Leaders across the South West have responded cautiously to Rachel Reeves’ Budget, welcoming certain measures while expressing concern over others.
The Chancellor introduced a series of tax increases, some of which were inadvertently disclosed early by the Office for Budget Responsibility. Reeves described the leak as a “deeply disappointing and a serious error on their part.” She framed the changes as a call for “everyone to make a contribution,” including a ‘mansion’ tax, freezes on thresholds, and higher rates on property, savings, and dividend income. The proceeds are intended to support infrastructure projects nationwide and stimulate economic growth.
Alex Davies, chief executive of Bristol-based Wealth Cub, highlighted proposed reforms to the UK’s venture capital schemes. The Enterprise Investment Scheme and Venture Capital Trusts will be allowed to invest more in mature businesses, which Davies described as “straight off the Venture Capital Trust Association wish list.” However, Davies noted that the Budget documents also revealed a reduction in income tax relief for VCTs from 30 per cent to 20 per cent starting April 2026. He warned that past reductions had significant impacts on funding, citing a 65 per cent year-on-year drop in funds raised when relief fell from 40 per cent to 30 per cent in 2006/07. “2026/27 will be no different – with smaller companies facing a drought in funding in the years ahead,” he said.
From a corporate finance perspective, Mark Naughton, partner at FRP Corporate Finance in Bristol, suggested businesses would be “breathing a sigh of relief” as the Budget proved “perhaps not as costly as first feared.” Key changes included the halving of capital gains tax relief on disposals to Employee Ownership Trusts to 50 per cent. Naughton observed that while the wider benefits for staff remain, owners relying on 100 per cent relief may need to reassess their exit strategies. He added that clearer policy guidance allows management teams and lenders to plan ahead, including in mergers and acquisitions.
Michael Carter, partner at Osborne Clarke, highlighted the expansion of Enterprise Management Incentive schemes as a positive step. “EMI [Enterprise Management Incentives] remains one of the most effective tools for attracting and keeping talent, and greater flexibility would be a real boost for growth,” he said. He added that widening eligibility could materially improve how fast-growing companies reward and retain key employees.
Peter Jones, managing director of the HR Dept, noted that the increase in the National Minimum Wage and National Living Wage may create challenges for businesses. “With a rising wage bill, this may impact their recruitment plans and could potentially drive up unemployment,” he said. He also welcomed plans to maintain low business rates for high street retail, hospitality, and leisure sectors, particularly benefiting the hospitality industry.
Finally, Nigel Smith, managing partner at Ellis Jones Solicitors in Dorset, described a perceived irony in the Budget. “The ultimate irony in the Chancellor’s budget today was that she taxed the workers, savers and investors who are the ‘working people’ that her party said that it wouldn’t target with such rises,” he said, emphasising a tension between political promises and fiscal measures.
Overall, reactions across the South West indicate a mixture of cautious optimism and concern. While reforms to venture capital schemes and EMI expansions are viewed positively, reductions in tax relief and rising wage obligations could present obstacles for smaller businesses and employees alike. The Budget appears to balance attempts at economic stimulus with targeted contributions from a range of taxpayers, leaving local businesses to navigate its implications in the months ahead.
