Budget Analysis

Rachel Reeves has delivered the first Budget of this Labour Government to fix the UK’s foundations and deliver on the promise of change.

The Budget follows months of warnings from the Chancellor and Prime Minister that “difficult decisions” will be necessary to embrace the harsh light of fiscal reality and address the £22 billion black hole, which Rachel Reeves has claimed was left by the previous administration. While the Government’s intention is to protect ‘working people’, decisions such as the scrapping of winter fuel payments for millions of pensioners and increasing the cap on single bus fares means those on the lowest incomes will also be impacted.

Much of the pre-Budget debate has centered on the Government’s decision to increase Employer National Insurance Contributions (NICs). They have faced criticism as to whether this is an outright breach of their pre-election pledge not to increase taxes on working people, or a technical loophole that keeps them within the margins of the manifesto. Either way, this represents the Budget’s largest tax rise and will generate more than £20bn which the Chancellor hopes will go some way towards changing the outlook for public services.

Ultimately, the stakes for business are high in this Budget. Some commentators have argued the combination of increasing Employer NIC contributions and the National Living Wage, as well as legislative measures such as the Employment Rights Bill, could all stifle the pro-growth agenda just weeks after the landmark International Investment Summit. Criticism has been levied at Government from a range of industries who warn these measures will squeeze smaller and medium-sized businesses and result in fewer jobs at a time when Government is striving to dramatically increase economic participation.

The changes announced today will raise taxes by £40 billion. Reeves’ central message to business is to pick up the bill now in return for a steadier operating environment in the long-term.

To find out more about what today’s announcements mean for your sector, and how your organisation can shape the discussion, get in touch at contact@wacomms.co.uk.