Budget 2020: The Coronavirus Budget

Friday 13 March 2020

With Number 10 and the Treasury now aligned more closely since Sajid Javid’s departure, Budget 2020 was meant to be new Chancellor Rishi Sunak’s chance to set out Boris Johnson’s economic vision for the country.

The consolidation of the Conservatives’ new position of strength in the North was a key goal. However, this budget will be remembered as the “Coronavirus Budget”; the Chancellor announced a £30 billion fiscal stimulus package to help keep the economy deal with the epidemic, along with many measures which had been heavily trailed.

We’ve taken a look at some of the key announcements affecting businesses in our region.

Business Support

While measures to promote businesses had been planned, here’s how Rishi Sulak plans to help businesses and keep the economy going in light of the spread of Coronavirus:

• Of the £30 billion fiscal stimulus announced, £7 billion has been earmarked for business. This comes on top of the Bank of England announcing a cut in interest rates to 0.25% yesterday morning (although with interest rates so low for so long it’s not entirely clear what impact this will have).
• A £2 billion sick-pay rebate for businesses with under 250 staff.
• £1 billion of lending via a government-backed Coronavirus Business Interruption Loan Scheme.
• A business rates one year “holiday” for small businesses in retail, leisure and hospitality – said to be worth £1 billion.
• A £3,000 cash grant to businesses eligible for small business rates relief.

Reaction to Rishi Sunak’s fiscal stimulus and his vow that he will do whatever it takes to get the economy through the Coronavirus crisis has been generally positive. Mike Cherry, the National Chairman of the Federation of Small Business said:

“This is a pro-small business Budget, which has delivered a high streets bonus, a series of Conservative manifesto promises to small businesses, and emergency steps to support small firms through the coronavirus outbreak.”

West Yorkshire Devolution and “Levelling UP”

West Yorkshire will finally get its own elected mayor with a deal said to be worth £2 billion.

Nationally, a “triple investment” in transport and infrastructure will see government spending at the highest level since in since 65 years. Measures include:

• £27 billion for 4,000 miles of roads.
• £5 billion for gigabit-capable broadband.
• £1.4 billion for the science institute
• £1.5 billion investment in skills and training.

Eventually the government also wants to see 22,000 civil servant roles move outside of London. Devolution and infrastructure spend, together with the movement of the Channel 4 HQ and civil service offices to Leeds could lead to an exciting time for the region.

The question will be whether small towns and cities (and their high streets in particular) which are desperately in need of investment will also benefit.

Reform of Entrepreneur’s Relief (ER)

Reform of ER had been heavily trailed, with many thinking the Chancellor might just scrap it. The Chancellor has instead elected to greatly reduce the lifetime limit for relief from £10 million to £1 million.

Although 80% of small businesses will not be affected, the reform will come as a blow for operators of larger owner-managed businesses considering exit. However ER’s continuation should give comfort to entrepreneur’s starting out.

The spending announced marks a departure from established Conservative economic policy of the last 30 years and Sajid Javid, among others, has queried how government will fund all the pledges if interest rates return to anything like normal rates.

However, investment in infrastructure is well overdue and Rishi Sunak and Boris Johnson have come to the conclusion that the government rather than private businesses are best placed to spearhead the spending.

Notwithstanding the current state of the nation’s health, Budget 2020 should be generally well received by businesses in our region.

At the time of writing the Coronavirus situation is continually developing. If you require legal support over the coming period, Blacks Solicitors offer a full range of commercial services to businesses, including employment, so please don’t hesitate to email or call us today on 0113 207 0000.