Raj Kandola, head of policy and strategic relationships at Greater Birmingham Chambers of Commerce, said: “There was much to admire in this afternoon’s statement as the Chancellor put forward sensible options to tackle our inherent labour market shortages and turbo charge business investment in a bid to raise stagnant productivity levels.
“Support for working parents around childcare costs and pension reform will hopefully bring more people back to the labour market and ensure we retain experienced staff.
“A move towards to full expensing around capex investment was also very welcome. However, for the measure to be truly effective, it’s a policy that needs to be implemented permanently in order to enable long term investment.
“The introduction of a new investment zone in the West Midlands also feels much more strategic and aligned to our regional strengths in education as opposed to the previous iteration - the challenge remains to ensure that jobs and investment aren’t simply being diverted from other parts of the region.
“Although heavily trailed, greater devolution of powers to the WMCA is also a step in the right direction – for levelling up to truly succeed, decision making powers need to rest with those who truly understand the economic contours of the region.
“Nevertheless, businesses will be disappointed that the Chancellor didn’t go further in a bid to tackle ingrained cost pressures – ignoring the pressing need to reform business rates or a willingness to commit to more generous energy support if wholesale gas prices go up seems like a missed opportunity.”
Neil Rami, CEO at the West Midlands Growth Company, said: "The Budget announcement of a new Deeper Devolution Deal for the West Midlands is a landmark step to help the region realise its economic potential. The West Midlands has long been a hub for innovation, and today we have a strong ecosystem of leading businesses, universities and talent at the forefront of high-tech and advanced manufacturing industries. With the region consistently showing itself to be the UK’s leading FDI hotspot outside London and the South East, this is a compelling proposition for investors, however, further devolution was always going to be vital to make the most of our capabilities.
“The new funding and powers outlined in the announcement will give the West Midlands the ability to capitalise on our unique economic strengths. We are particularly pleased that the deal proposes to deepen collaboration between the West Midlands Growth Company and the Department for Business and Trade to help promote our investment proposition and co-develop a clear international strategy.
"This will build on the success the Business and Tourism Programme, which successfully maximised the once-in-a-generation economic opportunity provided by the Commonwealth Games, to increase our international profile and attract strategically important high-value inward investment into the region. The West Midlands’ selection for one of 12 brand-new Investment Zones and gaining the ability to designate our own Levelling Up Zones will also help to transform our region by accelerating growth, development and regeneration.”
Chris Romans, EY’s Head of Tax in the Midlands, said: “The Chancellor’s reference to the West and East Midlands as potential locations for some of the UK’s 12 new Investment Zones is positive news for both regions and will hopefully drive private sector investment.
“The freeze on rates for businesses moving into the zone could create opportunities for growth and job creation. As a region, the West Midlands is expected to see jobs grow slightly slower than the UK average between 2024-26, at an average rate of 1.1% each year, according to our recent Regional Economic Forecast report. The new Investment Zone could help the region outperform this forecast.
“Sectors such as information and communication, which are forecast to be the fastest growing sectors in the Midlands, will continue to play a key role in economic performance. This high value sector has the potential to boost growth across the region, while adding resilience to the economy.
“We look forward to hearing more about the Investment Zones and how the £80 million for each Zone will be spent over the next five years on skills, infrastructure, tax relief and business rates retention.”
Matthew Hammond, PwC UK Midlands Regional Market Leader & Birmingham Senior Partner, said: "Having first announced the regional investment zones in the September fiscal statement, it’s pleasing to see a commitment from the Government and practical details about the delivery of the zones.
"Whilst the proposals have been scaled back, both the West Midlands and East Midlands are set to still benefit from the proposed scheme that will be linked to a local research institution such as a university. The Treasury has committed £80m of support over five years to each zone, including tax incentives and the cutting of red tape to attract businesses to areas of the country that have experienced slower economic growth. In a statement, the Treasury said the money could be used to offer tax incentives, improve skills, provide specialist business support, improve the planning system or for local infrastructure within the zones.
“Productivity and enterprise economies were a key focus of today’s statement. The investment zones will support the regional levelling up agenda by driving economic growth in the Midlands. The 2022 PwC economic outlook analysis showed that the region's economic output remained around 3.3% smaller than pre-pandemic levels and identified the Midlands as one with the regions with most potential for growth.
"One of the ways we will achieve sustained improvements in our economy in the West Midlands is to improve our regional productivity within our growth sectors, including advanced manufacturing, financial and professional services, creative & digital technologies and life sciences. For the East Midlands, continued investment in its automotive and aerospace, medical and agriculture technologies will provide economic benefits and opportunities for growth.
“Part of the journey of course is the region's low carbon and net zero ambitions.Our recent Green Jobs Barometer report showed that the West Midlands has seen a surge in green jobs in the last 12 months, having doubled since November 2021. Employers in the West Midlands have an opportunity to innovate and consider how their operations can become greener, particularly in the manufacturing sector that represents a high proportion of the Midlands’ economy. Embracing new, greener technologies and investing in skills will provide benefits for business operations and more employment opportunities in the region, as well as making a difference to the environment.
"The region consistently ranks as one of the main UK’s regional destinations for attracting Foreign Direct Investment (FDI) thanks to numerous features of the Midlands economy, including infrastructure investment such as HS2, access to talent and skills and most recently because of the Birmingham 2022 Commonwealth Games. We look forward to seeing how the local discussions about the investment zones develop in the region.”
Kyla Bellingall, Partner and Regional Managing Partner in the Midlands at BDO LLP, said: “The Budget answered some of the calls from Midlands businesses, as the region fared relatively well as part of the overall ‘levelling up’ agenda. As part of our bi-monthly survey of 500 mid-sized businesses, more than a quarter told us that they wanted to see tax incentives in the region. With East and West Midlands set for an opportunity to bid for funding for a new Investment Zone, this could come to fruition.
