BiKBBI CEO Damian Walters reacts to the Chancellor’s Autumn Statement after a weekend of reflection.
Last week, the government undertook its third fiscal statement in as many months. The expectation for this budget was far greater than the previous 2022 statements, largely due to the damage caused by the previous ‘mini budget’ which created even further economic instability.
As the UK continues to battle with rising costs on all fronts, driven mainly by the post-pandemic fall out and the war in Ukraine, the Chancellor needed to back up his pledge to create stability for the country.
There were some encouraging messages around the government’s support and investment in our NHS, social care and the armed forces. Equally, it was very reassuring to hear reference to the importance of apprenticeships and vocational learning to drive economic growth. But within the key points, there were some areas of concern for the UK’s 5.5 million small businesses as the government seeks to find a balance between stability and growth.
The British Institute of KBB Installation represents thousands of micro-SMEs and, whilst fully supportive of the need to tackle inflation in order to stabilise the economy, it is vital that this is done in conjunction with measures to create conditions for growth within business.
BiKBBI CEO, Damian Walters commented ‘Our members are already facing commercial challenges through inflated operating costs, ludicrous price increases in materials, supply chain struggles, falling revenue, and shrinking availability of affordable finance. Add to this the rising trend of late payments and being owed money as a result of customers going into administration, it is clear that BiKBBI members, along with thousands of other SMEs, are forecasting turbulent trading conditions for the foreseeable future. Measures introduced in the Autumn budget could add even further burden to the hardworking businesses owners servicing a vital sector of the home improvements industry.’
Whilst the KBB sector has flourished over the last two years, as consumers invested in their living environments during and post Covid, the industry is starting to experience a slowdown which will undoubtably lead to uncertainty for many. The home improvement and construction industries are in the midst of a skills gap crisis, an enormous shortfall of professional operatives to deliver the critical front line component needed to meet housing upgrade and construction targets. A freeze in the VAT registration threshold means that many small businesses who experience increased turnover as a result of rising costs will be required to register for VAT. This could potentially deter investment and remove the incentive for small businesses to grow.
Alongside this, the justified rise in the National Living Wage, will ramp up the costs of employment without offsetting that against significant measures to reduce other business costs.
The decision to cut dividend taxation allowances will be yet another blow for hard-working owners of small limited businesses, particularly as it is likely these individuals will be the same group that were excluded from the government’s furlough scheme and any other support during the darkest days of the pandemic, and then more recently pushed out of the cut in National Insurance contributions..
There are a few saving graces; the retention of the Employment Allowance at its current level, which was hard fought for by the Federation of Small Businesses, and the continuation of the lower National Insurance rate for the self-employed and employees which government predicts will save SMEs around £4,200 per year on average
And positively, the Energy Bill Relief Scheme will remain in place until March 2023, helping businesses through a very tough winter ahead and there Is an expectation of further targeted support for the most vulnerable businesses.
Whilst it is impossible to predict the impact that the latest round of fiscal measures will have in real terms, BiKBBI remains committed to supporting our members, partners, sponsors, the wider industry and the consumers they serve, throughout these challenging times.
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