Christie & Co comments on 2022 mini-budget announcement
Today, the new chancellor Kwasi Kwarteng announced further measures to support households and businesses over the coming months.
This included; a cut in basic rate of income tax to 19% from April 2023, a reversal in the recent rise of National Insurance, cancellation of the rise in corporation tax, cuts to stamp duty, VAT-free shopping for overseas visitors and new investment zones where business rates and stamp duty will be waived. In addition, the news announced on Wednesday that, from the 1 October, energy bills for UK businesses will be cut by approximately half their expected level for the next six months as part of a government support package, has been welcomed across all sectors in which Christie & Co operates.
Carine Bonnejean, Managing Director – Hotels and Stephen Owens, Managing Director – Pubs & Restaurants at Christie & Co comments, " The recent measures, particularly the cut to energy bills, are extremely positive in the short term and offers some relief to an industry already stretched as costs continue to rise across all fronts. Whilst the Government has been quick to act, and over the past few years we have seen more government support than ever before, there is still uncertainty about what will happen in six months’ time when the energy bills cut will expire.
“For some businesses these measures won’t be enough as they can’t absorb any cost rises. This will tend to impact smaller businesses, where working capital and cash flow are limited. However, combined with other factors mentioned in today’s budget, including the reversal of the 1.25 percent National Insurance increase and the cut in income tax, will have a positive impact on household and businesses budgets.
“We welcome news regarding the announcement that draught relief will be extended to cover smaller kegs which will assist smaller breweries and the cancellation of planned increases of duty rates to beer, cider, wine and spirits. However, there will be disappointment in the wider hospitality sector that there was no announcement on VAT cuts which could bring some much need relief to the sector.”
Rob Kinsman, Regional Director – Care at Christie & Co comments, “The basic rate of income tax cut in the Spring next year will benefit social care workers at a time when many are being forced to leave the sector. Recruitment across the economy is difficult, but the challenges in the social care sector are particularly acute and this income tax cut will be welcomed by the workforce.
“The reversal of the National Insurance hike of 1.25% in November is more controversial. This will ease the burden on both staff and care providers, but the extra income generated from this policy was earmarked for the social care sector. The industry will be keeping a keen eye on how the Government propose to plug this gap, especially given Liz Truss has quoted this week that no-one will have to sell their property to fund social care.
“The measures outlined earlier this week to cap business energy tariffs was welcomed. Many providers were facing a five-fold increase in energy bills and at a time when occupancy has yet to fully recover from the turmoil caused by the global pandemic the Energy Bill Relief Scheme provides much needed certainty for the next six months, but there remains real concern on how costs will be met in the medium term.”
Courteney Donaldson, Managing Director – Childcare & Education at Christie & Co comments, “Whilst the government’s announcements over the past few days, including the mini budget and the Energy Bill Relief Scheme allude to cost benefits for business in the childcare and education sectors, the announcements have been met with disappointment. There is no doubt that the regulations to halt the increasing rate of energy bills is a relief to many, as well as the reversal of the national insurance rate, however the lack of action in reviewing business rates in England or VAT contributions is a missed opportunity.
“Comments in the chancellor’s budget statement today regarding cutting the cost of childcare will be of great worry to owners of childcare settings. Whilst the plans surrounding this are yet to be announced, following so closely off the back of the IEA paper in July ‘Cutting Through: How to address the cost of living crisis’, suggests a larger scale reform could be in action. Topics for debate in that paper included the removal or reduction in ratios, the deregulation of childcare providers to allow other parents or family member to provide childcare for pay and even reducing or removing regulatory requirements such as EYFS. We would hope that the Chancellor works closely with the sector before bringing into law actions which will impact both the sector and the children in its’ care.”