Business leader critiques “radical” tax strategy

Tim Jones, chair of the South West Business Council, has voiced serious concerns about the recent budget announcement by the Chancellor, characterising it as one of the most radical tax increases seen in a generation.

In an exclusive interview with the North Devon Gazette, Mr Jones stated that while the necessity for change was evident, the extent of the Chancellor's strategy poses significant risks to the economy.

He highlighted that, while the previous government's policies could not continue indefinitely, the current government's approach could lead to considerable pain before any potential gain is realised. 

He expressed scepticism about whether the government's plans would effectively stimulate growth, noting that external factors could hinder success and that a substantial amount of luck would be required.

“The financial markets have already responded nervously,” Mr Jones explained.

“Some commentators have likened this situation to the Liz Truss reaction from the money markets, which is an exaggeration, but it underscores the precariousness of international funding. The budget has diminished the value of sterling and escalated the cost of government borrowing.”

Mr Jones pinpointed agriculture and the hospitality sector as particularly vulnerable to the proposed changes, both of which are vital to the North Devon economy. 

He emphasised the longstanding challenges faced by the agricultural sector, which has relied heavily on government support in recent years. 

The government's plan to accelerate the wind-down of basic farm payments, coupled with the introduction of new funding under Environmental Land Management, threatens the financial stability of local farmers.

“The current administration has not adequately addressed the need for increased agricultural support,” he said, highlighting concerns over a nearly £400 million underspend in agricultural funding.

Furthermore, the introduction of a 20 per cent Inheritance Tax could force family farms to sell land or even the entire business to cover tax bills, creating additional distress in the sector.

Mr Jones also expressed alarm over the implications for the hospitality, tourism, and leisure industries, which have faced numerous challenges in recent years, including the aftermath of COVID-19, soaring energy costs, staff shortages, and dwindling customer demand. 

New measures, such as a 6.7 per cent increase in minimum wage, higher National Insurance contributions, and reduced business rate relief from 75 per cent to 40 per cent, further compound the struggles faced by businesses in this sector.

“The government often talks about its financial black hole, currently estimated at £22 billion or possibly £40 billion,” Mr Jones remarked. 

“What they overlook is that the hospitality sector already grapples with a £10 billion shortfall.”

Mr Jones concluded by asserting that it may take five years or more for the impact of these changes to positively influence the economy. 

He urged caution, stating that the effectiveness of this budget will soon be tested. Additionally, he warned that changes in US leadership and potential protectionist policies could further threaten UK economic stability, particularly concerning export trade.

As businesses brace for what Mr Jones describes as a “dangerous game of roulette,” the coming months will reveal whether these “radical measures” yield the anticipated growth or lead to further economic turmoil.