Chris Cowcher, Plunkett’s Head of Policy & Communications, considers the impact of Spring Budget Statement for community-owned businesses
The backdrop facing Rishi Sunak’s and his Spring Statement; delivered in the House of Commons yesterday afternoon, could not have been made more clear than by the announcement that UK inflation had hit 6.2% even before he had stepped up to the dispatch box. The cost of living crisis facing the nation right now, coming off the back of two years of restrictions and rules related to navigating the coronavirus pandemic too is putting undue pressure on the pockets of everyone – individuals and businesses.
The headline 5p cut to fuel duty will have been welcomed by some but for many, simply does not go far enough. Neither does it make up for the dramatic cost rises at the pumps that have been seen in the months leading up to this point. Granted the cost of oil has been dramatically impacted by the illegal Russian invasion of Ukraine, but that is of little comfort to those who rely on transport to access key services, employment, education and health care. In reality, this is the challenge facing many living in rural areas, where public transport provision, or other options away from private transport are limited. For community businesses that use vehicles to collect stock, or to deliver goods to customers the cost of fuel is another burden that they now must build in to their operations.
There was an apparent missed opportunity yesterday to directly respond to the fuel-poverty crisis that is engulfing the UK. Sadly the End Fuel Poverty Coalition predicts that 1 in 4 households will wake up in fuel poverty on 1 April 2022. Furthermore rural residents and businesses have some of the hardest to heart properties and about a million rely on heating oil that is risen in cost three times over since this time last year. Whilst Mr Sunak was positively able to announce incentives for green technologies, at this current time the cost of many technologies is prohibitive for many businesses and residents to even contemplate exploring.
It is shocking to think that the stark news of the highest inflation rate in nearly 30 years has not yet fully accounted for the war in Ukraine. The financial crisis we are currently enduring is therefore clearly here to stay for the foreseeable future. For community-owned businesses, operating on a predominantly no (low) profit making basis, with a primary purpose of social impact the challenge of keeping their prices affordable and continuing to delivery their services are now a very real challenge. Plunkett Foundation remains available to support community businesses at this time, whether that is implementing short-term measures or seeking to revise their operating model. Please do get in touch via support@plunkett.co.uk to share your needs and we will see how best we can help.
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A more positive policy included in yesterday’s announcements was an increase to threshold for National Insurance contributions. A move that will benefit those earning less than £35k this year, however there wasn’t a great deal of further support for those smaller businesses that employ people. Beyond the 50% business rates relief, that had already been announced in the Comprehensive Spending Review last autumn there wasn’t much more for community businesses to “go at”. In the short term, Plunkett supports calls from the wider hospitality sector to continue the discounted VAT rates, set up in response to Covid to support pubs attempting to rebuild their sector after two years of decimated trade. Longer term we support calls for a complete overhaul of the business rates system and would like to see a universal discounted rate made available for community and social purpose businesses, in line with what is afforded to charities. We have had two years of necessary short-term interventions to support businesses, this is now an opportunity to start planning for the future.
In terms of looking ahead the final “big ticket” item included in the spring statement was the drop in the rate of income tax from 20% to 19%. However, this announcement was perhaps more interesting for the fact it will come in to force in April 2024, a move that may suggest it will be a campaigning pledge during the next General Election. Therefore as part of our commitment to represent our members, we will be looking to use the next 12-18 months to make sure that the role of rural community businesses are clearly in the minds of our politicians heading in to any election period. If you are interested in our policy and research, or would like to contribute to our work please feel free to get in touch with Georgina Edwards via georgina.edwards@plunkett.co.uk.
The reality right now is that there are so many combining external factors, beyond our control that are putting so much pressure on all our finances. Therefore it is a credit to the community business network that they continue to serve their customers and keep doing what they do, despite the challenges they face. We never fail to be amazed by what this committed network of businesses achieve and therefore I am happy to end on a lighter note, sharing the news that the network is yet to grow further still. Today the Department for Levelling Up, Housing and Communities announced their latest recipients of the Community Ownership Fund. Included in the list are 3 community-owned pubs and one shop, all of which I am delighted to say Plunkett has worked with at some point in their journey. We are so pleased for each of their successes and will continue to champion the needs of our sector in respect of future rounds of the Community Ownership Fund.
Please do keep in touch, we will do all we can to represent the interests of our members and the wider community business sector.
If you want to share your thoughts on yesterday’s Spring Statement, or your own experiences of how the policy changes are affecting your business please contact Chris Cowcher, Head of Policy (chris.cowcher@plunkett.co.uk)
