Concern around budget’s impact on small and medium sized businesses in Sheffield

Immediately following Rachel Reeves, the chancellor’s, speech in the parliament setting out how the Labour government will handle finances in the short and medium term, business owners already started calculating.

In the parliament, Ms Reeves has announced a number of measures targeting businesses to collect tax revenue, including the introduction of an increase in employers’ National Insurance contributions.

The 1.2 per cent increase could result in an extra £25billion for the government.

On the other hand, she also announced a 40 per cent relief on business rates for the retail, hospitality and leisure industry in 2025-26, up to a cap of £110,000 per business.

All in all, the budget is proposed to collect £40bn in taxes.

For an immediate reaction, the Local Democracy Reporting Service (LDRS) approached Tracy Viner, the executive manager (policy and public impact) at Sheffield Chamber of Commerce and Industry.

She told the LDRS that her initial reaction was that the budget “was quite a hit on businesses”.

She admitted there was some “good news” in it but in a city with 98 per cent small and medium-sized enterprises (SMEs) the majority of them will be hit by the National Insurance contributions going up and also the Minimum Wage going up.

She added: “That creates some uncertainty for future employment, whether they increase the numbers of employees when they actually invest in growth.

“If you’re not in one of the sectors where lower business rates are coming through, that’s quite tough, isn’t it?”

Ms Viner added that the small and medium sized businesses have been through quite a bit over the last few years and while everything should be done to grow the economy, she wasn’t sure “if there is enough in this (budget)”.

Ms Viner said the chamber of commerce was a small company with 20 people and the NI increase – after having done a very quick calculation – would mean hundreds of pounds extra expenditure.

But there are other SMEs with, say, 500 people or more – the bill for them would be much much bigger.

She said: “I can see where the government is coming from but there will be an awful lot of employers who are going to be thinking ‘where I’m going to find the extra cash’”.

Ms Vinter said businesses needed stability and the Labour government told them they were “friends of business”.

However, following this budget there will be quite a few business owners questioning that.

She told the LDRS that the budget had “some good news in there”, especially around the investment into innovation and modern industries but some of them are quite big industries and they are still not looking after what the majority of this country is built on which is micro and small businesses.

Prior to the budget, in a press release, the Sheffield Chamber of Commerce called for the government to prioritise local economies.

Did they?

Ms Viner said they didn’t – on the contrary, Sheffield and South Yorkshire, for example, were left out when it came to key transport links.

What about the announced 1.3bn for local councils up and down the country? Will that be enough?

Ms Viner said although the extra money is very welcome but it won’t be enough, and it will take years before the problem of council fundings could be sorted.