Business leaders across the region are focused on how Rishi Sunak can ease the rising cost of living in the chancellor’s spring statement.
With the economy still recovering from the turmoil created by the pandemic, and the global economy disrupted by the war in Ukraine, some feel that, with so many issues to address, the statement will be difficult to predict.
Lee Watson, Tax Partner at Clive Owen LLP, with offices in Darlington, Durham, Middlesbrough, and York, said: “It is clear that action needs to be taken in relation to the energy crisis and fuel bills. The question is how this is achieved? Does the chancellor cut fuel duty, provide further one-off support for energy bills, or look to raise benefits, pensions, and tax bands in line with a high rate of inflation? Does he look to scrap the health and social care levy that will be introduced in April?”
However, cutting costs means that the chancellor will need to seek to raise funds now or in the future from other areas as Lee states: “Reducing income into the Treasury coffers now, means that more will need to be collected in the future. There have been consultations in recent years regarding aligning capital gains tax rates with income tax rates, which could be a way that the chancellor can increase tax take. In addition, every year there are rumours of cuts to pensions tax relief.
“Businesses are facing increasing taxes due to the increase in employer national insurance and the corporation tax increases planned for 2023, as well as the cessation of the furlough support last year. It is certainly a tough time financially.
“There is also expected to be an overhaul of R&D tax relief to reduce the amount that can be claimed by SME businesses where the government feel there is abuse of the system. We await the statement with bated breath.”
Bob Borthwick, a director at Stockton-based Scott Bros, which is involved in recycling, haulage, and plant hire, said: “Small firms are facing widescale cost pressures, from rising business rates to spiralling energy costs, but those operating vehicles, from vans up to HGVs, are having a particularly tough time.
“I urge the chancellor to cut fuel duty by a meaningful amount to ease the burden on transport-based businesses, not to mention the millions who rely on their cars and who are struggling to afford to fill up.
“This is a perfect storm in terms of causes, from the effects of the pandemic to the war in Ukraine, but high fuel prices impact on the cost of goods and services used by everyone and will lead to further inflationary pressure.
“The UK already has one of the world’s highest tax rates for fuel, so the government has an opportunity to considerably reduce this, but I fear any reduction, while welcome, may be too modest to have any significant effect.”
Rosemary Du Rose, CEO of Beyond Housing, which provides 15,000 homes and a range of services to more than 30,000 customers throughout the Tees Valley and North Yorkshire, said: “For already vulnerable families and individuals the cost-of-living crisis can mean choosing between two essentials – food or energy.
“I hope the chancellor will prioritise lower income households, extending a safety net to insulate them from the worst of energy and inflationary pressures.”
Martin Williamson, head of residential property at Darlington-based Latimer Hinks Solicitors, said: “There is a possibility that the Chancellor may increase the higher rate of stamp duty payable on second residential property purchases this week, bringing England in line with the four per cent surcharge already in place in Scotland and Wales.
“This could have significant implications for landlords and property investors and give something of a shock to the market generally.”
- The chancellor will deliver the spring statement in the House of Commons on Wednesday, 23rd March at noon.