and physically during the entire course of the pandemic and this provides some of the certainty they will need a part of today’s Budget announcement and as we move out of this crisis.”
Martin Davenport, Business Rates Partner at Hartnell Taylor Cook, called the 3-month extension to the business rates holiday “hugely disappointing”. He said: “I would have liked to have seen at least an additional 6 months! Sunak extending the furlough scheme until September is surely an indication that the economy won’t recover by June, so why hasn’t he done the same for business rates relief? Sunak’s speech also skirted around the swathes of businesses that will not benefit from the 3-month extension.”
Paul Morris, practice lead, retail sector, EMEA, at Juniper Networks said ahead of the budget that it is important to remember that consumer habits have changed forever. He said: “The future of retail is hybrid.
“Retail has always changed and evolved. The speed at which businesses can adopt becomes all the more critical and retailers will need to deliver omnichannel experiences, in a multitude of different ways. The new winners in retail will be those able to bring together their physical and online stores to deliver a seamless user experience, where the consumer can interact with the retailer in whichever way they want.”
By Andrew Lawson, SVP EMEA, Zendesk said that whilst the news of ‘Restart Grants’ was welcome, it must be noted that “There has been a fundamental shift in shopper habits over the last year, and one that we expect is here to stay.
He added: “Those that succeed will be thinking big picture. With physical footfall replaced by online eyeballs, businesses are getting creative about how they attract custom and keep people, new and old, coming back. This includes considering the full lifetime value of a customer and really prizing that as an outcome of customer experience. As opposed to considering good customer experience as a cost centre, it can and should be seen as a driver of profit.
Martyn Jones, CCO and retail expert at VoCoVo, said the measures will help breathe life back into retail in the short-term but alone it’s not enough. He said: The problem is not an unwillingness to head to the high street, it’s retailers accessing support and delivering the best consumer experience to ensure there is still a high street in years to come.
“Our recent research found that nearly two-thirds of UK shoppers have no plans to stop shopping in-store, which is a positive sign. Additional financial support, regeneration and tax relief are all crucial to level the playing field with online but physical retailers also have distinct advantage – and that’s the unique in-person social experience that shoppers clearly crave.”
Gavin Matthews, partner and head of retail & consumer at law firm Womble Bond Dickinson, said that rates relief news was welcome, but pointed out that Sunak’s announcement is similar to, but not 100% consistent with, Scotland where Nicola Sturgeon recently announced a full business rates holiday for the 2021/22 financial year.
He said: “Whether or not the Chancellor’s package of measures for retail will be enough to save many non-essential retailers remains to be seen but all eyes will be on overall trading figures after 12 April 2021 once the High Street opens its doors again to the public.”
[Last updated 11:50am 4/2/21]