Budget 2021: accountants want job creation and export support
15 February 2021: Ahead of Budget 2021, three-quarters of chartered accountants have said they do not want to see major changes, according to new research from ICAEW. Instead, members have called for more focus on creating jobs and supporting trade relationships.
A survey of ICAEW members found that three-quarters of respondents did not want to see any major corporate or personal tax changes. Instead, just over half said the government should extend the existing business support schemes to act as a bridge to the summer and beyond.
“Chartered accountants want to see the Chancellor use this Budget to lay the foundations for the UK’s economic recovery”, said Iain Wright, ICAEW’s Director for Business & Industrial Strategy.
“They recognise that public finances will need to be repaired. However, 2021 is not the right time for major changes to taxes: business is coping with COVID-19 and changes to our international trading relationships – it just can’t afford further disruption at such a precarious time in the economy.”
One-third of survey respondents said extra taxation to repair the public finances should not come in until next year, while a quarter said it should not be until 2023.
Wright added: “We want to see the Budget focus on providing that bridge to sustainable and resilient economic recovery, getting people back into work, help for exporters, and greater investment in digital technology to make our businesses competitive in the 21st economy.”
The message from chartered accountants is that the Budget should focus on job creation, help SMEs who export and drive the rollout of digital infrastructure to help the economy recover in 2021 and beyond.
This should include measures on employment and training to create new jobs and help those who need to re-skill. A third of ICAEW members said the Budget should also boost training in soft skills for workers who have lost their jobs.
The government has already moved to axe the 30-job minimum requirement for the Kickstart Scheme - enabling SMEs to apply directly - an initiative that provides funding grants to create new job placements for 16 to 24-year-olds on Universal Credit.
31% of members said there should be help for exporters to understand post-Brexit customs controls, particularly for smaller businesses that may not have the cash to pay for advice and for whom it may cost proportionately more to obey the new rules. This could include greater support to highlight the options available through facilities such as customs warehousing.
This week the government announced grants of up to £2,000 to help small and medium-sized businesses new to importing or exporting.
Fibre optic infrastructure
Finally, 44% of ICAEW members surveyed said the Budget should prioritise the roll-out of high-speed fibre optic infrastructure across the entire UK to support remote working, reduce gaps in internet coverage and boost a business recovery powered by adoption of new technology.
Businesses still in distress
ICAEW’s members also said that many of the businesses they work with or for are still in distress as a result of the pandemic. They also added that, assuming lockdown eased from March 2021, there were many businesses which were not confident they would have enough cash to survive for more than six months.
Recent research from business insurance firm Simple Business found the pandemic could see two-fifths of UK small and medium-sized businesses close permanently and could cost the UK SME sector as a whole more than £69bn.
Many businesses given local authority grants or government-backed loans thought that they would still need to borrow more in the future, highlighting that even when lockdown restrictions ease many businesses will need much more time to rebuild their business.
ICAEW’s survey of its members ran from 28 January to 2 February 2021. Nearly 300 responses were received in total.
ICAEW’s Tax Faculty has written its pre-Budget letter to Financial Secretary to the Treasury Jesse Norman, highlighting areas for consideration around tax policy, while ICAEW will shortly be writing to the Chancellor to ask him to consider the views of its members as he finalises the Budget, which is set to take place on Wednesday 3 March.
To stay up to date with the latest Budget coverage, please visit ICAEW’s Budget 2021 page.