With a 50% reduction in business rates and more money pledged to fund apprenticeships, business chiefs and the KBB industry have broadly welcomed the Chancellor’s Autumn Budget.
Chancellor Rishi Sunak delivered his Budget speech to the House of Commons yesterday, in which he promised to deliver a stronger economy for the UK to pave the way for higher wages, higher skills and rising productivity.
Sunak struck a positive note when he forecast that the economy would regain pre-pandemic levels of business by the end of the year with 6.5% growth for 2021, 6% in 2022 and 2.1% in 2023.
And there was good news for the retail sector on business rates. Although the promised fundamental reform of the system has been delayed, there were £7 billion in selective cuts to boost investment in the high street. The Chancellor announcement that for 2022/23 there would be a 50% reduction in business rates up to a maximum of £110,000 a year. The timing of revaluations will also be shortened to every three years. The planned business rates multiplier [used to calculate a property’s rateable value] has also been cancelled.
Commenting on the news, Richard Hibbert, national chair at KBB specialist retailers’ association the KBSA, said: “The Chancellor has finally listened and made changes to the business rates system. While the measures announced are only a short-term solution, they will bring a welcome bonus for our retail members.
“The 50% business rates discount for companies in retail, hospitality and leisure sectors, up to a maximum of £110,000, is welcome, as is the cancellation of next year’s planned increase in the business rates multiplier.”
The BRC, however, had reservations. Chief executive Helen Dickinson added: “While the Government’s 50% bridging relief for 2022/23 may prove to be beneficial for the smallest businesses, it will do little to support the businesses that pay two-thirds of retail business rates and employ 1.5 million people. With no reduction in the burden, this will lead to the unnecessary loss of shops and jobs and fails to incentivise investment in all parts of the country.”
With skills shortages still plaguing the KBB industry, the Chancellor’s pledge to increase investment in apprenticeships to £2.7bn by 2024/25 was welcome news. This is intended to give employers more choice over how apprenticeship training is delivered.
British Institute of KBB Installation chief executive Damian Walters said: “Vocational training has been undervalued for far too long, so the money pledged by the Chancellor today comes as good news. However, it will be money wasted unless it works to support trades that everybody relies on that are facing the prospect of huge skills gaps.
“Research we carried out earlier this year found that around a third of kitchen, bedroom and bathroom installers are planning to retire in the next decade, creating a shortfall in people with the skills to provide a service that all households rely on. Coupled with the record high demand, this would be disastrous for consumers and the industry alike.”
Hibbert at the KBSA added: “It remains to be seen whether any of the extra funding announced for skills and training, £3.8bn over the [course of this] parliament, will have an impact on the severe skills shortage that we are facing as an industry.”
This coincides with the launch of the BiKBBI’s new KBB fitted interiors apprenticeship programme.
The Chancellor also announced new investment and business rates relief for green technologies.
On the housing side, Sunak also revealed a £1.8bn investment to develop brownfield land for housing and a £3.8bn prison building programme.
Tom Reynolds, chief executive at the Bathroom Manufacturers Association (BMA) commented: “We welcome the Chancellor’s announcement of additional capital investment across transport, hospitals, prisons and housing. This will not only improve our infrastructure, but will provide some encouraging market opportunity for bathroom manufacturers.
“BMA was part of a coalition of trade bodies calling for reform of business rates ahead of the Budget. We therefore welcome the Chancellor’s introduction of a new green investment relief and business rates improvement relief. This will benefit not only manufacturers but also our key channel partners in retail and merchanting.
“However, bathroom manufacturers will be very disappointed the Chancellor missed the opportunity in the Comprehensive Spending Review to put substance behind the Heat in Buildings Strategy. Decarbonising our 27 million existing homes, including through upgrades to bathrooms, is vital if we are to meet our national climate targets.”
Giving his reactions to yesterday’s Budget, Bill Miller, managing director of the Kitchen and Bathroom Buying Group (KBBG) said: “My initial reaction to the Budget is positive. It is good to hear that the Government is forecasting that the economy will grow by 6.5% this year and 6% in 2022, so the current sales levels seen by our members over the past 18 months should continue well into next year. Wage growth will also put more money in people’s pockets, although some of this will be offset by rising inflation and living costs. I know that our members will welcome the reform of business rates and the 50% discount, although we need more details on this. The Budget will hopefully give greater confidence to consumers to continue to invest in their homes and drive sales of kitchens, bedrooms and bathrooms.”
Other key announcements in the Budget included:
• £1.4bn to encourage international companies into the UK;
• £11.5bn pledged for 180,000 new affordable homes;
• £5.7bn for transport infrastructure improvements;
• Fuel duty rise cancelled;
• Review of shipping tonnage tax to reward shipping carriers operating under a UK flag.