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What does the Spring Statement mean for Liverpool’s business community?

For businesses across the country, including Liverpool, what the Chancellor of the Exchequer has to say is of vital importance. The initiatives, changes to funding and taxation he announces always change the business landscape. So, we thought it would be interesting to take a look at Philip Hammond´s Spring Statement from the viewpoint of businesses based in Liverpool.

The economy is growing faster than expected

Naturally, businesses welcomed the Chancellor´s announcement that the UK economy is growing at a faster rate than was anticipated. Growth at a national level is set to be 0.1% higher than was forecast.

This is good news for all businesses from across the UK, but particularly for Liverpool-based firms. Economic growth in the city has been strong and should continue to be so.

Over the past few years, around £4.5bn has been invested in projects like the L2 Superport, Project Jennifer, Liverpool ONE Shopping Centre and Liverpool Waters. These investments have made the city a very attractive place to visit, live and work. As a result, Liverpool is now the second fastest growing economy in the UK, beaten only by London. Maintaining this level of growth requires the UK´s economy as a whole to be as strong as possible.

No big changes to tax legislation

The fact that the Chancellor decided to leave the tax regime pretty much as it was is also good news for businesses. Liverpool accountants and their clients will not have to spend many hours changing the way they work. This frees up more time for companies to continue to focus on the core functions of promoting their businesses and serving their customers.

It also helps to have a stable set of overheads to work with. Forward planning is always easier when the tax regime remains as it was. Naturally, companies will still need to adapt to the Digital Tax regime as well as to the previously announced General Data Protection Regulation (GDPR), but it is good news not to have another raft of adjustments to cope with on top of these two radical changes.

More scrutiny of proposed business taxation changes

More positive news is that Chancellor has announced that there will be more time for the business community to scrutinize proposed changes to the tax system. Under the new regime, changes that are announced in the Autumn Budget will be consulted on until the spring. Draft legislation will be published in the summer, with the bill being introduced in the winter. Royal Assent should be received the following spring.

This should give Liverpool firms more time to think ahead and make the necessary adjustments to how they work. In addition, it will be far easier for companies to incorporate these changes into their long-term financial planning.

Reduction in corporation tax

The fact that corporation tax rates will fall from 19% to 17% for the Financial Year beginning 1 April 2020 is also a welcome change. It frees up a significant pot of money that firms in Liverpool and the rest of the country can use to reinvest in their businesses.

More regular business rate evaluation

One bill that catches a lot of company owners out is their business rates. The fact that they are only reviewed every five years, sometimes longer, means that increases in this bill are often steep. Suddenly, a firm can find itself having to find new business premises, at short notice, because they cannot pay the higher rates and remain profitable. The 2022 review will be brought forward to 2021. From then, rates will be reviewed every three years.

The Chancellor takes late payers to task

For decades, UK SMEs have struggled with the issue of late payments. Many smaller firms have had to cope with not being paid for several months at a time. In fact, recent research that was carried out by The Federation of Small Businesses (FSB) showed that 84% or small businesses suffer from this issue. This has made being able to maintain cash flow to be able to stay in business extremely difficult.

In his Spring Statement, the Chancellor vowed to crack down on the practice of late payment. Given the fact that a significant percentage of Liverpool´s businesses are made up of SMEs and startups, this culture shift could prove very important for the city. It will make it far easier for the city´s firms to prosper and grow.

More money for apprenticeships

Many firms in the city employ or want to take on apprentices, so Hammond´s announcement of an additional £80m to be used for training these valuable employees should bring many benefits. Improving the quality of the apprenticeship training and making it easier for SMEs to take them on are both welcome changes. Construction companies in the city will also be able to apply for their share of the £29m construction fund, which they can also use for training.

Digital connectivity investment

In January 2018, the Liverpool City Region Combined Authority announced an initiative to make the city the most digitally connected in the UK. Here, good digital connectivity is seen as a priority.

The Chancellor announced that there would be £190m in funding made available to bring full-fiber to local areas. Whether the city will qualify for some of this funding is not yet clear, but if it does, delivering a high level of digital connectivity to the entire city will be far easier to achieve.

Investment in housing

In 2017, an investment programme of £44bn over five years was announced. During his Spring Statement, the Chancellor announced that 44 areas were working with the government on projects related to this initiative.

The relatively easy availability of a skilled workforce is one reason Liverpool has such a strong local economy. Key to being able to attract the right employees is good housing. In comparison to other parts of the country, Liverpool has a better level of good-quality housing stock. However, as the city´s population grows, stocks will dwindle, so it is particularly important that new housing is built in and around the city.

In Liverpool, small developers play a role in delivering new housing for the city, so the £220m being earmarked for the Housing Growth Partnership bodes well. This fund is there specifically to support the small developers that are at work in Liverpool and other parts of the UK.

Thinking ahead

Wisely, many business owners are sitting down with their Liverpool-based accountancy team and working out how to get the most out of these changes. Those that take this approach are the ones that will grow the fastest and contribute even more to Liverpool´s economy.

Posted by Peter
March 26, 2018
Economy

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