Key Announcements from Labour’s Autumn Budget and The Impact
Labour’s Chancellor, Rachel Reeves, presented the 2024 Autumn Budget to Parliament on 30th October. With an emphasis on public investment, progressive taxation, and cost-of-living relief, we take a look at the announcements made, and how these policies have impacted various industries 1 month on.
Public Spending
Central to the budget is a commitment to revitalising public services and infrastructure. Over the next five years, £100 billion will be directed towards capital projects, including housing and transport. Education also takes centre stage, with a 19% increase in capital spending enabling extensive school rebuilding and maintenance programs. This includes an additional £2.3 billion boost to the core schools budget for next year.
Furthermore, the NHS will benefit from substantial increases in funding. This includes a £22.6 billion rise in day-to-day budgets. Capital spending in health services will see an extra £3.1 billion.
What does this mean for my business?
The significant public spending commitments outlined in the recent budget, including £100 billion for infrastructure and increased funding for education and healthcare, are expected to have widespread effects across various industries. Read on to see how your companies industry may be impacted.
The Manufacturing Industry:
The government’s focus on housing, transport and NHS upgrades is set to drive demand for essential building materials, such as steel, concrete, and glass, benefiting the manufacturing industry with a rise in orders. At the same time, significant investments in NHS facilities, are expected to create new opportunities for manufacturers of medical equipment and healthcare technology.
The Construction Industry:
This surge in infrastructure work will create substantial job opportunities and long-term projects for construction firms across the UK. Additionally, projects focused on healthcare facilities will require specialised construction services, increasing demand for contractors with expertise in high-spec builds.
Professional Services Industries:
The £100 billion allocated to capital projects will significantly impact a range of professional services. Architectural, engineering, and consultancy firms will be essential in the design and planning stages of new schools, hospitals, and transport networks. This will create opportunities for growth in these sectors. Similarly, legal and financial services will see increased demand as firms handle contracts, and financial institutions manage project funding and investments. Furthermore, technology service providers will play a key role in integrating digital infrastructure for schools and healthcare facilities.
Taxation
The Autumn Budget introduced several key progressive tax policies aimed at addressing wealth inequality and ensuring a fairer tax system. Labour announced they will be increasing capital gains tax (CGT) rates, meaning individuals selling residential property will pay higher taxes on any profit they make from the sale. The tax rate for lower-rate taxpayers will rise from 10% to 18%. For higher-rate taxpayers, the rate will go up from 20% to 24%. These changes, along with adjustments to Business Asset Disposal Relief (BADR) and Investors Relief, are intended to create a more progressive tax structure. As well as these policies, Labour will be applying VAT to private school services starting in January 2025 and removing business rate relief for these schools by April 2025.
What does this mean for my business?
The Manufacturing Industry:
Investors may become more cautious about buying and selling manufacturing assets due to the higher tax burden on any capital gains from these transactions. However, the shift could encourage longer-term investment strategies, focusing on sustainable growth rather than quick turnovers.
The Construction Industry:
Increased capital gains tax rates could limit the availability of capital for new construction projects or reinvestment in the sector. However, the strong demand for construction services, particularly in public infrastructure projects like housing and hospitals, may balance out these potential impacts.
Professional Services Industries:
With changes to taxes, such as the rise in Capital Gains Tax (CGT), inheritance tax reforms, and new VAT regulations for private schools, businesses and individuals will likely need expert advice to navigate these adjustments. Law firms may see an increase in demand for legal services, and accounting/advisory firms may benefit from the increased demand for financial advice.
Cost-of-living Support
Addressing the ongoing cost-of-living crisis, the government announced a significant rise in the national minimum wage, which will rise 6.7% to £12.21 per hour from April 2025. As well, £22.6 billion boost to NHS funding and increased investments in public services, aim to improve healthcare and essential services. The government also announced that fuel duty will remain frozen.
What does this mean for my business?
The measures to support the current cost-of-living crisis are expected to affect many different industries for similar reasons. One of the most notable affects, impacting businesses of all sizes, is an increase in labour costs as a result of the increased national minimum wage. These higher costs may place additional financial pressure on employers, particularly in small and medium-sized enterprises. The freeze on fuel duties however, may help stabilise costs associated with transport and logistics. This will be particularly beneficial to those in the retail, manufacturing, distribution and logistics sectors, as this could allow these businesses to better manage operating costs. Additionally, the increased investment in public services should lead to more opportunities and job creation in various industries. For example, the manufacturing, construction and engineering sectors could see a significant boost in demand, due to the increased demand for infrastructure.
Environmental Policies
Labour introduced several key environmental policies aimed at reducing carbon emissions and fostering sustainable growth. The government announced investments in clean energy and the development of green technologies. There is also a focus on accelerating the electrification of transport. Additionally, steps are being taken to encourage sustainable land management and improve energy efficiency in the agricultural sector.
What does this mean for my business?
The Manufacturing Industry:
The increased focus on clean energy and green technologies will likely drive demand for manufacturers. More specifically, those involved in the production of renewable energy equipment, such as solar panels and wind turbines. Manufacturers may also see opportunities in producing energy-efficient components. This includes products such as electric vehicle batteries for the transport industry.
The Construction Industry:
The emphasis on green infrastructure and sustainable land management will create opportunities for construction firms. In particular, those specialising in energy-efficient buildings and sustainable development projects. Also, the electrification of transport could lead to new construction projects focused on electric vehicle infrastructure, such as charging stations.
Professional Services Industries:
Professional services, such as engineering, architecture and consultancy firms, will play a key role in supporting the transition to greener industries. There may be an increase in demand for services related to sustainable design and compliance with environmental regulations.
In summary, the 2024 Autumn Budget outlines a strategy focused on strengthening public services, supporting economic growth, and addressing the cost-of-living crisis. Key investments could significantly drive demand for businesses in the UK. The introduction of progressive taxes, aims to reduce wealth inequality, though the impact on businesses will differ. Investments in green technologies and clean energy also create new opportunities for industries. Overall, while some sectors may face challenges, the budget’s focus on long-term investment is expected to promote growth for the economy.
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