‘Tough day for business’ says chamber as Hampshire reacts to the budget

“This is certainly a tough budget for businesses with a heavy burden to carry.”

The assessment of Ross McNally, chief executive of Hampshire Chamber, following new measures announced by the chancellor this Wednesday.

Companies are now facing a 1.2 per cent hike in national insurance contributions (NICs) and 6.7 per cent rise in the national living wage – though fortunately corporation tax has been capped at 25 per cent.

And small businesses will need to start coughing up NICs sooner, with the earnings threshold lowered from £9,100 to just £5,000.

National accountants MHA estimate that the average cost of employing an individual on minimum wage will ultimately rise 10 per cent as a result of this week’s budget.

It all comes in an effort to get the economy moving again. But might the new measures instead stifle growth and force some struggling companies to fold?

We’ve pooled comments from Hampshire’s engineering, tech, accounting, aerospace and housebuilding sectors to see how the region’s small and medium-sized enterprises (SMEs) are reacting to the news.

To add your budget reactions, please get in touch at [email protected]

***

“Please, no further taxes on job creation or business growth” – Ross McNally, Hampshire Chamber

“Because of the widely recognised shortfall in public finances, it was clear this budget would mean higher costs for our members and other businesses, and that is indeed what we now face.

“The prospect of a hit to the bottom line affects all kinds of decision making on the scope for investment in people, premises, equipment and tech.

“The key test for the chancellor is the extent to which such higher costs on business are balanced with measures to incentivise medium term growth.

“To help mitigate the ‘hit’, we therefore welcome other budget measures announced by the chancellor – such as the 25 per cent cap on corporation tax, the freeze on fuel duty and the continuation of the full-expensing system of capital allowances for investment in plant, machinery and IT.

“Measures to alleviate the impact of business rates through ongoing reliefs, while falling short of full-scale reform, will also be a help to many businesses.

“On balance, we understand the need for short-term pain for help create the right conditions to drive investment and prosperity, but this is certainly a tough budget for businesses.

“Government needs to be pragmatic. By all means, seek efficiency savings within departments and look to control public spending, but there should be no further taxes on job creation or business growth.

“If we depress business investment through a tax on jobs, it’s simply counterproductive to what government wants to do and will act as a major disincentive to partnership for the rest of this parliament.”

***

“Small businesses are the backbone of the economy. Support them” – Andrew Barnett, Barnbrook Systems (Fareham)

“Hitting the SME community will not encourage employment at a time when there’s a rise in company closures.

“As a company, we’ve tried to make sure we remain globally competitive without raising prices, but this will now have to be reviewed.

“Small businesses have long been a backbone of the economy, driving employment and fostering innovation.

“Supporting these enterprises means ensuring their ability to grow, create jobs and contribute to the economic landscape.

“The government’s role should include nurturing these enterprises, creating a competitive business environment and considering long-term sustainability.”

***

“Landscape for tech remains resilient, but today fell flat” – Tim Walker, Aura Technology (Totton)

“As an industry, the tech sector watched eagerly for signals that the budget would help strengthen the UK’s position as a global tech leader.

“The chancellor made it clear that the core way in which improvements will be made to public services will be through using the latest technologies, whether that’s through bolstering and improving government departments like the HMRC or the NHS.

“We also heard there’ll be improvements to broadband. We’ll await the detail to emerge on this, but it’s another welcome measure.

“The landscape for UK tech remains resilient, with companies consistently investing in digital, AI, and other innovations.

“However, today felt a little flat.

“For the tech sector to continue to drive progress, it’s critical that the government’s growth strategy aligns with tech priorities – particularly in areas like digital infrastructure, public service digitisation and the much-anticipated research and development (R&D) tax reform.

“We’re still being left waiting to see key initiatives like the digital adoption strategy (supporting SMEs in adopting digital and AI to potentially boost the UK economy by up to £232 billion), investment in digital infrastructure and expansion of digital skills through the growth and skills levy.”

***

“Good news on wage rises and public services spend” – Gemma Hedges, HWB Chartered Accountants (Eastleigh)

“We saw this coming, and it was expected that we’d need to pay more tax to make much-needed improvements to public services.

“However, employers will feel it more than others with the double whammy of salary increases and a hike in employers’ NICs.

“The national living wage for over-21s goes up 6.7 per cent from £11.44 to £12.21 per hour from April 2025, with an increase in the national minimum wage from £8.60 to £10 per hour for 18- to 20-year-olds.

“Some businesses are already warning it could hit job creation.

“Businesses will be also less enthusiastic about the headline rate of national insurance for employers being increased from 13.8 to 15 per cent from April next year.

“There was still good news for businesses though in the shape of corporation tax rates and annual investment allowances remaining unchanged.

“We also welcome a 40 per cent business rates relief for retail, hospitality and leisure business, capped at up to £110,000 per business for next year and 2026.

“While there’s been a significant increase in HMRC enquiries into R&D claims recently, the chancellor made clear that this relief is staying and is fully supported, which is welcomed where the relief is vital to so many businesses.

“Capital gains tax increases were highly anticipated, but significantly lower than could have been expected, with the lower rate increasing to 18 per cent and the main rate to 24 per cent.

“Inheritance tax (IHT) was another widely anticipated area of reform, but the chancellor surprised everyone by extending the freeze on the nil rate and residence nil rate bands until 2030.

“Landlords, who have faced significant attacks in previous budgets, did not escape unscathed this time either, with stamp duty land tax surcharges on second homes increasing from 3 to 5 per cent from tomorrow.

“For individuals, the good news comes in the national minimum wage rises, the fuel duty freeze, and of course for all of us, the spend on public services.

“I’m looking forward to someone answering the phone at HMRC and one million less potholes on our roads each year.”

***

“Mixed-bag budget, but the devil will be in the detail” – Alan Fisher, Farnborough Aerospace Consortium

“We were pleased that there was an extra £1 billion announced for the aerospace sector and £2.9 billion for the Ministry of Defence.

“They’re relatively small amounts set against what these industries are worth, but are nevertheless welcome.

“We also heard about £20 billion pledged for R&D, some of which we hope will find its way into aerospace.

“Of course, our members will be affected by the increase in NICs and minimum wage, and we’ll have to see whether this stifles their growth and ability to hire staff.

“The chancellor also announced that she wanted the country to be a ‘clean energy superpower’, without noting the huge strides aerospace has made and its ability to lead this ambition.

“As ever, the devil of the budget will be in the detail, and we’ll be studying the small print to see what it means for our members.”

***

“Greater certainty and support for housebuilding sector” – Mark Perry, VIVID Homes (Portsmouth)

“Today’s budget, which confirms a £500 million top-up for the existing affordable homes programme (AHP) among other items, will give greater certainty and support to our sector.

“If anything, these announcements indicate the government understands the pressures the sector’s facing, and we should take some comfort from this.

“Of course, having to wait for the outcome of the spring spending review linked to the next Homes England AHP is not ideal given the government’s ambitious housing target for this parliamentary term.

“But in any event, it’s vital this future funding programme is significant and has flexibility.”