Why Hammond's tax plan might boost both wellbeing and business

Hammond’s tax plan might boost both business and wellness

Hammond’s tax plan might boost both business and wellness

While the Chancellor’s New (tax) Year announcement is definitely an attempt to please ‘all of the people all of the time’, it might just work, writes Anna Gaston

While the majority of news emanating from our government, the opposition and from the EU over the past few months has been full of doom, gloom and uncertainty, Philip Hammond has surprised many with some rare good news.

The Chancellor’s ‘New [tax] Year’s’ announcement was that 32 million people in the UK will benefit from a reduction in their income tax bill due to increases to personal allowances; the biggest increase to the National Living Wage (since its introduction) and an increase to the National Minimum Wage. Whilst this is undoubtedly good news for those 32 million people not all will be so pleased with the resultant increase in staffing costs.

As President Lincoln (para-phrasing poet John Lydgate I believe) observed ‘You can please some of the people all of the time, you can please all of the people some of the time, but you can’t please all of the people all of the time’, but with this announcement Hammond may be attempting to be all things to all people. While small business owners were unlikely to be pleased by all of the recent announcements, lo and behold, the Treasury also included provisions to benefit precisely those businesses: in the form of an announcement relating to cuts in  business rates for small retailers – the government’s stated plan is to cut a third off the business rates for small retailers over the next two years.

In view of the fast approaching ‘bank holiday rush’, the Treasury’s announcement is likely to be very welcome to many small business owners who undoubtedly will not be relishing the prospect of a potential dip in productivity due to the upcoming series of the shorter working weeks. That said the news from a well-publicised evidence of a study recently run in New Zealand that a four-day week can be just as efficient as the traditional five day working week, might well cheer them up.  In the New Zealand trial 240 members of staff were offered a four day working week without a reduction in salary (though I appreciate that prospect may not immediately sound encouraging for an employer). The trial was reportedly so successful that it has become a permanent policy for that company, having been described as an unequivocal success.

It seems unlikely that the 15 hour week – prophesied by John Maynard Keynes, in his celebrated essay of 1930, Economic Possibilities for Our Grandchildren – predicting that rising living standards and technological advancements by beginning of the 21st century will ever be achieved. But it remains to be seen whether UK businesses will look to implement any policies similar to those introduced down under, as workplaces strive towards increased efficiency, flexibility and automation.

However, as Easter is so late this year with the result that Good Friday and Easter Monday fall so close to the Spring bank holidays, many small businesses might take the opportunity to see what happens to productivity within their firms as a result – there may be a silver lining in these rain-laden clouds after all.

Anna Gaston is a senior associate at boutique private wealth law firm Maurice Turnor Gardner LLP



 

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