Spring Budget 2022: Key points for businesses at a glance

The Chancellor has made a range of green technology used to decarbonise buildings, such as solar panels and batteries, exempt from business rates from April 2022. This is expected to save businesses £35 million in 2022-23 and be worth around £170 million over the next five years.

Sunak has also committed to reform R&D tax credits to help drive innovation. From April 2023, businesses will be able to claim relief on the storage of vital data and pure maths research. This is set to boost world-leading sectors in the UK such as AI, robotics, manufacturing and design. Draft legislation will be published in summer.

The Chancellor has also said he will examine how the tax system – including the operation of the Apprenticeship Levy – can be used to encourage employers to invest in adult training. This could be essential in ensuring the UK can end the productivity crisis and create more highly skilled workers.

Neil Murphy, Global Channel Chief at ABBYY shares his thoughts: “The rise in cost of living has shone a spotlight on the need to support employees inside the workplace, as they face increasing stress outside the office. [The] budget is an opportunity for businesses to invest in the most important area – their employees.

“Being frugal with your employee’s development is detrimental to their future and the business. Not only will it limit their skillset, and ultimately the company’s credibility and profitability but it will hinder employees’ ability to keep up with the times, creating the perfect storm.

“Leaders need to upskill staff through training and developing opportunities. According to Gartner, 64% of managers don’t think their employees are able to keep pace with future skill needs. By focusing on improving digital and technical skills through no-code or low codesolutions, employees will be able to progress from level one roles to carrying out more value-added activities within the company, like wealth advisors.”

However, Ben Hansford, Chief Operating Officer of Apprenticeships at Firebrand Training, argues that too much meddling in the Levy by the government may reduce the number of apprenticeships.

“While it’s good to hear the government acknowledge the skills gap and productivity crisis in the UK and the role that apprenticeships can play, further meddling in the Apprenticeship Levy will not help to close this.

“Apprenticeships work well and are popular for both learners and employers. With apprenticeships lasting from 12-36 months, the Levy is currently working well for employers that pay it and can help them to plan ahead for their longer-term skills needs. However, employers have skills gaps today that need to be addressed more urgently. For this there are a range of initiatives, such as the recent Skills Bootcamps and paid for commercial training, that address these shorter-term skills needs. Many groups like the Confederation of British Industry (CBI) have been lobbying for more flexibility around what, other than apprenticeships, the Levy can be spent on, the government needs to be careful how flexible they make the Levy. Too much flexibility can cut into the recovering apprenticeship numbers and, in turn, affect the progress being made to close the skills gap and address the productivity crisis which would be detrimental to the UK economy,” said Hansford.

Nadeem Malik, Vice President and Country Manager, UK and Ireland at Software AG considers how it’s encouraging to see the government reviewing whether there’s enough training opportunities for UK workers and discounting new software purchases for SMBs. However, businesses need more help than ever to achieve the goal of having a digital workforce.

“The stratospheric rise in inflation, which is worrying everyone, will be a real focus in this budget and the underlying issues causing this inflation have not gone away. We’re still in a pandemic, with many employees continuing to work from home, and their priorities have shifted. Their spending needs have changed dramatically compared to before 2020.

“The government isn’t losing focus on supporting a fully digital workforce. It’s encouraging to see the government is reviewing if there is enough training for UK workers and discounting new software purchases for small and mid-sized businesses. That said, businesses need more help than ever to achieve the goal of having a digital workforce, especially as almost two-thirds (65%) of UK organisations say becoming more connected is a top priority this year. The nature of job roles across all industries is changing, by becoming more digital. Skillsets must adapt to this digital world and the government must support businesses with more training opportunities to make this shift.  

“The onus isn’t just on the government – businesses need to ensure they remain attractive to employees, otherwise they will go elsewhere. Wage increases aren’t a straightforward answer in the face of rising inflation. Businesses must attract and retain employees in more creative ways, for example, tailoring benefits so they provide localised services to people at home rather than in a centralised workplace,” said Malik.

Some feel that the budget announcements have left many business leaders wanting, pushing much of the innovation and R&D decisions until the Autumn.

Andrew Duncan, Partner and UK CEO, Infosys Consulting said: “Research and development tax relief and government support for innovation wasn’t focussed on in [the] as much as I had hoped, with the government holding back on confirming much of their support in this area until Autumn.

“Nevertheless, the plans to cut tax rates on business investment, and expanding the generosity of the existing reliefs to include data, cloud computing, and pure maths, is welcome news. As the Chancellor pointed out – we have a productivity and innovation gap that needs filling, quickly. This means making the UK a highly skilled, high-tech economy, not just by boosting UK businesses but to attract talent from overseas.

“Alongside innovative technologies like automation and AI, human capabilities are also essential for surviving a potentially looming recession. Supporting the UK’s digital re-skilling agenda is of the utmost priority – particularly as business leaders are battling for top talent during this challenging environment. The Government’s Help to grow management scheme, which offers businesses mini-MBAs and is 90% government-funded, and the Help to Grow Digital program providing 50% discount on buying new software up to £5000, are positive steps in this direction, but there is still some way to go to make real change by involving big businesses.”

Other announcements included a Help to Grow scheme which is giving SMEs the tools they need to innovate, grow and drive the economic recovery, an increase in the Annual Investment Allowance to £1 million, a £1000 increase to the Employment Allowance to benefit around half a million SMEs and the biggest two-year business tax cut in modern British history.