What’s on our Christmas (Autumn Budget) Wish List? With Chancellor Phillip Hammond due to release the Autumn budget on Wednesday 22 November 2017, we are waiting with fingers crossed to see if anything on our wish list comes true. As an SME in construction we are certainly feeling the strain. Living Wage, pension auto enrollment and business rate increases not to mention subsequent years of difficult trading are leaving us in choppy waters. We’ve heard that the deficit is at the lowest in ten years but are things looking up?
In the last few weeks we had the announcement of the National Living Wage increased to £8.75 p/h. While it is not compulsory, as a responsible employer we pay the living wage which is above the minimum wage. However, over the years this has come to feel like we are subsidising the gap caused by the increase in the cost of living and pay. Coupled with this is the impact of the pension auto enrolment leaving a much heavier employee on-cost (around 5% higher). Grant funding for small businesses was something we benefited from but even this is drying up. For example, in the last two years Howells Glazing has received two grants worth around £20K. This has allowed us to be more innovative and therefore competitive, increase production areas and maintain steady employment of dozens of local workers. Grant funding has dried up for us with awarding bodies advising that the money has been earmarked but not released. We are doing everything right to meet the criteria to receive the funding that should be there but it has been ‘frozen’.
We are told that the nations deficit is at a ten year low, however, when you consider the drop since last year is just £700m on a deficit as of August of £5.7 billion, is it as good as it sounds. Has the delay in things like grant funding help to contribute towards the ‘lowest deficit in 10 years’ headline?
The recent increase in interest rates does not impact us so much directly as we do not rely heavily on credit, however, what it is likely to do is impact on customer spending; the business-to-consumer rather than business-to-business element. One of our key markets is the domestic refurb / extension with a much sought after lantern rooflight to finish it odd. With customers’ budgets being squeezed, at the end of their project (the roof) they may be more likely to skimp and go for a cheaper option, like uPVC, than a higher quality aluminium product like ours, or leave a rooflight out altogether.
On the plus side, an increase in corporation tax seems highly unlikely given that the chancellor pledged to reduce it to 17% by 2020 but if business rates go up we are looking at a gloomy new year. Throughout this year we have seen numerous small businesses go under, companies who have weathered the financial downturn and struggled over the last 10 years but just couldn’t keep up with increased costs and such challenging market conditions, particularly in construction.
Having spent 2017 trying to stay on Santa’s good list, will we reap the benefits this festive season and year ahead? We are hoping for an easing of business rates for SMEs with any rises likely to turn small businesses into the ghosts of Christmas past.