The headline story in March was the Chancellor’s much-anticipated Spring Budget, with the announcement provoking a mixed response from members. A poll conducted on LinkedIn in the aftermath asked the question: Will announcements in the Spring Budget boost investment and growth? The results were stark: just 7% said ‘yes’, while two-thirds said ‘no’, with a further 26% of respondents somewhere in the middle. 

Risk-taking with public finances

Many of the announcements were mooted in the financial press in the days leading up to 6 March, with much dependent on the health of public finances. “Tax cuts feel like premature action and risk-taking with public finances to deliver election promises,” was the view of a member working in education in the North West.

A member in Wales commented: “Disappointing that there was nothing really for business with focus on the voter.” Another working in manufacturing in the East of England bemoaned the emphasis on short-term giveaways rather than long-term business growth.

Tax changes for the creative sector welcomed

One exception was the UK’s creative sector, with members of ICAEW’s Entertainment, Sport & Media Community welcoming a suite of tax relief changes to incentivise and support the sector. Overall, members welcomed the announcements as “fantastic news that will make a big difference to raising finance for independent film”. 

Time flies and it’s hard to believe the announcement on full capital expensing – allowing companies to claim 100% capital allowances on qualifying plant and machinery investments – was made a year ago as part of the Spring Budget 2023. 

However, a proposed extension to this policy announced in last month’s Budget left at least one member in Thames Valley underwhelmed: “The announcement on the extension of full expensing to leased assets doesn’t sound like a commitment. It says it will happen when fiscal conditions allow, with the government to publish draft legislation shortly.”

Tinkering with policy decisions

Budget omissions were also picked up on by members, and those working in the retail and hospitality sectors highlighted announcements on business rates and VAT relief as conspicuously absent. Having been hit particularly hard by the impact of cost-of-living pressures on depressed customer demand and rising input costs, members had hoped for more. The reintroduction of tax-free shopping was also highlighted as a big miss. 

‘Tinkering’ was a word used by several members to describe policy decisions. “The increase in the VAT threshold is unlikely to be significant and nothing compared to how high it would be if raised in line with inflation,” commented a member in the South West.

Indeed, the impact of rising inflation did not go unnoticed: “The benefit of the key personal tax announcements, including the national insurance cut and child benefit threshold increase, will be outweighed by frozen personal and higher-rate tax thresholds.”

Next government priorities

On a more positive note, we have been keen to gauge members’ wish lists on the priorities for the first Budget of the next government. The overarching call is for an environment of stability and certainty, a theme emerging strongly in the ICAEW Manifesto. This may be unlikely in a general election year but nevertheless the most widely cited ask by members.

The Manifesto was built on member insights, and hearing first-hand from ICAEW members across the UK has been invaluable in shaping our recommendations to the incoming government. ICAEW members guide three million UK businesses, practices and charities and help shape ICAEW’s thinking on key issues. 

Better, fairer and greener economy

Sustainability also presents a big longer-term opportunity for the UK. One practice member called for “a green vision and longer-term focus so we can build back a better, fairer and greener UK economy”. ICAEW’s vision is that ICAEW Chartered Accountants enable a world of sustainable economies. To read more about the role of the accountancy profession in tackling climate change and the transition to net zero, visit ICAEW’s Climate hub.

Members also called for more targeted tax incentives for business and simplification of the tax system. In the words of a practice member in London: “Tax simplification and targeted deregulation would free up businesses to grow, which would benefit the economy.”

With skills issues continuing to plague business, policies to close the skills gap are also on the priority list for members. Although labour pressures have started to ease in recent months, some sectors, including manufacturing, have struggled to attract people into the industry. Improved funding for apprenticeships might be one answer and remains a key ask from members working in the education and training sector. 

Uptick in confidence

With more positive news on inflation and increased anticipation of a cut in interest rates, sentiment appears to be turning more favourable. While the Spring Budget may have played a small part in this uptick in confidence, businesses continue to face an uncertain environment.

ICAEW’s Business Confidence Monitor Q1 2024, due to be published later this month, will offer more clues as to how businesses are feeling and assessing economic conditions. 

• For more Budget reaction and analysis from ICAEW, visit the Spring Budget 2024 hub.
• To share your insights and read previous Member Insights articles, go to the ICAEW Member Insights page.