KBB industry leaders react to Spring Statement

With disposable incomes falling and costs rising, what will the measures announced in the Chancellor’s Spring Statement mean for KBB retailers?

Yesterday [March 23] Chancellor Rishi Sunak stood up before the House of Commons to deliver his Spring Statement. Kbbreview asked leading industry figures for their take on the measures he outlined.

BiKBBI chief executive Damian Walters sees the Chancellor’s statement that disposable income will fall by 2.2% could affect the home improvement boom. He said: “The news that VAT on home energy-saving initiatives is also a good thing for our sector, although an announcement by the Office for Budget Responsibility suggesting that real household disposable income is to fall 2.2% per person in the next 12 months, the largest financial-year fall since comparable records began in the 1950s, could be significant for the home improvement sector.”

The fact that VAT will be removed on energy-efficiency home improvements was good news for BMA CEO Tom Reynolds, as it has been something that the BMA has been campaigning for over many years. Reynolds said: “The BMA, along with partner organisations like the Federation of Master Builders (FMB), has been calling for VAT removal on home energy-efficiency improvements. So, it’s great to see the Chancellor finally make this move. Retrofit is an important way to tackle the UK’s reliance on imported energy, including Russian gas, and bathroom manufacturers are keen to play their role in home refurbishment.”

Responding to the rest of the Spring Statement, Reynolds said: “Following the confirmation that inflation is at its highest level for three decades, this is a concerning time for the whole economy. Bathroom manufacturers perform well after a strong recovery after the pandemic, but we do not operate in an economic vacuum.”

He added: “While welcome, the tax cuts delivered through the NI threshold increase in July and through a penny cut in income tax by the end of the Parliament, will not help the cost-of-living crisis now. The NI hike next month will dent consumer spending power and increase company wage bills immediately.”

Cuts to fuel duty were met with a resounding sigh of relief, as these changes may help ease the spiralling costs of fuel. Walters said: “With economic uncertainty remaining unusually high as a result of the ongoing Covid recovery, and Russia’s invasion of Ukraine pushing up costs, it is encouraging to see measures being adopted to help with the cost of living. There is no doubt that the reduction in fuel duty will be gratefully received by our members, most of whom are SMEs and rely on their vehicles to work. That’s assuming that savings will be seen at the pumps and not absorbed by the retailer, as some sources are suggesting.”

Reynolds at the BMA also welcomed this change and said: “The industry will welcome the cut to fuel duty announced by Rishi Sunak today. This will help companies manage the spiralling costs of logistics and fleet management and will help consumers with motoring costs.”

Sunak also announced in his statement that a review of the apprenticeship levy will be part of the new Treasury tax plan, which will be finalised in the autumn.

Helen Dickinson, chief executive of the British Retail Consortium, commented on this review: “Last week, we wrote to the Government to call for reform to the Apprenticeship Levy. By improving the flexibility of the way Apprenticeship Levy funds are spent, the Government could help create thousands of new retail apprenticeships. We are heartened to hear that the Chancellor has heard our concerns and is set to examine whether the Levy could be improved to allow businesses to invest in the right training. We urge him to introduce measures that allow high-quality short courses in functional skills, allow Levy funds to cover associated training costs, and allow a wider range of courses to be supported.”

Jamie Jeffries, CEO of Access Training UK, believes that this review might encourage more young people to take up vocational training. He said: “We welcome the news that the Government will be reviewing the Apprenticeship Levy. We desperately need to encourage more people to take a vocational route into training, and this starts by making sure training schemes are properly funded. The skills shortage has been a disaster brewing for decades. It’s estimated that the UK needs to recruit 217,000 new workers by 2025 in construction alone, just to keep up with current demand.”

He added: “Just 18% of young people hold a vocational qualification. If we are to encourage more people into vocational training, we need to ensure that the Apprenticeship Levy remains focused on the training and development of those looking to enter work and does not become a tool to offer businesses wage subsidies.”

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