Sunday trading, VAT-free shopping, tax exemptions for NEETs: there’s an abundance of low-hanging fruit for the Chancellor to back businesses this Budget, I just hope he picks it, writes Karim Fatehi
The Chancellor, John Healey, faces no shortage of difficult choices at this Budget. But that should not obscure the measures that are relatively straightforward to deliver and could give businesses an immediate reason to invest, hire and grow.
London businesses are telling us that confidence remains fragile. Costs are high, recruitment is difficult and too many businesses are holding back investment while they wait for greater certainty.
The government should therefore look beyond the biggest tax measures and take some of the low-hanging fruit. There are practical changes that could unlock growth without requiring another major programme of public spending.
The low-hanging fruit
Start with VAT-free shopping for international visitors.
London is competing with major global cities for tourists and their spending. Removing VAT-free shopping puts the UK at a disadvantage to European destinations and makes London less competitive as a shopping destination. Restoring the scheme would help retailers, hospitality businesses and the wider visitor economy, while strengthening London’s position as a global city.
The same principle applies to Sunday trading. Large shops in England and Wales remain restricted to six hours of trading on Sundays, despite consumers living and working differently from when these rules were introduced. Businesses should be given the freedom to decide when they open. Removing an outdated restriction would cost the Exchequer little while giving retailers greater flexibility to respond to demand.
We should also make it cheaper for businesses to give young people a first opportunity in the labour market.
The number of young people not in education, employment or training (NEET) remains far too high. At the same time, businesses are facing high employment costs and are cautious about taking on additional staff. A targeted employer National Insurance exemption for businesses hiring young people who are NEET would directly address both problems. It would reduce the cost of taking someone off the sidelines and into work.
Finally, London must remain one of the world’s leading financial centres. The government should introduce a five-year listing holiday for companies newly listing in London, alongside incentives for companies to move their primary listing here. If we want more businesses raising capital, creating jobs and investing in the UK, we should make London an even more attractive place to list.
The through line? Removing barriers for businesses
These are different policies, but they share the same principle: remove barriers and let businesses do more of what they are already capable of doing.
That matters because growth does not always require the government to spend more money. Sometimes it requires government to get out of the way.
The Chancellor has an opportunity at this Budget to take some practical steps that would send a clear signal to businesses. Make London more competitive for international visitors. Give retailers greater freedom. Make it easier to employ young people who are currently outside the labour market. Strengthen London’s position as a global financial centre.
None of these measures solves the UK’s wider growth problem on its own. But together they would show that the government is prepared to take the practical decisions that allow businesses to invest, hire and grow.
The businesses we represent are not asking for another slogan. They want action on the barriers that are holding them back.
The Chancellor should start with the low-hanging fruit.
Karim Fatehi OBE is chief executive of the London Chamber of Commerce and Industry