With the first Budget of the Boris Johnson government delivered, Commercial People gather the opinions of the property sector to see how they reacted.
In a Budget heavily dominated by the ongoing coronavirus pandemic, new Chancellor of the Exchequer Rishi Sunak revealed the governments spending plans to both tackle the virus and outlined what’s in store for the economy for the coming 12 months.
Below are the thoughts of a selection of property professionals and companies who wished to comment on their takeaways from the speech.
The award-winning Coventry-based commercial property specialist welcomed the governments’ decision to abolish business rates for small businesses, calling it a “welcome shot in the arm.”
Founding partner Tom Bromwich (pictured right) commented: “The Chancellor’s move to exempt small retail, leisure and hospitality businesses from paying business rates for one year to protect the economy from the impact of the coronavirus outbreak is a significant and welcome step,”
The Chancellor claimed that the measures announced would correspond to a £1 billion tax cut for business, and pledged an additional £3,000 cash grant for small firms who’re currently eligible for the small businesses rates relief.
Mr Bromwich adds: “We also welcome the announcement of a new review into the long-term future of business rates themselves, which should be completed by the Autumn.
“The commercial sector needs support now, and clarity moving forward, to make the sort of long-term financial decisions needed to ensure a flourishing economy.
“There is no doubt that the current system of business rates has stifled some activity in the
commercial property sector and this move should help unlock some of that potential over
the next 12 months.”
Cushman & Wakefield
Several regional divisions of the global real estate firm, Cushman & Wakefield, also gave us their impressions, we have curated a selection of them below:
Regarding Infrastructure, Simon Lloyd (pictured right), Partner and Head of Logistics & Industrial at Cushman & Wakefield in Birmingham comments:
“The announcement of further investment into alternative power sources for cars, such as EVs is welcome news for the Midlands manufacturing sector, and therefore the region should be a beneficiary of this policy.
Expenditure on roads is also positive, and it will help to speed up journey times as well as keeping vehicles moving, reducing pollution and reducing cost.
Whilst short term Covid-19 measures will help smaller businesses, and it is unlikely to cover the full cost.”
Also highlighting the infrastructure section of the 2020 Budget, Tim Davis (pictured left), Head of Cushman & Wakefield’s Bristol office commented on what it meant for the Bristol and South West: “With election promises and the Coronavirus dominating the agenda, the Budget promised a huge fiscal stimulus for the next five years. The highlights from an infrastructure perspective include a focus on roads, rail, affordable housing, digital connectivity and research and development.
“However, from a regional perspective, the priorities are still focused very much on Wales, Scotland, Northern Ireland and the Northern Powerhouse, giving the impression that the South West is doing ok so does not need special attention.
“The fact that the Chancellor keeps applying sticking plasters to the business rates system, this time in widespread reliefs to smaller businesses in the retail and leisure sectors, only serves to highlight the need for fundamental reform to reflect the rate of change in the market, which will only be the hastened by the public’s behaviour in response to the Corona Virus. It will only provide a short-term impact on town centres and will do little to address the causes of the decline of the High Street.”
The feeling of the Chancellors Budget only acting as a temporary, short-termism policy was echoed by Cushman & Wakefield Newcastle.
Giving his thoughts on the outcome, Richard Turner (pictured right), Partner and Head of Capital Markets at Cushman & Wakefield in Newcastle, asserts:
“Faced with manifesto commitments for levelling up and a certain short term shock to the economy the Chancellor has abandoned his party’s decade long austerity message in favour of a quasi-Keynesian expansion of public spending, particularly in investment.
“Infrastructure spending will create widespread opportunities for the property sector with transport, green agenda and affordable housing commitments particularly pertinent.”
Following on from our article earlier in the week, Shaun Dawson, Head of Insights at the commercial property consultancy, DeVono Cresa, exclusively gave Commercial People his thoughts on the Budget.
Commercial People: You previously mentioned that the current business rates system was “suffocating”, yet the government has refrained from adjusting business rates for larger businesses, what do you make of the rate abolishment for SME’s and what will the implications from larger corporates?
