Budget 2018: Businesses deliver mixed response to Philip Hammond's announcements

Small retailers to see rates cut by a third while tech giants face new tax on UK revenues

Ben Chapman@b_c_chapman
Monday 29 October 2018 20:35
Measures designed to halt decline in Britain's high streets may not be enough say businesses
Measures designed to halt decline in Britain's high streets may not be enough say businesses

Philip Hammond unveiled what he claimed was a business-friendly budget on Monday with a rates cut for small retailers, as well as a freeze on duty for beer, cider and spirits.

Business rates will be cut by a third for around half a million smaller high street shops, while large tech firms will face a new digital services tax of 2 per cent on UK sales, the chancellor announced.

But business groups said the changes would not be sufficient to stem the decline of British high streets.

Small retailers with a property rental value of up to £51,000 are set to save thousands of pounds under the changes, designed to help businesses struggling against shifting consumer habits as well as competition from online rivals.

Local areas will have access to a £650m fund to help them adapt for the future by, for example, investing in transport access.

The digital services tax on “global tech giants” such as Amazon, Google and Facebook is forecast to raise over £400m when it comes into effect in 2020.

It will bring the UK ahead of the majority of advanced economies on the issue, a move the chancellor said was necessary because of “painfully slow” progress towards an international agreement.

Businesses will also be relieved from paying business rates on toilets made available for public use, a change that apparently secure a spot in Monday’s speech so that the chancellor could make a series of puns about urination.

It was, he claimed, “virtually the only announcement in this budget that hasn’t leaked”. The policy was explained “for the convenience of the house”, but Mr Hammond said he didn’t want to get “bogged down” in the detail.

Reducing business rates will give independent shops some much-needed breathing space and allow them to invest in their staff and stores said Jo Causon, chief executive of The Institute of Customer Service.

“However, more still needs to be done to help the high street continue to be a place where communities come together," she added.

“In an increasingly fragmented world, it is critical that consumers have choice and for many, it means their brand of choice needs a high street presence.”

Pub landlords welcomed a freeze in alcohol duty which amounts to a saving of 2p on a pint of beer, 1p on a pint of cider and a 30p on a bottle of scotch or gin.

“This early Christmas present will save brewers, pubs and pub-goers £110m and secure upwards of 3,000 jobs that would have been lost had beer duty gone up,” Brigid Simmonds, chief executive of the British Beer & Pub Association, said.

Tax on wine will rise in line with inflation from February which will increase the price of a bottle by 7p on still wines and by an extra 9p on sparkling and fortified wine, the industry’s trade body estimated.

The Wine and Spirits Trade Association (WSTA) described the decision as “grossly unfair, unjustified and counter-productive”.

Chief executive Miles Beale said wine has been the most lucrative alcoholic drink for the Treasury since it overtook beer in 2012.

“The UK is the world's biggest wine trading nation and, as such, deserves the Government's support, not punishment,” he said.

He added: “By increasing the UK's already excessive duty rates the Chancellor will clobber wine importing businesses - including thousands of small and medium enterprises - stifle growth of our flourishing English wine industry and raise prices for consumers.”

Super-strength low cost “white cider” was also excluded from the duty freeze but will instead by the subject of a new rate of tax from October next year.

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