Rebecca Morley looks at the impact Chancellor Rishi Sunak’s Autumn Budget and the Spending Review 2021 will have on the cycling and retail sectors
Global economic uncertainty has dominated headlines over the past couple of years, with businesses across all sectors having to adapt to new challenges no one could have foreseen at the start of 2020.
The Autumn Budget and Spending Review (SR) 2021, announced on 27th October, set out the Government’s plans to ‘build back better’ as the country now recovers – but what did it promise for the cycling industry?
More than £5 billion will be invested over the Parliament in buses and cycling, and the Government is delivering a £5.7 billion investment package over five years for London-style integrated transport settlements in eight English city regions.
Local transport links will also be included with investment in cycling, fulfilling commitments to build hundreds of miles of high-quality cycle lanes across England, provide bike training for children, and a new e-bike support programme.
The Budget and SR also provides over £2 billion of investment in cycling and walking over the Parliament to build hundreds of miles of segregated bike lanes and other facilities to improve cyclists’ safety. This includes £710 million of new investment in active travel funding over the next three years.
“Ring-fenced funding of £2 billion over five years will enable councils to get on with building hundreds of miles of separated cycling routes in both urban and rural areas,” said Cycling UK CEO Sarah Mitchell. “However, it won’t deliver the tens of thousands of miles needed to create the ‘world-class’ network that the Government promised in its ‘Gear Change’ vision document last year.
“Meeting the Government’s own targets to double cycling and increase walking by 2025 will require investment of between £6 to £8 billion. If England is to have a chance of making this target, local authorities must be able to make up the shortfall and secure additional funding if we’re to ‘build back better’.”
Active travel funding
Sustrans’ chief executive Xavier Brice said the charity is ‘very pleased’ that the Government has used the Spending Review to commit to the £2 billion investment in walking and cycling up to 2025.
“This must mark the start of long-term multi-year funding for active travel to make it easier for everyone to walk and cycle more and to drive less for short journeys,” said Brice. “This will be crucial for reaching net-zero, tackling physical inactivity, reducing air pollution and creating more liveable towns and cities.
“The UK Government’s Net Zero Strategy reiterated the target for half of all journeys in towns and cities to be cycled or walked by 2030,” Brice continued. “This is a very ambitious target that highlights the need for long-term, reliable investment in active travel, and also public transport.
“However, whilst the £2 billion of funding is a great starting point for building up walking and cycling, the UK Government’s existing targets for 2025, which include doubling cycling, are unlikely to be met, and so we look forward to the Government setting out how they will meet the 2030 target in the forthcoming second Cycling and Walking Investment Strategy. The £5.7 billion sustainable transport funding for England’s city regions to help level-up transport is also welcome.
“As the Chancellor committed to continue to freeze fuel duty, it is worth acknowledging that there could be a lot more funding to invest in public transport, walking and cycling had fuel duty not been frozen for the last 10 years.
“This will cost the Treasury £8 billion alone over the next five years which could be invested in sustainable travel elsewhere. And it continues to make driving a more attractive option for longer journeys. Given that the cost of driving will become even cheaper as more vehicles are exempt from vehicle excise duty, it’s time for the Treasury to start thinking about a fairer, equitable approach for vehicle charging.”
Nicolas de Juniac, UK general manager of Zoomo, said the budget announcement was “truly underwhelming” and “frankly, disappointing”. “Rishi Sunak used [the] announcement, what he called embracing the ‘age of optimism,’ to dither and pontificate about creating a ‘new economy post-Covid’. However, it seems that this is blind optimism that neglects the ongoing climate crisis. We need to do more, and we need to do it fast. Sunak announced that £6.9 billion would be spent on transport schemes across the UK, although just £1.5 billion of this investment is new money.
“Shockingly, he announced a reduction in the cost of domestic air travel through a cutting of Air Passenger Duty ahead of COP26 and freezing of fuel duty, meaning that the average tank of fuel will cost around £15 less per car. He is outright enabling citizens to be more reliant on fossil fuels and climate hazardous transport solutions – rather than focusing on becoming less reliant on these harmful pollutants. It seems that Sunak forgot not only to get on his bike this morning, but he is also encouraging others not to get on theirs.”
