Welsh business groups and politicians have been reacting to Chancellor Kwasi Kwarteng’s mini Budget which he outlined in the House of Commons on Friday morning.
For a summary of all the key points from his statement, click here.
BusinessLive has rounded up views from leaders across Wales on the announcements made.
FSB Wales
Policy chairman for The Federation of Small Businesses in Wales, Ben Francis said: "The announcement today brings forward some much-needed clarity for the future for the small firms who have been strong facing competing headwinds. We are pleased to see the Government signalling its determination to back small firms.
"The growth plan announced today will go some way to ease the burden small businesses have been facing. We are pleased to see many of our calls heeded, including the decision to reverse the NICs hikes introduced in April. Reversing all four, employer, employee, self-employed and the dividend equivalent is the right decision, as is the scrap of the Corporation Tax increase. This will provide some crucial breathing space for firms.
"We’re also pleased to see that Government is working on incentives for international visitors and hope to see the VAT free shopping on highstreets for international visitors boost our local towns and tourism sectors.
"Among the announced measures, are the Investment Zones, where business taxes will be reduced, and planning rules eased. FSB Wales will be looking to UK and Welsh Government to engage early to identify the range of potential sites across Wales. Wales cannot afford to be left behind in the mission of boosting regional competitiveness. We look forward to working with Ministers in the Welsh Government alongside UK Government Ministers to help identify the measures that are needed to help our small businesses grow and thrive.
"Alongside the support announced on easing the now-significant energy burden for businesses earlier this week, today’s announcements will help provide some optimism for smaller businesses in Wales.
"The new Government has signalled its intention to focus on economic growth. While this is welcome, we need to continue to ensure that smaller businesses are supported and are ‘match fit’ to help fulfil that ambition."
Read more: Plans for over 100 energy efficient homes in North Wales unveiled
Welsh Retail Consortium
Sara Jones, head of the Welsh Retail Consortium, said: “The Chancellor’s statement acknowledged the challenges of sustained low economic growth; and saw a plethora of announcements aimed to kick start a revival. Welsh Retailers will welcome measures to protect consumers and businesses from the enormous energy price rises; without action there is little doubt the economy was facing difficult times. Similarly, with retail being the largest private sector employer the industry will welcome the reversal of the decision to increase national insurance contributions which will help consumers and lower their own costs.
“However, many of the announcements today will only have a limited impact on Welsh consumers and businesses. With the UK Government accelerating its planned reduction in the headline rate of income tax, bringing it forward to next April, Welsh Ministers should ensure workers on low or modest earnings here in Wales benefit similarly to boost household incomes and encourage discretionary spending.
“Furthermore, today’s announcement provided no insight on what decisions might be made on business rates. With the Welsh multiplier already at a record high and with inflation elevated the biggest question for many retailers will be how large next year’s bill might be – and whether they will be able to afford it. We are urging the Welsh Finance Minister to use her budget this autumn to freeze the business rate in order to give confidence to retailers during these turbulent times”.
Chambers Wales, South East, South West and Mid
Executive chair of Chambers Wales Paul Slevin said the budget was a "lifeline to struggling businesses".
He said: "We are pleased to see a number of measures announced in today’s mini budget that will no doubt provide a lifeline to struggling businesses across Wales and the rest of the UK.
“We’re particularly pleased to see the planned 1.25% rise in National Insurance reversed. This change will not only benefits workers who are set to see an increase in their take home pay but is vital for businesses who will now save on average almost £10,000. This saving cannot be underestimated in improving businesses’ ability and confidence to invest and grow.
“The repealing of the IR35 reform that we saw introduced in early 2021 is helpful for both businesses and contractors. While there is likely to be legislation remaining, its simplification will go some way towards bringing the economically inactive back to work and needs to be reversed as soon as possible.
“Welsh businesses will also be pleased to see that the scheduled increase in the main rate of corporation tax is being reversed and will remain at 19%. The original planned increase would have no doubt been a great source of worry for many, who are already facing rising costs across the board.
“The cost of living and cost of doing business crises are intrinsically linked, and so people will be reassured to see the basic rate of personal income tax reduced. Hopefully these changes will free up some much needed income for workers and provide a boost to the Welsh and UK economies.
