Shropshire Chamber of Commerce has welcomed measures announced today by Chancellor Rishi Sunak to address the growing cost-of-living crisis – but says it is unlikely to prevent many businesses being forced to raise their prices this year.
Fuel duty is to be cut for only the second time in 20 years, by 5p a litre, for at least a year, and VAT relief is being extended to cover energy-efficient investments.
There were hopes that the Government may scrap the proposed rise in National Insurance due to kick in next month, or at least raise the threshold.
And the Chancellor chose the second option – increasing the threshold by £3,000 from July this year, meaning no tax or National Insurance will now be paid by anyone earning less than £12,570.
Mr Sunak also revealed that the Government planned to reduce the basic rate of income tax from 20p to 19p by end of the current parliament.
Richard Sheehan, Shropshire Chamber’s chief executive, said: “We would have liked to see more done by the Chancellor – but he could have done much less. These are all welcome announcements which will go some way to helping to offset the fastest rises in the cost of living in a generation.
“But will they be enough to prevent many of our companies being forced to raise their prices to combat the rising cost of doing business? That’s far from guaranteed.
“Rural counties such as Shropshire, with a poorer public transport infrastructure than urban areas, have been feeling the biggest impact of the current fuel price rises which means we have taken the full force of the cost-of-living crisis. So the fuel duty cut is certainly welcome.
“However, we also have many homes and businesses off the main power grid who rely on heating oil which has more than doubled in price since the start of the year, and the huge impact of this must not be overlooked.”
He added: “Businesses don’t want to be constantly asking for Government help, but these are extraordinary times, and it is successful and financially solid businesses which will drive the recovery in our economy.
New figures revealed today that inflation in February was at a 30-year record high of 6.2%.
The British Chambers of Commerce expects the surge to continue over coming months as the energy price cap rise, the reversal of the hospitality VAT cut and upward pressure on energy and commodity prices from Russia’s invasion of Ukraine continues to bite.
Shevaun Haviland, director general of the BCC, said: “The Spring Statement falls short of the action businesses needed to see today. While there are some positive announcements that firms will welcome, it did not fundamentally address the huge cost pressures they are facing.
“Businesses will be pleased that the employment allowance has been increased. This long running ask of the BCC will provide a small amount of financial headroom for firms facing rising costs.
“But today was a missed opportunity to rebuild and renew the economy and ensure business has the resilience to weather the uncertain and volatile times ahead.
“The cut in fuel duty, though very welcome, is just a drop in the ocean compared to the larger tsunami of surging costs that is bearing down on firms and households. Smaller businesses are particularly exposed as they have neither the protections or financial support provided to households, nor the negotiating power of larger businesses.
“As the economic outlook is likely to get worse before it gets better, many firms will be forced to continue raising prices, further fuelling the cost-of-living crisis.
“We urge the government to take further action – including the introduction of an SME energy price cap – to tackle the escalating cost of doing business crisis. Firms need the headroom to keep a lid on prices, protect jobs and make investment that is so vital to sustaining our economic prospects.”