Further, de Juniac continued, there was ‘no sign’ of financial levers to reduce fossil fuel dependence, contrary to what has been occurring in cities like Paris. “We were looking forward to announcements of investment into cycling infrastructure, subsidies for individuals and businesses to own and use e-bikes, and financial mechanisms to dissuade the use and purchase of fossil fuel-guzzling cars and vans,” said de Juniac. “None of these measures were announced [in the budget].
“We find this uninspiring against the backdrop of global moves towards cycle-friendly and green policies. In fact, just recently, the city of Paris announced a €250 million investment into 180km of bike lanes and three times the number of bike parking spots across the city. This is how to adopt and implement sustainable and micromobility friendly models for the city of the future.
“It is a real shame that the Chancellor’s new budget did not follow the innovative examples of our European neighbours. It’s apparent that large cities want, and frankly need, to move in this direction, but they require government support to make the leap.
“Overall, we feel that the Chancellor’s budget was not bold enough and risks leaving Britain behind in the movement towards making cities more sustainable. There is so much we can and should be doing, and it is disconcerting to see a lack of interest, investment or decisive action in this area.”
What does the Budget and SR21 mean for retailers?
Tabitha Walker from the Association of Cycle Traders (ACT) outlines the key points for cycling businesses…
The Chancellor announced a new 50% business rates discount for companies in the retail, hospitality, and leisure sectors, lasting for one year. Alongside the Small Business Rates Relief, Sunak claimed his measures would mean more than 90% of retail, hospitality and leisure businesses will see a discount of at least 50%.
“Apart from the Covid reliefs, this is the biggest single-year cut to business rates in 30 years,” he said. The business rates multiplier will be frozen for 2022/23 at 49.9p for properties under £51,000 RV and 51.2p for those above, meaning bills are 3% lower than projected.
From 2023, a new business rates relief will incentivise property improvements by delaying consequent increases in bills for 12 months. Transitional relief has been extended for one year, restricting bill increases to 15% for small properties (up to £20,000 RV) and 25% for medium properties (up to £100,000 RV), subject to subsidy control limits.
The Government has published a consultation on introducing a UK-wide Online Sales Tax, where revenue would be used to reduce business rates for bricks and mortar stores. The final report of the business rates review is available here.
Various Independent Retailers Confederation (IRC) members have commented on the new business rates within the budget and how it will impact their members. Chris Hall, director of the ACT commented that the reduced business rates are “welcome news for cycling retailers”. He added: “This is exactly what the ACT together with other IRC organisations have been pushing for over many years.”
British Independent Retailers Association CEO Andrew Goodacre said: “Whilst we would have liked to have seen a more fundamental review of business rates, we are pleased to see some respite for the smaller, independent retailers. The retail discount for business rates was a positive move when first introduced in 2019 and it is right that it is now reintroduced. We also think that the incentive to encourage investment in equipment to reduce the carbon footprint of shops is a good idea.”
However, he also went on to point out: “The rates bill for this year was reduced to 25% (of normal levels). This was done in response to Covid. Reducing rates by 50% next year is in fact a 100% increase on what businesses are actually paying. On top of everything else, this will be a challenge.”
National Living Wage
The National Living Wage rate will be £9.50 from 1st April 2022. This is a 6.6% increase on the £8.91 rate for 2020/21. The Government remains committed to raising the NLW so that it reaches two-thirds of median earnings and applies to workers aged 21 and above by 2024, subject to economic conditions. The Government has accepted all recommendations from the Low Pay Commission on revisions to the National Minimum Wage rates.
The LPC’s full report, setting out the evidence used in reaching these recommendations, will be published later this year. A summary of findings is available here.
– The Government will freeze fuel duty in 2022-23, for the twelfth consecutive year
– The £1m Annual Investment Allowance, scheduled to end this December, has been extended to 31st March 2023 to support new investments and simplify tax requirements
– A new recruitment service will be established by 2024/25 to support new apprenticeships
and a consultation will be launched on giving employers more choice about how apprenticeship training is delivered
– The Recovery Loan Scheme has been extended until 30th June 2022. From 1st January the scheme, which provides lenders with a guarantee on eligible loans, will be restricted to
SMEs. It will provide a maximum finance amount available of £2m and guarantee coverage to lenders will be reduced to 70%
– Government will also address the driver shortages by introducing temporary visas. It also announced new funding to improve lorry parking facilities