Shaun Dawson: The announcement that a ‘fundamental’ review of the business rates system is taking place, correctly, and will report back in the autumn is a good step forward and gives more certainty that the government is taking this seriously. We would expect large business groups and membership organisations to lobby the government hard on this issue. Rates and tax thresholds more generally are a key differentiator for occupiers when assessing their portfolios and real estate requirements. We would expect more changes to be announced towards the end of this year on this issue.
CP: Additionally, what impact do you think the rate abolishment will have on retailers?
SD: The government has given a rates holiday to those businesses that they perceive need it the most, the retail and leisure industry. Whilst this is a short-term fix, it will relieve these businesses of the pressure of paying and help support a section of the economy most under pressure.
CP: What things would you have liked to have seen in the budget?
SD: I was expecting more policies related to the green agenda, whilst a few were mentioned they were not as far-reaching as expected. More detail on how departments will support the government’s zero emissions target is expected in the Comprehensive Spending Review later in the year.
Impact on IT Businesses
Clickingmad, a Bridgnorth-based web design company, welcomed the Chancellor’s announcement of a £5bn investment in high-speed gigabit-capable broadband.
The company’s Managing Director, Shaun Carvill, commented: “It is absolutely vital that every area of our country has access to a strong, fast and robust broadband connection. The pace of change in the digital world means that no area can afford to be left behind when it comes to access to what is now an essential utility.
“This announcement is a welcome step towards ensuring that businesses in rural areas such as ours can compete with their urban counterparts on a level playing field and enjoy all the economic benefits that the digital revolution is bringing.”
Impact on Logistics & Industrial Businesses
Looking at the Budget from the eyes of Logistics and Industrial firms, Commercial People also canvased opinion from two Telford-based firms to see what they made of the plans.
Anton Gunter, Managing Director at Global Freight Services, welcomed the Chancellors commitment to provide extra support to boost exports.
Mr Gunter said: “The announcement of £5bn of new export loans to businesses is good news for all those companies developing new markets overseas.
“The appointment of regional trade envoys will also provide some much-needed support for our exporting companies and the overall package of measures to develop the infrastructure necessary to help business thrive is very welcome.”
Fabweld Steel Products’ Managing Director, Richard Hilton meanwhile added: “It’s great to see such a comprehensive package of support for SMEs in challenging times, including the extension of the employment allowance and small business rate relief.
“As a company which is always looking to innovate, we are pleased to see the increase in
research & development tax credit to 13% which will undoubtedly boost the manufacturing
“The overall injection of public spending in infrastructure, particularly in roads and rail will be good news for supply chain businesses too.”
Lambert Smith Hampton
Lambert Smith Hampton gave a measured response to the Budget results, highlighting the caveats of the governments’ Retail Discount scheme’ which was first announced in 2018 but has now been extended to include museums, art galleries, theatres, gyms, small hotels and nightclubs.
Responding to the announcement, Paul Nash (pictured right), Director of Business Rates, commented: “As usual, the devil is in the detail and, while the retail sector will no doubt welcome any relief in respect of business rates, it is not as far-reaching as it might first appear.
“Any relief is likely to be subject to EU state aid limits, which restricts the support available to any businesses to €200,000 (approximately £168,600) over a rolling three-year period. It also excludes the majority of national retailers that occupy properties with a Rateable Value over £51,000 and which are the ones who have been feeling a lot of the pain. Not only that, but they also bring in footfall for a lot of the smaller retailers, so it is incredibly short-sighted of the Chancellor to exclude them.
“Ratepayers should, therefore, wait to see the full extent of the relief, or lack thereof, in the post-Budget report before counting their chickens.”
Pave Aways Building
The Shropshire-headquartered, construction firm Pave Aways Building Contractors, along with other businesses across the Midlands broadly welcomed the Chancellor’s Budget, and in particular their plan for COVID-19.
Steven Owen, the Managing Director of the firm, highlighted the governments’ commitment to supporting SME’s for employees on sick leave, stating: “No-one knows just how wide-reaching this disease could be and, with businesses like ours where people work in close proximity to one another, it could have a serious effect on staffing and therefore a knock on to our company finances.
“The pledge to refund sick pay payments for two weeks for SMEs has given us peace of mind.”