Chancellor’s Autumn Budget: Heart of London’s Response

A mixed bag

Although the pandemic still casts a cloud over much of the economy, Chancellor Rishi Sunak heralded “a new age of optimism” in his Autumn Budget. This positivity was grounded in figures showing the UK economy recovering faster than expected and allowing the Chancellor greater fiscal headroom.

From Heart of London’s perspective, though, this was a mixed budget, with some good news for a number of the business sectors represented by our members, but also a fair share of disappointments.

There was some love for the cultural sector

One of the most positive aspects of the Budget was that it did to go some way to acknowledge the financial and social contribution of the arts and culture sector. Chancellor Rishi Sunak announced the doubling of tax relief for museums, galleries, theatres and orchestras, £850 million in post-pandemic support for culture and heritage institutions, and £14 million a year in scale-up funding for creative SMEs. All these measures are hugely welcome and will provide support for the cultural sector at a time when it is much needed.

The extension of tax relief for theatres will be a particularly welcome boost for many of our members. Tax relief has already made a huge difference for the sector; and this week we saw tax relief for eligible institutions extended for two years, to March 2024, in order to help them rally after months of closures and lost revenue.

Further rates of relief for theatre tax will provide theatre producers and investors with greater confidence in developing London’s world-leading theatreland and help culture drive the recovery from the pandemic.

But the Government should go further to support the cultural sector’s post-lockdown recovery. After a protracted period of venue closure during the succession of lockdowns, there is a major task ahead to rebuild consumer confidence in returning to the concert halls, theatres and live music venues. Rises to the cost of living will also create real difficulties down the line. Solving these issues will not be straightforward.

Only tinkering with business rates

Besides help for the cultural sector, there was some tinkering with business rates that will help the retail, hospitality and leisure sectors, which includes many of our members.

We have long called for business rate reform as a priority for our members and the positive news on this front is that this year, in the retail, hospitality and leisure sectors, any eligible business can claim a 50% rates discount up to maximum of £110,000. According to Sunak, this means 90% of retail and hospitality businesses will get some form of relief.

And, following calls from the British Property Federation, a new business rates relief will also support investment in property. For one year, no business will face higher rates bills after making improvements to premises, whether that’s the expansion of a hotel’s bedrooms to the installation of solar panels on an office roof.

Finally, revaluations are now to take place every three years from 2023, and next year the multiplier increase will be cancelled, which is projected to saving £4.6bn.

What all of this stopped short of, however, was the wholesale overhaul to the rates system that is so overdue. Our view is that long-term reductions in the rates businesses pay is far better than short-term fixes, so we will continue to press the government for more comprehensive reform.

So, what about London?

It must be said that there was very little explicitly pro-London policy in the Budget – indeed, much of the rhetoric was about what is being done outside London.

Our position is that this is a short-sighted approach, even within the context of the levelling up agenda.

The reality is that London is best placed to drive the UK’s economic growth and if levelling up is to be at the expense of places such as London, the entire economy will underperform. We were hardest hit by the pandemic and have so much to offer the economy, but we need the Government’s strong and unwavering support to ensure London remains a great global city.

This is our message to Government and one that we will keep making for you, but let’s not be in any doubt – the financial support announced at this Budget will be vital to many businesses in the West End as we continue our recovery.

In response, our Chief Executive, Ros Morgan commented on the news about business rates, as well as what is still needed from government:

“We have long called for business rate reform as a priority for our members and the changes announced today will come as a welcome boost for businesses in the retail, hospitality, & leisure sectors. We also welcome the helpful extension of tax relief for museums, galleries and theatres.

However, this was a mixed Budget from London’s perspective. There was very little pro-London policy in there. The reality is that London is best placed to drive the UK’s economic growth and if levelling up is to be at the expense of places such as London, the entire economy will underperform. We were hardest hit by the pandemic and have so much to offer the economy, but we need the Government’s strong and unwavering support to ensure London remains a great global city.”