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E-scooters at a crossroads
E-scooters at a crossroads

Posts Tagged ‘Spring Budget’

Unravelling the Budget – Health and Life Sciences reflections

Alongside the economy, health is one of the top concerns among the electorate. In today’s Budget, likely to be the last before the General Election, the Chancellor made announcements which will have implications for the healthcare system and clients alike. 

Here, we take a look at three key take aways for the health and life sciences industry:

An efficiency saving trade-off for the NHS 

The Chancellor’s flagship Budget announcements were largely based on personal finances. This includes a 2p cut to national insurance tax, freezing fuel duty, and raising the child benefit cap. Despite this, Hunt did find room for one significant financial package for the NHS – £3.4 billion of funding towards the NHS Productivity Plan.  

The Productivity Plan aims to fund digital advancements across the board, including for AI MRI scanners, ungraded IT systems and digitally enabled prevention services. The plan will also fund electronic patient records in all NHS trusts by 2026 – something initially committed to by Hunt when he was Health Secretary in 2013.  

This funding package and the commitments attached to it should be welcomed; however, they will be delivered alongside an expectation that the NHS achieves annual productivity growth of 2%. In the wake of ongoing industrial action and the largest real terms cut to NHS funding since the 1970s, this may be difficult to achieve.  

Clients engaging with the NHS should bear this in mind – policies and proposals that offer productivity gains or efficiency savings will be warmly welcomed.  

Scuppering Labour 

Hunt’s unexpected decision to reform the non-dom tax status takes away the only funding source for Labour’s health service reform plans, just as they will have finalised their manifesto commitments.  

Shadow Health Secretary Wes Streeting confirmed yesterday that this leaves a hole in their funding allocation, and they would have to look at alternatives. Hunt’s decision to act here puts a sizeable spanner in the works for Labour’s health mission.  

While there is nothing to suggest that Labour are inclined to move in an entirely new direction, this new development will likely require them to consider their priorities and rethink their direction of travel in health policy.  

What about Life Sciences?  

Hunt’s budget this year reaffirmed the Government’s position placing Life Sciences as a key growth sector in a series of announcements including funding for medical research charities and R&D tax reliefs. He hailed the success of AstraZeneca’s £650m investment in R&D and manufacturing sites in Cambridge and Liverpool respectively. 

Richard Torbett, CEO of the ABPI, suggested that this shows UK medicine manufacturing can be reinvigorated if the policy environment is right. The policy environment he refers to is one that values growth, jobs and investment.  

This is a mindset shared with Labour. Attracting Life Sciences industry investment is central to their plan for the sector and wider ambitions for growth. Any opportunity to leverage home-grown domestic growth and inward investment will be looked on favourably.   

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Spring Budget – Moving the political dial

Today’s heavily trailed Spring Budget demonstrated the difficulty the government will have in moving the political dial before the General Election.

Chancellor Jeremy Hunt has been operating under tight fiscal margins after ONS data showed the UK entered a ‘technical’ recession at the end of 2023. Nonetheless, news from the OBR that the government had more than halved inflation since November 2022, the top priority on Rishi Sunak’s 5-point plan, gave Hunt the confidence to cut taxes for a second time, in what could be their last opportunity to appease voters.

According to the OBR forecast today, the economy is expected to grow by 0.8% this year and 1.9% in 2025. That is slightly stronger than the 0.7% and 1.4% growth rate expected at the time of the Autumn Statement in November.

In this economic context, it was no surprise that Hunt’s speech was marked by a series of smaller scale changes rather than big policy interventions. Instead of an injection of cash to target waiting lists the Chancellor chose to announce an ‘NHS Productivity Plan’ to support a digital transformation within the NHS. On housing, a capital gains cut for residential properties was announced, but no sign of the rumoured Stamp Duty holiday for buyers.

At the heart of his speech was the 2p cut to national insurance, a measure that will partly be funded by abolishing the non-domicile tax status by 2025. This highly political move puts Labour on the backfoot by forcing Starmer to endorse the personal tax cut in his response, while creating a major challenge for a new Labour government, who have already allocated the money changes to the non-dom status will raise to the NHS.

There was also a notable continuation of existing commitments, with the freeze on alcohol duty and fuel duty both extended for a further 12 months. A U-turn on the household support fund, scrapped in the Autumn Statement, to provide an additional six months of funding also speaks to the Chancellor’s plan to push tough decisions until after the General Election, setting potential traps for a Labour government.

Whilst some fiscal headroom will be created through measures announced today, the reduction in national insurance will lead to a tighter squeeze on public services at a time when local councils are increasingly struggling with their budgets.

In his response, Labour Leader Sir Keir Starmer accused the government of “delusion” and “giving with one hand and taking more with the other”. He was quick to highlight that theft of Labour’s non-dom policy signalled “a government bereft of ideas”, and warned about stealth taxes that would swiftly follow through council tax.

However, pressure is now on Starmer and Shadow Chancellor, Rachel Reeves, to show how a Labour government will deliver economic growth and public sector reform without increasing taxation. This will become a lightning rod issue in the General Election.

