Sunday , May 22 2022

‘Sticking-plaster measures’: Sunak fails to ease pain of surging costs, say firms

The spring statement did not deliver much to help Lesters, a small but growing packaging company struggling with rising costs.

The Staffordshire-based firm’s energy bills will rise from £7,000 a month to £18,000 when the current contract runs out. Speaking after Rishi Sunak’s spring statement, Lesters’ managing director, Billy Hutchinson, said the chancellor had offered nothing to help on this key issue.

“For us the assistance that is needed has not been addressed,” he said. The fuel duty reduction helps but “doesn’t really scratch the surface”, he added.

The chancellor’s statement was met with a chorus of criticism from businesses and lobby groups complaining that Sunak had done little to alleviate levels of cost inflation steeper than anything faced by British businesses since the 1990s.

“The chancellor put forward sticking-plaster measures that will do little to stem the pain of the rising cost of living,” said John Dickie, the chief executive of the lobby group London First.

Carmakers, the food and drinks industry, the chemicals sector and manufacturers said the government could have done more.

“The lack of action on energy costs for business is especially hard to fathom,” said Stephen Phipson, the chief executive of Make UK, a lobby group representing manufacturers.

“Government cannot escape the fact that manufacturers are facing eye-watering cost increases that are pushing many towards a tipping point, and companies would have been looking for substantial business support measures to help alleviate these.”

Pubs bosses said the failure to extend a cut in VAT to 12.5% for hospitality meant landlords faced more hardship just when they were looking to recover from the financial damage from the coronavirus pandemic lockdowns.

Liz Hind, who took on the running of the Old Millwrights Arms pub in Aylesbury, Buckinghamshire with her partner five years ago to the day of the spring statement, has endured one of the most difficult periods in history for the sector. Further rent increases on top of inflation in product prices have been the last straw, and she and her partner are planning to hand back their pub to the owners in two weeks’ time and look for jobs in hospitality management.

There was “absolutely nothing” for pubs in the spring statement, she said. “It’s just not fun running a pub at the moment.”

The trucking industry’s lobby group, the Road Haulage Association, welcomed the cut in fuel duty – which has been heavily criticised by environmental campaigners – but Rod McKenzie, the group’s executive director, said that his members still face “huge operating cost hikes”.

Shevaun Haviland, the director general of the British Chambers of Commerce, said: “The spring statement falls short of the action businesses needed to see today. While there are some positive announcements that firms will welcome, it did not fundamentally address the huge cost pressures they are facing.”

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She cited the increased employment allowance, a tax break for small businesses, as a small victory, but said it was a “missed opportunity”. The fuel duty cut was “just a drop in the ocean compared to the larger tsunami of surging costs that is bearing down on firms and households”, she added.

Tony Danker, the director general of the Confederation of British Industry, which represents many of the UK’s largest businesses, said there were some welcome “steps to sustain confidence in our economy” but they “don’t do enough to tackle the current challenges facing firms”.

Promised changes to business investment incentives at the next budget were good news but “we cannot wait until October to get growth going”, Danker said.

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