Spring Budget 2023

Head of Corporate Mark Lazenby spoke with North East Chamber of Commerce to share his thoughts on the Chancellor's budget announced to parliament on 15th March.

"Whilst a number of the headline items had already been confirmed or widely predicted (such as the energy price guarantee being extended at the annual rate of ￡2,500 for another 3 months, widening support for childcare provision and relaxation of the current pension contribution rates), the detail of the measures announced will as ever be greeted by business locally with a sense of encouragement and also disappointment.

Many companies would have been hoping that the Chancellor would have taken the opportunity to reduce the planned increase in the rate of corporation tax to 25%, he did not do that but does seem to have offered some mitigation of more expansive tax allowances for investment in machinery and technology, which I suspect will be of interest to businesses in the region and perhaps seen as an encouragement for further investment by businesses to increase productivity rates. Locally, the region will benefit from having two of the new investment zones (North East & Tees Valley) that are being created and there were suggestions of new tax credits for business involved in significant R&D which may be positive for businesses in the region.

Mr Hunt seems to have placed an emphasis on tools relating to the relaxation of pension contributions and expanding support for childcare provision purportedly to try and expand the size of the available labour force, Which if it is successful would, I think, be welcomed by businesses across the sectors as the availability of an appropriate labour market (especially in skilled roles) is a common challenge. Whether these policies can actually have a material effect on increasing the available labour market remains to be seen,?it certainly would not seem to be a quick fix as a number of those announced policies will not be fully implemented for 2 years and more.

Unexpectedly for me, the Chancellor has also maintained?the freeze on fuel duty that was due to end this month for another?12 months. I assume this is to demonstrate support for individuals and business in the current inflationary period and I believe this will be welcomed by many but at the same time there did not seem to be any mention of the current Energy Bill Relief Scheme for businesses continuing. Meaning, the less generous discount scheme will then apply for businesses which will likely be a significant disappointment across the business community.

As always the Budget announcement has winners and losers and the Chancellor will claim it demonstrates the Government are bringing back stability to the economy and implementing policies for growth whilst increasing the size of the labour market for the benefit of all. Whether it does, only time will tell, but business in the region should ensure they take advantage of the excellent budget commentary and summaries produced by a number of professional advisers in the region to understand how the new policies will impact them."

Author: Mark Lazenby