Our view of the Autumn Budget 2024

By Jonathan Bryce, Chief Policy and Governance Officer at Colmore BID

The Government have been clear that they want to prioritise investment in public services, rebalance workers rights and kickstart growth in the economy.  On Wednesday, Rachel Reeves, the first female Chancellor in history, set out her economic vision for this Parliament, and the first steps she is taking to reach those goals.  This was a wide ranging budget; here are our key takeaways. 

The headline grabbing policies related to workers.  Firstly, a significant boost to the National Minimum Wage, seeing a 6.7% uplift for workers aged 21 and over.  For those earning the minimum wage, this headline figure will be welcome during the enduring Cost of Living crisis, However, it is worth noting that for those aged under 21, the increases were much more significant.  It’s vital that the minimum wage allows people to afford to live whilst working, but this change isn’t without impact for businesses.   

For businesses with a significant proportion of their workforce on minimum wage, this will represent a considerable cost increase.  There is also a chance that work opportunities for younger people will reduce, as wages jump by up to 18%.  An appropriate settlement for those earning the minimum wage is important, but it doesn’t come without potential consequences.  

This increase has to be considered in conjunction with the budget’s other key announcement, an increase to the employer’s contribution to National Insurance.  This rise will start in April 2025, giving businesses a few months to prepare, however it will represent a significant increase in operating costs for small businesses.  The threshold at which employers have to contribute to National Insurance has also lowered, bringing more employees into this bracket.   

There is a small relief in the budget for the smallest of businesses; the Employment Allowance for employers has increased, meaning that there is a little headroom before small employers are expected to contribute at all. This is likely to only benefit the smallest of businesses.  Most SME’s will feel this change next year.    This one measure is expected to raise £25bn in tax.  With a budget aiming to generate £40bn of tax, it is clear that it is the broad shoulders of business that are expected to do the heavy lifting.   

One of the key sectors likely to be affected by these two changes is hospitality.  It’s no secret that the industry is still struggling; caught between the Cost of Living crisis for customers and the soaring cost of business, a set of circumstances that particularly effect this sector.  In past years, the government has provided some assistance to the industry, along with leisure and retail, through Business Rate Relief.  We are pleased that the Chancellor has heeded calls (including ours) to continue this scheme.  However, the level of relief has dropped from 75% to 40%. This is unlikely to provide much protection from the impact of this new wage and taxation regime and will do nothing to reverse the current trend of closures across the UK.   

There are a number of additional measures in the budget.  A few that stand out for us are: 

• An increase in Capital Gains Tax; most people will see an 8% increase 

• An increase in stamp duty on the purchase of second homes.  Will this have a chilling effect on the buy-to-let market? 

• A commitment to keep Corporate Tax at 25% for the duration of this parliament.  

There are also a number of benefits, tax increases, and regulatory changes in a number of areas that may or may not affect your business, such as; changes to how in-work benefits are paid, who is responsible for PAYE obligations in situations where agency staff are used, and ongoing relief to encourage the use of Electric Vehicles and businesses should take professional advice on if and how these might affect them.  The budget also gives businesses a sense of stability.  The roadmap for the next 12 months is now set, and there are no systemic changes planned.   

Focusing on the West Midlands, there was also the announcement of greater financial devolution to the WMCA, and a commitment to creating detailed plans of action both here and in Greater Manchester.   

The questions over the future of HS2 were also resolved (for now!) with commitment to continue to fund the project, and a commitment to fund the tunnelling from Old Oak Common to London Euston.  

The Government has set itself a range of goals on public sector performance, growth and economic stability.  However, it is clear that businesses are the ones funding much of this.  It is critical that the Government now delivers on those promises.