Chancellor urged to ease pressure on Perthshire businesses

Shifting fiscal thresholds could offer hope

Perthshire businesses want to see VAT eased and more money in customers’ pockets as they continue to wrestle with rising costs and falling profit margins.

That is the overwhelming consensus from our Pre-Budget Survey, which closed on 16th November.

With Rachel Reeves getting ready to open her red budget box on Wednesday, business owners in the region are seeking some succour after the Chancellor’s last budget of October 2024.

In that, she introduced National Insurance rises and significantly lowered thresholds for employers on top of a hike to the National Living and Minimum Wage.

The combination of those measures has clearly impacted employment, according to our Survey respondents, with increased staffing costs an almost ever-present theme throughout the responses.

One respondent stated they had removed 2 full-time posts and reduced employee hours just to stand still. Others also stated that the Chancellor’s move had forced them to re-evaluate their staffing.

Combination of measures squeezing margins

On whether National Insurance rises had impacted businesses, 56% of respondents said it had while 62.5% said the NI rise was part of a wider combination of fiscal measures impacting margins.

When asked whether they were optimistic about Wednesday, all bar one respondent answered in the negative.

While confidence is clearly at a premium, there was also some constructive suggestions on how Rachel Reeves could get people smiling – and spending money- again.

One of the most cited methods was to re-assess VAT levels on business – and act accordingly.

Most survey respondents wanted to see a reduction in VAT (particularly hospitality businesses) with one suggesting a return to the 17.5% level before then Chancellor George Osborne raised it.

Others would like to see the threshold at which VAT is paid to be raised, to ameliorate the pressures, allied with measures introduced to put more money in peoples’ wallets.

One respondent said: “We need to increase the spending power of lower earners by reducing VAT and moving the tax thresholds up. That would stimulate increased sales and would also generate more tax income.”

However, there were differing views on how the fiscal levers could be used, with suggestions put forward that holding VAT could help reduce inflation – something that everyone has had to wrestle with in terms of costs.

Re-balancing the books

Within tourism, which makes up a high percentage of the Perthshire economy (11% of total employment) the message to the Chancellor was clear: give us some wriggle room back.

“SMEs are working more for less. Providing more employment has just meant higher NI contributions and tighter margins. There is also less feet on the High Street because there is less money in the system,” said one.

Wednesday’s budget will see Rachel Reeves attempting to balance public priorities (and votes) with the need to cut borrowing.

However, Perthshire has spoken. Businesses need some festive cheer and a commitment their concerns are being taken seriously.

*PBN would like to thank everyone who participated in our Survey, helping give readers an insight into business mood going into the Budget.