“We also look forward to finding out more about the Government’s plans for 40 new investment zones in England and what this means for devolved nations. There is a growing concern that those including Wales are in danger of being left behind when investment announcements are made in Westminster, similar to what we have seen in freeport discussions.
“Whilst we do have concerns around this week’s rise in interest rates, in recent days we have also seen help announced for businesses struggling with rising energy costs. The stimulus packages will help the UK grow its way out of a recession, if it does not cause contention with attempts to subdue inflationary pressure, especially in supply chain and energy.
“It is our hope that the measures announced this week, will give businesses confidence in the future.”
Association of Chartered Certified Accountants (ACCA) Cymru
Lloyd Powell, head of ACCA Cymru Wales said the fiscal announcement was "cautiously welcomed" by the organisation.
He said: "While this package will help in the short term we need to see more action by the government to alleviate the increasing financial pressures on businesses in the medium and longer term. For our economy to return to growth, small businesses, in particular, will need more support to invest, innovate, develop their workforce, and expand international trade, than was promised today.
On the simplification of the tax system for businesses Mr Powell said: "IR35 has desperately needed to be reviewed. The tax system as it stands is overly complex and burdensome for businesses, individuals and public bodies. The reform in April 2021 to IR35 left many businesses without the support they desperately needed due to confusion surrounding the rules and regulations.
“Now more than ever, simplicity is key. A simpler tax system avoids the potential for mistakes and enquiries, which too often distracts HMRC from addressing serious and deliberate evasion.
“However the dissolution of the Office of Tax Simplification is worrying and will impact UK businesses. The OTS previously worked with holding agencies and provided guidance on previous tax reforms and regulations. Without the OTS and with further details needed on how the government will simplify tax many UK SMEs will still be facing a complicated and unclear tax system.”
He added that the government's decision to keep corporation tax at 19% would encourage businesses to invest.
"With the main rate of Corporation tax previously set to increase to 25% next April many businesses were becoming more nervous already feeling the strain of a rise in inflation, cost of living and energy prices, putting unnecessary pressure on businesses. Now more than ever businesses are looking at the ease of doing business and where investment opportunities lie."
However, he said the mini Budget failed to mention a reduced VAT rate for businesses.
"VAT cuts would have provided businesses, and in particular the hospitality sector, a fighting chance at moving towards post-pandemic recovery. As we saw during the pandemic, targeting lower rates of VAT at businesses helped to give them a boost after the various lockdowns. Now with rising inflation, consumers are cutting back on discretionary spending. In order to keep the economy moving, we need action to support consumers and businesses."
Brewin Dolphin
Geraint Hampson-Jones, senior investment manager at wealth manager Brewin Dolphin’s Cardiff office, said: “The new UK government had been very outspoken on its very ambitious growth target of an average of 2.5% over the medium term. The most common root to increasing growth comes from boosting demand and drawing people into employment but with unemployment historically low that will be difficult. That’s the reason the Bank of England are raising interest rates, to slow demand down and avoid stoking inflation.”
“With a lot of the measures in this budget boosting demand the risk is that interest rates will have to rise further to offset them. The chancellor seems to be pushing the accelerator while the MPC is pushing the brakes.”
“The energy bill cap, reversing the NI increase, bringing forward the income tax cut, and abolishing additional rate tax are all policies that will boost demand.”
“The growth target depends much more on the UK’s ability to boost the economy’s potential capacity. That is what they will hope to achieve through changes to universal credit in order to try and reduce labour inactivity. Other supply side measures include cancelling the planned increase in corporation tax, low tax investment zones and greasing the approval process for infrastructure investment. These kinds of policies have potential but will prompt resistance making them difficult to implement.”
“The net result of the chancellor’s statement was that the government bond yield rose sharply. Borrowing costs are rising in anticipation of both higher interest rates and a deluge of new bond issuance that will be required to fund the new debt burden.”
“With many of the details pre-released, the biggest surprise was that so little was done to raise new funds or cut other spending to pay for the headline measures. Despite the prospect of higher interest rates the pound eventually fell reflecting investors’ concerns about the deteriorating public finances and skepticism that the increase in debt will translate into higher growth.”
Welsh Government
Wales' Finance Minister said plans unveiled by the Chancellor to drive economic growth will instead "embed unfairness" across the country.
Rebecca Evans MS said the UK Government was “prioritising funding for tax cuts for the rich” instead of helping struggling households.
