Chambers of Commerce react to government's Growth Plan

Chancellor of the exchequer Kwasi Kwarteng has unveiled a Growth Plan to "release the huge potential in the British economy" by tackling high energy costs and inflation and delivering higher productivity and wages.

Among the raft of new measures are major tax reforms including cancelling the planned rise in corporation tax to 25 per cent, keeping it at 19 per cent – the lowest in the G20 – to encourage businesses to invest.

The 1.25 percentage point rise in National Insurance contributions will also be reversed, a change the government says will save 920,000 businesses almost £10,000 on average next year.

The Chancellor also announced more relief for businesses by making the Annual Investment Allowance £1 million permanently, rather than letting it return to £200,000 in March 2023. This gives 100 per cent tax relief to businesses on their plant and machinery investments up to the higher £1 million limit.

It was also confirmed that the government is in discussion with 38 local and mayoral combined authority areas in England, including the West of England, to set up Investment Zones in specific sites within their area.

Each Investment Zone will offer generous, targeted and time-limited tax cuts for businesses and liberalised planning rules to release more land for housing and commercial development.

The government hopes they will be hubs for growth, encouraging investment in new shopping centres, restaurants, apartments and offices, and creating thriving new communities.

Sector-specific support for pubs and hospitality has also been unveiled. Alcohol duty will be frozen for a year and the government will publish a consultation on "reforms to modernise alcohol duties."

The Chancellor also announced a 1p cut to the basic rate of income tax one year earlier than planned. From April 2023, the basic rate of income tax will be cut to 19 per cent and will mean 31 million people will be better off by an average of £170 per year.

The Chancellor said: "Economic growth isn’t some academic term with no connection to the real world. It means more jobs, higher pay and more money to fund public services, like schools and the NHS.

“We want businesses to invest in the UK, we want the brightest and the best to work here and we want better living standards for everyone.”

Reacting to the statement, Corin Crane (pictured) Chief Executive of the Coventry and Warwickshire Chamber of Commerce, said the support announced on energy bills earlier in the week coupled with the fiscal statement, which included the reversal of National Insurance and corporation tax rises as well as the Annual Investment Allowance remaining at £1 million, would come as a big relief.

He said businesses were still facing an incredibly tough autumn and winter but hoped the Chancellor’s announcements would help them through.

Corin added that he would work with partners in the region to secure one of the Investment Zones, also announced in the fiscal statement.

He said: “I’ve spoken to so many businesses across Coventry and Warwickshire since I started in this role a couple of months ago and there was a huge amount of fear as we were approaching this autumn with prices and inflation spiralling.

“We have been calling for support on energy prices and for the Government to cancel the National Insurance rises so we are very pleased that they have listened. This will be a big relief.

“Investment Zones will only have a positive impact for businesses in this region if we manage to secure one for the patch so I was pleased to see the Gigafactory at Coventry Airport included in the documentation as being under consideration. We need to turn that into a reality and I’ll be working with other stakeholders in the region to help make that happen.

“Overall, this mini-budget does provide a boost for business but the Government must now develop this into a long-term plan for growth if they are to satisfy the aim of achieving the 2.5 per cent growth target.”

And at Business West, the organisation that includes the Chambers of Commerce of Bristol, Gloucestershire, and Wiltshire, director of policy Matt Griffith said: "Given the new Government’s fiscal event today wasn’t termed a Budget statement it contained so many measures that will affect firms and communities across the region.

“It’s positive to see the announcement of new Investment Zones within the West of England and the broader South West which could attract jobs and growth into the region. We look forward to examining the details.

“For companies making profits the cancellation of the planned corporation tax rise due in April 2023 will be welcome, and all businesses investing in new plant and machinery will get the continued benefit of the annual investment allowance which had been due to fall.

“The biggest measure for local employers is the long-trailed cancellation of the national insurance increases, which the new Chancellor announced would be effective from 6 November.

“This cut partially offsets the backdrop of higher costs of doing business. The cost of the package overall hasn’t been published but will add significantly to the government borrowing totals.

“We await further details on the reforms announced by HM Treasury.”