London business groups have given a tepid welcome to Chancellor Jeremy Hunt’s spring budget, announced in the House of Commons today, with the London Chamber of Commerce and Industry (LCCI) saying it “fell short of delivering optimum value and support for London business” and a West End Business Improvement District (BID) expressing regret at the failure to bring back a tax refund scheme that has attracted overseas visitors in the past.
Although the LCCI welcomed Hunt’s extension of 30 hours a week free childcare for working parents in England to cover one and two-year-olds as well and three and four-year-olds, chief executive Richard Burge said small and medium-sized companies “continue to lose thousands of pounds due to high energy prices” and his colleague James Watkins, head of policy and public impact, though praising steps to encourage business investment such as in new machinery and technology, criticised the government’s recent decision to hold back funding for High Speed 2, saying “it does not provide a solution to its goal of levelling up and boosting economic growth”.
Kay Buxton, chief executive of the Marble Arch London Business Improvement District (BID) regretted “another missed opportunity” to re-introduce the VAT Retail Export Scheme which, prior to the the end of Brexit transition period on 31 December 2020, had enabled international visitors to reclaim the VAT they paid on goods they purchased in the UK. It appears this was done partly on the grounds that the scheme was “largely centred on London“.
During her brief time as Prime Minister, Liz Truss said she would bring back the scheme, which was regarded as a significant draw for affluent overseas shoppers, but this was reversed after she was replaced by Rishi Sunak.
“Independent research suggests that reintroducing tax-free shopping would have led to an extra £2.1 billion being spent on shopping by overseas visitors, as well as £1 billion on hotels, restaurants, and visitor attractions,” Buxton said. “The removal of tax-free shopping has damaged the international appeal of the UK for visitors.”
The Chancellor’s new childcare measures were given a qualified welcome by the Child Poverty Action Group (CPAG), whose chief executive Alison Garnham said many of the changes “are a big step forward” but expressed concern about what she called “the stringent job-search requirements for parents on Universal Credit (UC)” in order for them to be eligible, and described the “overall package” as falling “far short of what struggling families need” amid continuing high inflation. Hunt’s decision to raise the cap on childcare fees that can be reimbursed through UC is, however, though by CPAG to be of particular relevance in London, as childcare costs in the capital are higher than elsewhere.
Debbie Akehurst, chief executive of the Central District Alliance BID, said the new childcare costs provision would “help allow a return to work for thousands of parents” but called for more to be done to assist people with coming back into the job market, such as enabling employers to offer flexible roles so that all care-givers can combine employment with domestic responsibilities along with “transport infrastructure improved to ensure that women working outside of usual trading hours can travel to and from work safely and reliably”.
Kate Hart, chief executive of EC BID, which represents businesses in the eastern part of the City of London, also asked for “the whole childcare system, including paternity and maternity leave arrangements” to be “made more flexible to allow for full caregiver contributions to the economy”. Hart also urged the government to “seriously consider initiatives such as flexible transport fares to persuade a productive workforce back to their desks,” while acknowledging that the business community should seek to offer employees “a unique experience of coming to the office that will make their journey worthwhile”.
In a significant move for London’s theatres, Hunt has chosen not to reduce Theatre Tax Relief as previously proposed, bringing a warm welcome from the Society of London Theatre.
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