What Jeremy Hunt’s Spring Budget means for procurement

Business leaders have expressed concern after Jeremy Hunt unveiled his first Budget since becoming Chancellor of the Exchequer.

A defiant Hunt claimed to be ‘proving the doubters wrong’ after the country narrowly avoided going into recession. He promised to boost business investment and encourage people back into work - but senior figures are concerned small firms risk being ‘left behind’ in the face of sky-high energy costs and labour shortages.

Martin McTague, national chair of the Federation of Small Businesses, claimed many firms will feel ‘short-changed’. Meanwhile, Shevaun Haviland, director general of the British Chambers of Commerce believes ‘the jury is out’ on Hunt’s Budget.

Here, we take a look at how procurement might be affected and what those in the know have been saying about the Spring Budget.

Energy bills

Hunt revealed the government would continue its support for households by limiting typical bills to £2,500 as part of the Spring Budget. But he made no such promise for business with the Energy Bill Relief Scheme due to end on March 31.

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McTague said: “We’ve got a budget that on energy helps households but not small firms. On business taxes, it spends £27billion extra on big businesses, arguing that small businesses are already catered for. This will lead to a feeling of being left behind instead of being considered equal partners in economic recovery – trickle down economics here simply does not work."

"The chancellor set high expectations for supporting small firms during these challenging times, but today’s budget falls short. The lack of new support in key areas shows that small businesses are being overlooked and undervalued. With billions of pounds being allocated to big businesses and households, small businesses and their 16 million employees will be wondering why they have been left out.”

Fuel duty and logistics

The 5p cut to fuel duty on petrol and diesel which was due to end in April will be kept for another 12 months. While inflation remains high, Hunt vowed to keep the policy that was introduced in last year’s Spring Budget by Rishi Sunak.

Paul Hollick, chair at the Association of Fleet Professionals, welcomed the move but has reservations about the Budget as a whole. He said “there was little content that showed the government has been thinking about business road transport”.

However, Hollick added: “The one bright point for fleets was the freeze in fuel duty. An increase in 11p per litre would’ve been extremely unwelcome at a point in time when the economy is struggling and removing that possibility is very much welcome.”

David Wells, chief executive of Logistics UK, is also worried about energy costs. He said: “This is a missed opportunity. Our members will also be concerned about proposals for a reformed HGV road user levy and together we will be seeking urgent clarification as to the detail involved.”

Labour shortages

Helping people back into work is one way the UK government is looking to address labour shortages. Measures include sector-based bootcamps, free childcare for working parents and tougher requirements for people on health-related benefits.

Hunt is also specifically targeting people over 50 and those who have left their jobs by offering incentives to return to the workforce.

McTague said: “Proposals to help people with health conditions are ill-designed and won’t help people get back to work, and we fear the work capability assessment changes won’t happen for years. The chancellor has failed to take any action to make it easier for small firms to recruit people locked out of the labour market.

“Those with health conditions and disability have been let down by a government that does nothing to work with small employers and is continuing with its failing Jobcentre-focused approach. Small measures on subsidising occupational health are welcome but not the big bang needed.

“Measures on the over 50s are token efforts at best, though we are pleased the government is committing to the skills bootcamp model.”

Tax

With corporation tax set to increase to 25% from April, the government is introducing a full capital expensing programme for the next three years.

It will allow companies to write off the cost of qualifying investments in plants and machinery.

Haviland said: “The plans for full capital expensing are also a step in the right direction to offset the rise in corporation tax, but the jury is out on how it will impact businesses compared to the Super Deduction scheme.”

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