Governments have a longstanding history of reducing taxes before a General Election to put more money in their voters’ pockets. However, there is scepticism within sections of the Conservative Party that today’s national insurance reduction will be enough to shift the political dial, after the Autumn Statement’s giveaways failed to do so. All eyes are on the polls over the coming days, as pressure grows on the Prime Minister and the Labour Leader, who now must navigate the fallout from today’s Budget.

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Budget Analysis with Jim Pickard and Kitty Ussher

On Thursday 16th March, WA Communications hosted Jim Pickard, Deputy Political Editor of the Financial Times, and Kitty Ussher, Chief Economist at the Institute of Directors and former Treasury Minister, to discuss what the Budget means for businesses and the big unanswered political questions following Chancellor Jeremy Hunt’s statement.

Chaired by WA’s Head of Public Affairs Marc Woolfson, the panel discussed the revised economic forecasts, Hunt’s focus on supply side policy, the upcoming challenges for the government, and policy areas that did not attract significant attention in the Budget.

Our panel outlined five key takeaways during the session:

To learn more about what the Budget means for you and other takeaways from the Chancellor’s Statement, get in touch with WA’s team to see how we can work together.

WA regularly host high-profile political figures and leading journalists to explore the intersection between politics, the media, and business – our recent event speakers include Rachel Reeves, Shadow Chancellor of the Exchequer; Chris Giles, FT Economics Editor; and Katy Balls, Political Editor at The Spectator. 

To be the first to hear about our upcoming events, follow us on LinkedIn or email events.rsvp@wacomms.co.uk.  

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Will the ‘Back to Work’ Budget work?

Sunak and Hunt are emerging from a bruising few months.

The cost of living crisis, questions about the fiscal competence of the Conservatives, and languishing poll ratings meant the duo face a political and economic mountain to regain momentum ahead of an election.

Today’s Budget therefore had to serve two purposes. It needed to continue the government’s response to the immediate economic and financial challenges facing businesses and households. It also had to offer a plan for the future, responding to Labour’s recent polling dominance.

Hunt responded to this challenge with a lengthy statement, which put meat on the bones of the Prime Minister’s five priorities and set out a direction for how the government plans to grow the economy.

Here are our key takeaways from Hunt’s Budget:

Economic growth is the central mission of the government

The more positive fiscal outlook – driven by falling energy costs and wider economic changes – has given Hunt more headroom to act. He used it to focus on supporting businesses and driving economic growth, which has become the defining mission of the government.

He will seek to achieve this by supporting businesses that invest through the capital expensing policy, further support for life sciences and creative industries and even producing a ‘Quantum Strategy’. It reflects a more targeted, transactional approach to this government’s relationship with business and prioritisation of high potential and high growth sectors. For those that invest, or have a plan to do so, this government wants to help those plans come to fruition.

The programme for growth can only be delivered with business help

The flip side of this Budget is a reflection that the government has limited resources, time and money to make big things happen. Governments of the recent past would highlight big infrastructure programmes to drive growth and support the economy. Even Hunt highlighted these types of policies in his last statement.

This Budget strikes a different tone. Through a mixture of tax changes and funds, government wants businesses to work closely with central and local government to deliver its priorities. The new Investment Zones are the clearest example of this, with government wanting combined authorities, universities and businesses to work together to drive regional transformation. It means that whilst the Government has set an overall direction, it is now looking to others to fill in the detail and help make its plans a reality.

Stealing a march on Labour

Labour has been on the front foot, with Starmer’s national missions defining the early battleground for the General Election campaign. Hunt’s statement began the Conservative Party’s fightback, stealing his headline childcare policy from Labour. By capitalising on Labour hesitancy to release specific details, the government has now taken the initiative in this debate.

Questions on the pace, scale and ambition of the policy are likely to follow in the days and weeks ahead, but the biggest impact could be on Labour. This episode is a lesson for Starmer and his Shadow Cabinet. By not fleshing out their platform, they are now at risk of a significant ‘love bombing’ operation from Sunak and Hunt. For businesses and public affairs professionals, it means Labour may accelerate its policy development and programme of big announcements.

The election starting pistol has been fired

This budget will focus minds in the Government and Opposition. Hunt focused his statement on the audiences that could provide a route to retaining power. More money for red wall constituencies, support for older voters and backing for businesses that could help fill the party’s coffers set itself up for the coming battle.

Meanwhile Labour faces a wake-up call that the road to power will not be straightforward and that there is still fight left in the Conservatives. A mixture of targeted funding, retrenchment of core messages on the value of work and businesses and the assault on Labour’s programme is the clearest demonstration of how the Conservatives plan on rebuilding their political momentum.

Sunak and Hunt will hope this Budget is the beginning of a long road back from the dismal poll ratings they face, and for Labour marks the first stern challenge they have faced since taking a commanding lead. The reaction to the Budget will define whether this is a turning point, or another nail in the coffin of the Conservatives.

To find out how the Budget is landing, and what it means for businesses, you can join our Budget analysis webinar by signing up here.

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