“Businesses were also hoping for a roadmap to reduce corporation tax rates. Instead, the Chancellor said that companies could offset 100% of investment in IT, equipment, plant, and machinery in the UK against taxable profits, stating that it’s the most generous capital allowance scheme of any advanced economy. That said, there are practical barriers as businesses still grapple with supply chain challenges. As a result, people may struggle to get hold of the kit they want to invest in.
“All year round, businesses tell us that access to skills is their biggest challenge. Hopefully, new initiatives and incentives will open up a deeper talent pool by attracting returners and working parents back to work. Support with childcare costs will also be well received by business leaders as a way of helping employees with the cost-of-living crisis. Around one-in-ten Midlands businesses have already been trying to plug this gap, by providing other workplace benefits such as support with childcare costs for employees.”
James Brown, Managing Partner at Grant Thornton UK LLP in Midlands, said: “This was a budget without fireworks. Mid-market businesses called for measures that would ensure stability and certainty and that’s what we got.
“Replacing the Super Deduction with a tax incentive that goes further – allowing all businesses, irrespective of size, to write-off 100% of their investments in plant and machinery against their tax bill – is a strong statement towards encouraging investment. This, the £1.8bn package of support for SMEs investing in R&D, and the announcement of two new Investment Zones in the East and West Midlands should go a little way towards sugaring the bitter pill of the incoming rise in Corporation Tax.
“In all, the so-called Budget for Growth has some sensible and welcome measures to stimulate regional growth and investment, while also tackling social inequalities and energy prices before inflation starts to fall.”
Paul Carney, pensions partner at Shoosmiths, said: “The AA was originally expressed as 100 percent of one’s earnings up to a maximum of £320k and represents the maximum amount that can be contributed by or on behalf of an individual to his or her pension plan before a penalty tax is applied (on the excess above the AA). As above the penalty tax is 55 percent of the excess over the AA. The AA was reduced after 2010 to its current level; £40k. The chancellor has announced that it will increase to £60k.
“The increase in the AA will be welcomed by those wishing to save more for retirement because it increases the amount that can be contributed to a pension scheme or arrangement in a tax efficient manner. On the other hand, commentators have been quick to point out (and this seems fair enough as observations go) that given the recent increases in interest rates and inflation (particularly increases in energy bills, food, and childcare costs), relatively few people have an “extra” £40k to contribute to a pension plan. It follows that increasing the limit to £60k is unlikely to make a material difference to the majority of the population.
“That point having been made, our sense is that the increase will help senior employees who are members of public service pension schemes such as the NHS Pension Scheme, Teachers’ Pension Scheme and the (defined benefits sections of the) Principal Civil Service Pension Scheme."
Mike Tuhme, tax partner at KPMG UK Midlands, said: “The Chancellor has delivered a Budget with significant fiscal loosening. He managed to address many of the concerns circulating in the headlines, but there were still some gaps.
“On business taxes it had been clear that the Corporation Tax rate rise would go ahead. But in an attempt to ease the pain of this, combined with the loss of the super-deduction, the Chancellor announced the introduction of full expensing for qualifying spend on plant and machinery for the next three years. The aim is to make the measure permanent when fiscal rules allow. Whilst this replacement for the super-deduction will be welcomed, the temporary nature demonstrates a continued lack of long-term strategy which can be damaging to investment.
“We knew the Government was concerned about economic inactivity and here we saw other big announcements. The Government is providing 30 hours a week of free childcare for eligible working parents of children aged nine months up to three years in England. It is also extending the annual allowance for pensions savings to £60,000 and abolishing the pensions lifetime allowance.
“As expected, household finances are being helped by a freeze to fuel duty, together with an extension of the 5p reduction for a further year, and a continuation of the Energy Price Guarantee for a further three months.
“But there were other areas where the pickings felt lean. The Investment Zone initiative sounded fairly minimal, with 12 investment zones, including within the Midlands, each able to access interventions worth up to £80million over five years. The limitation of full expensing to plant and machinery spend excludes large sectors such as infrastructure and construction. Major business rates reform seems to have been kicked down the road once again. And there were no measures to address some of the cliff-edges and distortions in the tax system, such as the VAT threshold.
“Overall, it reflected a calmer approach following months of political and economic upheaval. The real revelation will likely come in the Autumn as pre-election policies are unveiled.”
Zoe Davidson, Real Assets Partner at Deloitte, said: “We welcome the Chancellor’s focus on innovation-led growth. The UK’s regions and nations are full of businesses, entrepreneurs and innovators that need a catalyst of this type to enable them to unlock investment and, in turn, create productive jobs, attract talent, and support sustainable communities.
“The key to unlocking success will be for the Government to back this up with infrastructure investment and support for the private sector who are already investing in regional markets.”
“The extension of powers and funding to the West Midlands and Greater Manchester has been long awaited. This will enable the city regions to have more control and ensure funding is channelled towards the right local challenges. Although the proposed single funding pots for regional capital and revenue still needs to be agreed at the next Spending Review, this is a great step forward for regions across the UK looking to drive economic growth.”
Mark Evans, audit partner at Crowe, said it was encouraging to hear of more investment opportunities in the West Midlands.
“And closer to home, we heard of more money to be allocated to Tipton for regeneration. However, in order for improvements in the workplace and the economy, we need to see results from the Chancellor’s bid to get the over 50s back into work.
“I have concerns that those over 50, or ‘experienced’ as we are now known, who have chosen to retire may not have the inclination or the need financially to return to work.”
