Hunt statement fails to support co-op sector or empower communities, say critics

‘Instead of shifting power and resources to local people, successive governments have continued to rely on the levers in Whitehall’

Chancellor Jeremy Hunt delivered his autumn budget yesterday, with an emphasis on tax and benefits as the government gears up for an election year in 2024.

The main rate of National Insurance will be cut from 12% to 10% from 6 January, affecting 27 million people, and the Living Wage will rise from £10.42 to £11.44 an hour from April. But experts from the Institute for Fiscal Studies (IFS) warn this will mean tough austerity measures ahead, and said Hunt was “taking more from us than it gives back”.

Hunt also announced 110 measures aimed at boosting economic growth – but this ignores co-ops and community businesses, say sector representatives, who had already been critical of the recent King’s speech.

Joe Fortune, general secretary of the Co-op Party, said: “The chancellor hailed this as ‘an autumn statement for growth’. However, within the 110 measures to grow British businesses, there was not a single mention of growing the co-operative sector.

“Our country needs growth created everywhere, by everyone, for everyone. That growth will only be delivered by a Labour & Co-operative government.”

Co-operatives UK said the statement was a a “missed opportunity”, adding: “We’re disappointed he didn’t take the opportunity to save thousands of jobs by supporting small businesses to convert into worker co-operatives – via a simple change to capital gains tax. It was a subject covered by our policy officer, Tom Laing, in his blog”.

The apex welcomed some measures, including the move to make permanent changes to the tax system which allow capital expenditure to be claimed as an expense. “This incentivises businesses to focus on investment and not just profit extraction. It is something co-operatives already excel at. However, co-operatives need government to unlock options to raise more capital from private investors.”

Co-operative UK also welcomed action to reduce the time it takes for new energy projects to connect to the national grid. “This is a major barrier to the proliferation of co-operative and community energy,” it said. “We need to go further though. Government should support communities to establish new energy projects and set up co-operative hubs for home and business retrofit.”

The decision to continue with the 75% business rates relief for retail, hospitality and leisure, is another plus, said the apex. “The cost-of living-crisis is not going away, and this measure will help community owned shops and pubs and working men’s clubs. But government needs to offer more help for small businesses to become energy efficient and lower costs.“

With regard to the hike in the living wage, Co-operatives UK urged more fundamental changes to the business system to improve living standards. “Government should also enable the growth of businesses that share wealth and power by design,” it said. “Worker co-ops and employee-owned businesses are more than twice as likely to hold fair pay accreditation as comparable non-worker owned firms.”

Ed Wallis, director of policy at Locality, said: “In an effort to make the economy stronger, the chancellor has reached for the usual election year tools. But headline grabbing announcements on taxes and benefits will not solve the underlying issues in our society. Whether it’s helping people into work, leading the way on net zero, or tackling inequality, it’s local people not Westminster politicians who have the answers.

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“Yet instead of shifting power and resources to local people, successive governments have continued to rely on the levers in Whitehall. If the chancellor really wants to unlock the potential of people across the country, he should take the leap and kickstart a community power revolution.”

Tim Davies-Pugh, CEO of Power to Change, said: “This was a missed opportunity to provide the proper resources and backing community business needs to thrive. In the King’s speech the government said it would “put local people in control of their future” and “strengthen the social fabric” of the country, and both the Prime Minister and Chancellor have pledged to “back British business”. But judging by the autumn statement, there is a gulf between what has been said., and what is being done – there should be a little less conversation and a lot more action for community business.

“The government has listened to Power to Change and others in the sector by ensuring the third round of the Levelling Up Fund was allocative not competitive, but there is still more listening for them to do. Our evidence shows that community business needs long-term and flexible place-based funding which provides the certainty to truly control their future. While new devolution deals are welcome, polling consistently shows that people trust local community groups to bring about change in their local area more than regional mayors; power, properly resourced, needs to reach the neighbourhood level.

“Plans outlined for future day-to-day spending and investment mean that questions remain around the adequacy of funding for local government and public services, and OBR forecasts living standards are to be 3½ per cent lower in 2024-25 than pre-pandemic. In 2022, 77% of community businesses reported increased demand for support related to the cost of food. Community businesses are already stepping in to provide more health and social care, education and childcare support to their communities. We need to learn lessons from the Big Society, not repeat its mistakes.

“Backing British business means backing community business too. That means treating community business like other forms of enterprise and making sure they are included in measures government puts forward to grow and nurture British business. The extension of 75% business rates relief for retail, hospitality, and leisure is a positive step which will benefit some community businesses, but without a dedicated business rates relief for community business, many will continue to fall through the cracks.

“Government had the opportunity to recognise the potential of community business and follow through on the promising rhetoric to provide the right resources and backing for community business so that they can thrive. On these measures, the Autumn Statement failed to deliver.”

Chris Cowcher from Plunkett Foundation said more should have been done to support small business, bearing in mind the cost impact of the rise in the Living Wage. “Last year nearly two thirds of businesses absorb price rises so that their products and services remained affordable for customers,” he said. “Also, over half of all businesses provided a minimum 5% cost of living pay rise to their staff. More concerningly, the research also highlighted that as many as one in three businesses is concerned about the next 12 months, with as many as 91% stating that inflation, rising prices and staffing costs were negatively impacting their operation.

“The increased energy price cap, coming just days after the budget, adds to these pressures for businesses.”

Cowcher welcomed business rates relief and  VAT relief for the use of energy saving materials (ESM) in premises used solely for charitable purposes. But he said this should be extended to community-owned businesses, specifically those that have adopted the community benefit society legal form.

“Our Better form of Business research showed that as many as 85% of businesses have already or are currently installing ESMs,” he added. “Not only would VAT relief be meeting an interested demand, incentivising investment in ESMs would be hugely positive for our sector – not just in terms of reducing running costs of for businesses but also in terms of taking action on climate change.”

With regard to plans to take unemployed and people back into work, Cowcher said: “While the ‘Back to work’ sections of the budget statement have rightly faced days of scrutiny in relation to the relative impact on those with physical and mental disabilities, there were some aspects of the announcements which may be of interest to our sector.

“Plunkett has recently been engaged in conversations with local DWP offices about the opportunities for work experience and volunteering. Previous evidence that we have published, has shown that the network has often created employment for those facing marginalisation the labour market. Plunkett would be keen to explore the opportunity to work with Job Centres, in relation to employment experience.”

Changes to the planning system “could present future opportunities for new community businesses as part of new infrastructure delivered alongside housing”, said Cowcher. “Plunkett will continue to advocate for the use of community-owned businesses within developments as a way of supporting integration of new and existing residents. In this context, community businesses will provide access to vital facilities and services, as well as volunteering employment opportunities, which have been prioritised by the community which owns the business.”

But, echoing other sector organisations, he warned: “The reality for many businesses is that they need more support than what was on offer this week. We will work with our membership to make the case for more direct measures in the spring budget, otherwise we fear that the challenges currently being faced may become terminal for some businesses.”