“Today’s announcements show the UK Government is heading in a deeply worrying direction, with misplaced priorities leading to a regressive statement that will embed unfairness across the United Kingdom,” Ms Evans said.
“Instead of delivering meaningful, targeted support to those who need help the most, the Chancellor is prioritising funding for tax cuts for the rich, unlimited bonuses for bankers, and protecting the profits of big energy companies.
She added: “We could have seen a bold programme of investment in new green energy, tackling rising bills and improving our energy security in the long term to help stop this kind of crisis happening again.
“We were promised a statement that would ensure immediate support would be delivered, but this falls well short of what was needed.”
As a result of the income tax reduction and cuts to stamp duty, the Treasury said the Welsh Government will receive around £70 million of extra funding over the three years covered by the 2021 Spending Review. The Scottish Government is to receive more than £600 million extra funding over the same period.
Jo Stevens, Shadow Secretary of State for Wales, said the UK Government’s economic plan would fail and amounted to “casino economics”.
Ms Stevens said: “This is their seventh growth plan in 12 years, the previous six have failed, this one will fail as well; what they are proposing will not work. We are sick of trickle-down economics, it does not work.
“Everybody contributes to the wealth of this country, everybody should be able to share in the return on it, but that’s not what’s happened today. This is about making people who are very wealthy even more wealthy.
“This whole thing is just casino economics, it’s irresponsible and it’s reckless.”
She added: “Some people will see lower taxes, but it’s clear from the reaction of the markets today that they are not convinced by the Chancellor’s plan.”
Welsh Conservatives
The Welsh Conservatives welcomed the plan, describing it as "bold".
Leader Andrew RT Davies said: "You can’t tax your way to prosperity. What we’ve seen from the Chancellor and Prime Minister is a bold plan to grow our economy, boost jobs and increase wages.
"It’s absolutely right that our country should have the competitive edge for businesses to lay down roots and create jobs for British workers.
"And, when people are struggling with the cost of living, it’s fundamental that they can keep more of their own money.
"These announcements, along with the support for households and non-domestic customers with energy bills, show that this Conservative Government is here to deliver, with pace, for everybody in the UK.
"As areas of England bid to become enterprise zones, and as stamp duty is slashed, they enter the fast lane on the economic motorway. But thanks to Labour, in those areas, Wales is parked on the hard shoulder.
"So it’s fundamentally important that the Labour Government get onboard with enterprise zones and stamp duty cuts, and get Wales into the fast lane too."
The Welsh Tories also called for a land transaction tax cut in Wales.
Shadow Minister for Finance, Peter Fox MS, said: “Thanks to the UK Conservative Government, house buyers in England have just received a massive boost through cuts to stamp duty. This is just another example of the UK Conservative Government improving the prospects of hard-working families.
“Labour ministers need to take the same approach by scrapping land transaction tax for first time buyers here in Wales and properties up to £250,000.
“Only through tax cuts, not tax rises, can Labour provide a much-needed boost to the Welsh economy.”
Welsh Liberal Democrats
Leader Jane Dodds MS said the budget amounted to “gross negligence”.
"The Conservatives are intent on a budget that robs the poor to pay for the mega rich. Someone on £200,000 a year will benefit by an extra £3,000 a year meanwhile those on the breadline will continue to struggle. It is almost criminal and completely detached from reality.”
Plaid Cymru
Plaid Cymru’s Treasury spokesperson Ben Lake said the statement from the Chancellor was about "supporting those on the highest incomes".
He said: "Households and businesses across Wales are facing a grim winter of unaffordable bills and soaring inflation, and the Government’s response is to engage in fantasy, trickle-down economics to please the super-rich.
“As rural households are offered the paltry sum of £100 to cover their energy bills, the top rate of income tax is being abolished and the limit on bankers’ bonuses is being scrapped. That is not just morally questionable, it is economically irresponsible.
“The cap on bankers’ bonuses was introduced in the aftermath of the global financial crisis. Scrapping the cap on bonuses risks a return to the risk taking that led to the 2008 financial crisis in first place, and a repeat of policies that led to misery for millions of people.
“Tax cuts for the super-rich will do absolutely nothing to drive growth in the Welsh economy. I urge Westminster to give Welsh Government the fiscal tools to unlock our economic potential ourselves. That’s the only way to improve the lives of people of Wales.”
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