What does the Spring Budget 2020 mean for designers?

The first Budget of Boris Johnson’s majority government looked to instil confidence its ability to deal with coronavirus, and kept its distance from any lengthy dwellings on Brexit.

With this being the first Budget of Boris Johnson’s majority government; the first Budget post-Brexit; and the first Budget of very-recently-appointed chancellor Rishi Sunak, it was always going to be a sharply-eyed announcement.

Add to this the looming threat posed by a COVID-19 epidemic, and today’s budget was a highly anticipated moment for the new government.

Indeed, the coronavirus took centre stage in the Commons today. Following on from comments made on the BBC’s Andrew Marr Show, in which the chancellor said the NHS would get “whatever resources it needs” during this ongoing crisis, Sunak used his first Budget to promise a fiscal stimulus which he claims is worth £30 billion.

Staying true to Tory form, elsewhere in today’s announcement Sunak looked to strengthen the government’s support of businesses, mentioning a number of tax breaks, reforms and funding opportunities to come over the next term. It was, however, exceptionally light on mentions of the UK’s culture and creative sectors.

Mitigating the effect of COVID-19 on businesses

The coronavirus stimulus is something designers might want to pay attention to.

Jack Tindale, the design and innovation policy manager at think tank Policy Connect, says the chancellor’s intentions to support freelancers and SMEs through the challenges posed by the COVID-19 outbreak are “significant”.

Per the chancellor’s announcement today, which aims to negate the effects of necessary self-isolation for potential coronavirus patients, firms with fewer than 250 employees will have sick pay paid directly by the Government for two weeks.

Additional relief for emergency loans, cash grants of up to £3,000, and the abolition of business rates for the present year, were also announced to combat the effects of the outbreak.

But an alternative route for freelancers

While this is good news for design businesses, freelancers and contract designers might have to work a little harder to find their contingency among the chancellor’s coronavirus plans.

For those who are self-employed or working in the gig economy, Sunak reinforced Boris Johnson’s earlier comments that sick pay would be extended to people on “all types of contracts” during the crisis, but the way they will have to do so is through accessing welfare.

Sunak said he would make it quicker and easier to access benefits – Employment and Support Allowance (ESA) will be claimable from day one rather than day eight of leave; the minimum income floor for universal credit has been temporarily removed and all of this will be organisable over the phone or online.

“Levelling-up” R&D

One of Sunak’s big-ticket items in his budget and indeed a propeller of his so-called “levelling-up” strategy is a huge investment in research and development. Aiming for R&D investment to reach £22 billion a year by 2024-25, this could be a significant boost for designers.

Design Council chief executive Sarah Weir welcomed this announcement, saying: “Business and people who work in design are highly innovative and productive, and boosting R&D investment in the design sectors can drive the UK towards the 2.4% of GDP target.

“Following the Conservative manifesto, which put design among the UK’s key strengths in decades to come, we are keen to demonstrate how to unlock design’s potential for levelling up the economy and will provide the solutions which make Net Zero a reality.”

This high level of funding is thought to be the government’s way of replacing the funding that has been, is being, or will be lost from the EU. To this, Creative Industries Federation CEO Caroline Norbury says: “These have provided vital access to finance, markets, skills development and employment, as well as important investment in cultural and business infrastructure.

“The government’s commitment to match existing levels of EU structural fund support is welcome, however it is vital that they consult on plans for the upcoming UK Shared Prosperity Fund as soon as possible. Creative SMEs across the UK still face significant financial challenges, particularly as European funding programmes such as EU structural funds and Creative Europe come to an end.”

£90 million Arts Premium

Among the talk of COVID-19 and “levelling-up” infrastructure, there was at least one nod to the UK’s art and design sector. Acknowledging that Britain has historically been home to both notable scientists and notable creatives, Sunak announced a £90 million a year Arts Premium for secondary schools.

This amounts to, he says, an extra £25,000 per school over a three-year period, which will be used to fund creative education. Whether or not this goes far enough, is up for debate.

Tindale says: “While welcome, it is unlikely that this will do much to redress the significant fall that has taken place in the number of students taking creative subjects over the past ten years.”

Additional to this premium, Sunak also announced a £1.5 billion fund for capital spending for further education.

This is a cause, he says, that his predecessor Sajid Javid was particularly passionate about, but Tindale notes that it will remain to be seen if “creative skills will be seen as a priority for providers, or if they will continue to be seen as a poor relation to engineering and the natural sciences.”

A “less generous” entrepreneurs’ relief

One of Sunak’s only cuts throughout the Budget came in the form of the criticised Entrepreneurs’ Relief. Acknowledging that it was an “expensive and ineffective” initiative that costs the taxpayer £2 billion a year, the lifetime allowance has been reduced from £10 million to £1 million.

This could likely affect design business owners retirement plans, as Moore Kingston Smith partner Mike Hayes explains: “Many business owners anticipate that they might someday sell their company and pay capital gains tax at only 10% by reason of entrepreneurs’ relief [but] that aspiration may have to be revised.”

While these changes were largely anticipated, he adds that they are “much less generous than before”.

What else happened?

  • Sunak promised to abolish the so-called “reading tax”, meaning digital publications, including online magazines and newspapers, ebooks and academic papers will no longer include VAT.
  • He has also allocated a £1 million fund to promote the Scottish food and drink industry, and pledged a further £10 million to help distilleries go green.
  • Now that the UK has left the EU, he also says the tampon tax will be abolished from January 2021.
  • No significant changes were mentioned about the imminent changes to off-payroll working legislation IR35, which will continue to take effect from 6 April.
  • Sunak said £1 billion would also be channelled in the R&D of green fuel solutions, by way of a tax increase on pollution.
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