Cool reception in Lancashire to Chancellor’s Spring Statement

Although the Chancellor refused to reverse his planned increase in National Insurance Contributions due on April 1, he shielded lower earners from the impact by increasing the threshold at which people start paying to £12,570 from July.

He cut 5p off fuel duty from Wednesday evening and promised to cut income tax by 1p in 2024 and also cut VAT on energy-saving materials such as solar panels, heat pumps and roof insulation to zero for five years and upped the employment allowance from £4,000 to £5,000 allowing small businesses to reduce their NICs.

Babs Murphy, chief executive of the North and Wester Lancashire Chamber of Commerce said: “There were certainly some positives in the Chancellors statement which will be welcomed by the business community. “Businesses will be pleased to see that that the employment allowance has been increased and the firm commitment to cut taxes on business investment.

"Turbocharging investment is crucial to boosting productivity, levelling-up and the transition to net zero.

"However, he has missed the opportunity to fundamentally address the huge cost pressures that firms are facing, which is disappointing.”

Federation of Small Businesses national chairman Martin McTague, said his measures were just a starting point and more needed to be done to support businesses.

He said: “We are very pleased to see the Chancellor adopting our top ask for this Spring Statement: uprating the Employment Allowance to help small employers with national insurance costs.

“Together with a cut to fuel duty, these measures will provide crucial breathing space for our embattled small employers.

“This Spring Statement marks a good starting point, with welcome measures on business rates, net zero and energy investment taking effect next month.

With steep inflation, energy bills increasing fast, without the same support in place as enjoyed by consumers, and hiring pressures landing hard on small firms, more of the right stuff will be needed in the autumn given this challenging backdrop."

Tony Medcalf, tax partner at MHA Moore and Smalley, said: “This was more like a mini-budget than a spring statement with tax cuts and tax breaks announced to tackle record inflation.

“The one per cent cut to the basic rate of income tax promised by the end of the parliament by 2024 will steal the headlines – an unexpected rabbit out of the hat the chancellor left to the end of his statement. Another significant intervention was the increase in the National Insurance threshold by around £3,000 effective from July 2022, bringing it in line with the income tax personal allowance.

“Despite the tax cuts, Mr Sunak made clear during his statement that the public finances would likely get worse and that additional public borrowing would be limited. This means we may see measures further down the line to increase the tax take.”

“The five per cent cut to fuel duty should provide some welcome relief for motorists and the removal of VAT on energy efficiency measures will save money for households looking to reduce energy costs."

Matthew Johnson, associate partner at accountants WNJ in Preston, said: “Little of what the chancellor announced today will immediately ease the pain being felt by SMEs squeezed by rising prices. In many ways it has added to the uncertainty.

“The fact that he did not scrap the 1.25 per cent hike in National Insurance contributions (NIC) scheduled for April 1, was particularly disappointing for SMEs facing the challenges caused by rising inflation, soaring energy bills and the impact of war in Ukraine.

“The cut in fuel duty is to be welcomed and will help businesses, particularly those with high transport costs.

“The announcement that Employment Allowance will increase to £5,000, which the chancellor described as a tax cut worth up to £1,000 for half a million SMEs, is also a positive move.”