Budget reaction: new visa plans welcomed

Different sectors of the UK economy have reacted very differently to measures announced – or not announced – in Chancellor of the Exchequer Rishi Sunak's autumn Budget.

London skyline suggesting connection
While financial services leaders have been delighted by the reduction of the tax surcharge on banks from 8% to 3%, and tech bosses hailed the introduction of a new Scale-up Visa, the continuing costs facing other businesses bothered many others.
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Visa reforms for skilled talent

The Government’s plans include for the Scale-up Visa, to be launched in the spring of next year, is based on a fast-track scheme open to English language-competent applicants with a high-skilled job offer from an eligible business on a salary of at least £33,000.Additionally, reform of the existing Global Talent Visa will allow holders of international prizes and winners of scholarships and programmes to automatically qualify for a visa.The new Global Business Mobility Visa will also be launched next year to enable overseas businesses to establish a presence or transfer staff to the UK.Miles Celic, CEO of the financial services advocacy group, TheCityUK, said: "Making it easier to attract highly-skilled talent from overseas, supporting inward investment, reducing the bank surcharge, and bolstering regional investment to improve connectivity between our towns and cities are all powerful signals that the Chancellor is serious about the UK succeeding in a fiercely competitive global economy."While these actions will help shore up the UK’s status as a world-leading international financial centre, we still need to make up ground on New York, and other centres who continue to gain market share from the UK. Even with the cut to the surcharge, the effective tax rate on UK banks will remain significantly above rates in rival financial centres."

Balancing homegrown and international talent 

Nimmi Patel, Policy Manager of Skills, Talent and Diversity at the digital trade association techUK, said it was no surprise that the Budget promised to provide a world-class education to all Britons by increasing skills spending over the next three years by £3.8 billion.But she added: "TechUK’s members are committed to building a strong domestic talent pipeline, but for the UK to remain world leading in fields such as AI and quantum, the UK must remain open and attractive to international innovators, investors and the talent that supports that ambition."TechUK welcomes the Budget’s focus on migration which the UK’s new Scale-Up Visa and Global Talent Network. This will make it quicker and easier for growing digital businesses to bring in highly skilled individuals."As we approach the end of the first year of the new (post-Brexit) immigration system, techUK believes this is an opportunity to streamline the immigration system so it engenders public confidence and works for businesses of all sizes."Bhavneeta Limbachia, an immigration specialist at lawyers Russell-Cooke, commented that the Scale-up Visa comes with promised to overcome the flaws of other visa routes - such as the innovator visa, which has been criticised for its strict endorsement procedure - by providing a far more streamlined route to come to the UK. She added: “The visa will focus on providing UK scale-up businesses with the best talent to support economic growth. The new visa is welcomed as we hope it will go at least some way in offsetting the skills shortage caused by ending free movement, which many businesses are still grappling with."

Investment opportunities outweighed by tax rises?

Some business leaders, however, harboured reservations over the measures announced in the Budget. Kitty Ussher, Chief Economist at the Institute of Directors, said the crucial test of Mr Sunak's announcements was whether or not they gave businesses the confidence to invest."The Chancellor’s business rates and R&D tax credit reforms are welcome but with hefty hikes in other taxation (such as corporation tax and National Insurance contributions) on the horizon, that may not be enough to convince business leaders to press go on their plans for growth," she said.“He had an opportunity to partially reverse his previous decisions on employment and profit taxes, made in tougher times, but he chose not to do so.  “While promising a ‘skills revolution’, the actual measures that were announced, while welcome, felt piecemeal, and will not give business confidence that we have a coherent plan to prevent future labour shortages for our post-pandemic era outside the EU.”

'Businesses need more'

Similar concerns were voiced by Shevaun Haviland, Director-General of the British Chambers of Commerce, who said that while she welcomed changes to the business rates system and additional investment in skills and infrastructure, businesses needed more."Businesses have been battered by 18 months of the pandemic and problems around supply chain costs and disruption, labour shortages, price rises, soaring energy bills and taxes and there will be difficult months ahead," she said“While investments announced (in the Budget) today will take time to bed in, Government should consider other action that will relieve immediate pressures, particularly on smaller businesses, such as urgent review of the shortage occupation list to allow for short-term visas in key sectors, and an SME energy price cap."

International trade and domestic manufacturing

However, as far as international trade was concerned, Marco Forgione, Director-General of the Institute of Export & International Trade, welcomed the Chancellor's announcement of an increase in funding for the Department for International Trade.In particular, he said the allocation of £45 million in funding for the Export Support Service held out the prospect of really making a difference to how the government can help businesses to export.He added: "There is funding too for radical improvements at the border to streamline traders' interactions with agencies. The introduction of a Single Trade Window, the funding for which, to the tune of £180 million, has now been announced, is an opportunity for a step-change in how trade is done."But Stephen Phipson, Chief Executive of the manufacturers' organisation Make UK, said that while he welcomed the general direction of Mr Sunak's plans, he hoped to see "more focus on manufacturing as the plans unfold".While Mr Phipson said the Chancellor had been right to prioritise help for those on vulnerable in the post-pandemic era, manufacturers had a "mixed response" to the rest of the Budget."While there were some welcome announcements on business rates and the extension of the annual investment allowance, the announcements on skills amounted to little, if any, new money while the delay in the R&D spending target goes against the aim of making the UK a science superpower," he said."In addition, we had hoped to hear more about driving digitalisation and Net Zero Transition, issues at the forefront of the next industrial revolution. Furthermore, while growth is returning, future prospects look anaemic and will not be helped by the substantial tax rises companies are facing.“The current approach would benefit from a long-term economic plan. We face huge technological and societal challenges. Manufacturers are ready to seize the opportunities these challenges will provide and, in many cases, are already providing many of the solutions.“But they can only do so if government is willing to work with the grain of business and industry. This requires a partnership to develop the vision for our economy in the medium to long term and the development of policies which will support it.”

Read more news and views from David Sapsted

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