The Chancellor's budget was centred on creating a new economy post-COVID as the OBR expects recovery to happen at a quicker pace than in previous predictions.
Much of Rishi Sunak’s announcements were focussed on increased spending on public services and individual taxation, however there were still some important announcements for the commercial property industry. The levelling up agenda continued to be front and centre, including infrastructure investment, while the issues surrounding business rates were kicked further down the road.
The sector with the biggest takeaways was the leisure industry, with tax rate reliefs for museums, theatres and galleries, as well as a draught relief to be bought in by 2023 alongside a reform of alcohol duty, bringing pubs onto more competitive level with retailers.
You can read the reaction of our experts from across our business below:
Economic overview
Walter Boettcher, Head of Research & Economics:
“Confirmation of the Government focus on ‘levelling up’ is welcome. Local settlements were announced which will create local physical visibility of central government commitment.
“The real transformation, though, will be linked to larger scale infrastructure projects. Commitments of up to £130 billion were mentioned and assurances that the integrated rail plan would soon be released, alongside road maintenance funds were real headline grabbers. The initiatives were described as being part of an ‘Infrastructure Revolution’. Nevertheless, a true revolution of scale requires private sector funds.
"The Chancellor mentioned the unlocking of institutional investment in connection to innovation investment, and by implication, physical infrastructure. For commercial property, this has the potential to be revolutionary, although hurdles remain related to de-risking what is often perceived by institutional funds as long term illiquid investment. Navigating these hurdles effectively is the key challenge in realising much of the development associated with the levelling up agenda.”
“There wasn’t anything completely unexpected in the OBR’s high-level economic forecasts, with the size of the UK economy predicted to return to pre-pandemic levels by the turn of the year. 2021 growth was revised up from 4 per cent in the March forecast to 6.5 per cent, while 2022 growth was revised down slightly.
"Tax cuts for those on the lowest incomes and an increase in the National Minimum Wage are welcome and will hopefully help alleviate some of the pressure from higher inflation, which is now expected to average 4 per cent next year. However, it is disappointing that the Government did not address energy prices directly, especially as the Chancellor acknowledged that wholesale energy prices have soared in the past few months.”
Business Rates
John Webber, Head of Business Rates:
“After delaying his response four times in the last year, the Chancellor has yet again missed a golden opportunity to reassure businesses and to instigate the fundamental reforms campaigned for and needed - particularly for the beleaguered retail sector.
“There were some positive announcements today but overall, the Chancellor’s measures were “underwhelming” said Webber. “The Chancellor has made it clear he is determined to continue to raise “£25 billion from this tax and as a result his proposals only tinker with the system. The measures suggested will not have a major impact on saving the high street in the longer term.
“The Government published its interim report of the fundamental review of the business rates system last March, when it listed the responses of the industry to the consultation from across all sectors- both private and public. The industry was unanimous about what needed to be done – but disappointingly only two of the points suggested have been addressed today.
“To not tackle the business rates burden, the multiplier, the relief system, overhaul the CCA appeals system or even to consider other taxes such as an on-line sales tax or delivery tax to help reduce the burden of business rates- feels like a kick in the teeth. There were some positive announcements, but overall everything that I and my fellow professionals, businesses and trade groups have been saying for years seem to have been ignored. We have seen no overall properly concluded reform and no apology for the lack of action.”
“I wonder why the Government went through the process of consultation in the first place if it is to ignore all advice yet again.
“The Chancellor does seem hostage to the Treasury. The problem with his response however is that by failing to properly reform business rates, he’ll have cooked the goose that lays the golden eggs, and more business will struggle or go under. Local finances will be even more impacted particularly in the poorest parts of the country.”
“It’s disappointing, missed opportunity.”
View our full Business Rates reaction
Leisure Sector
James Shorthouse, Head of Alternative Markets:
“There were some surprise positives in today’s budget announcements with the simplification of the alcohol duty rates, and the double tax relief for theatres, museums, and galleries. The Chancellor’s recognition of the scale and importance of the English and Welsh wine makers is a well-deserved acknowledgment of the growth of this sector, and of the quality of their wines.
“However, increases in minimum wages will impact the hospitality sector and no doubt lead to further price inflation for the consumer, as will the ongoing problems in the supply chain which are starting to create shortages in the availability of certain menu items in pubs and restaurants, as well as lack of stock on supermarket shelves.
“There were a number of positive points made on business rates but the fact that the Government is still committed to receiving £25 billion per annum does nothing to deal with the elephant in the room which is the size of the tax and the multiplier which will continue to rise over the coming years. In the long term, the level is unsustainable.”
