Analysis of the 2024 Autumn Budget

written by Barbour EHS Writer Chloe Jones

The Autumn Budget 2024, presented by Chancellor of the Exchequer Rachel Reeves on 30 October 2024, focuses on fostering economic stability and growth.

Central to the Budget are measures aimed at reducing the national deficit and supporting public services. The Government has introduced ￡40 billion in tax increases, including higher National Insurance contributions, to tackle a ￡22 billion shortfall in public finances. This move is intended to ensure economic stability and fund essential services.

In addition to tax changes, the Budget outlines significant adjustments in public spending. The Government plans to increase departmental spending by an average of 2.0% per year in real terms from 2023-24 to 2029-30. This includes initiatives to reduce NHS waiting lists by delivering 40,000 extra elective appointments per week. The Budget also emphasises support for small and medium-sized enterprises (SMEs) through targeted tax relief and increased funding for innovation, aiming to drive business growth and innovation.

Furthermore, the Budget sets a goal to reduce inflation to 2.0% by 2029, part of a broader strategy to stabilise the economy and protect household incomes. Investments in climate and energy initiatives, such as the allocation of ￡125 million for Great British Energy, underscore the Government’s commitment to transitioning to renewable energy and reducing carbon emissions. These measures collectively aim to create a resilient economy, support public services, and expand opportunities for businesses and individuals alike.

The Budget addresses a number of key areas, and we take a specific look at how they will relate to Barbour's services:

Environment

The Budget includes several key climate and energy announcements aimed at making the UK a “clean-energy superpower.”

One of the key highlights is the allocation of ￡125 million in funding for 2025-26 to Great British Energy, a publicly owned energy company, following an initial capitalisation of ￡8.3 billion over the current Parliament. Despite speculation, the Budget extends a 14-year freeze on fuel duty, which has cost the Exchequer a cumulative total of ￡100 billion and left overall UK carbon dioxide (CO2) emissions as much as 7% higher than they would have been.

Additionally, the Budget extends incentives for electric vehicles to encourage their adoption and reduce emissions from the transport sector. There is also an increase in the rate of windfall tax on oil and gas companies, aimed at ensuring these companies contribute fairly to the transition to a low-carbon economy. Furthermore, the Budget pledges investment in emerging technologies, including green hydrogen and carbon capture and storage, to support the UK’s climate goals.

These measures are part of a broader strategy to address slow economic growth, stagnant living standards, and crumbling public services, which the Labour Government attributes to the previous 14 years of Conservative rule. The Budget aims to “fix the foundations” of the UK economy through increased investment in clean energy and other critical areas.

The Autumn Budget has been critiqued by some, highlighting that it falls significantly short in terms of green investment. Experts argue that while the Budget includes some positive measures, such as funding for Great British Energy and incentives for electric vehicles, these steps are insufficient to meet the UK’s ambitious climate goals. The continued freeze on fuel duty, which has been in place for 14 years, is highlighted as a major issue, as it has led to higher carbon dioxide emissions than if the duty had been increased. Additionally, some say the Budget lacks substantial new investments in renewable energy and green technologies, which experts believe are crucial for the UK’s transition to a low-carbon economy.

Esin Serin, a policy analyst at the Grantham Research Institute on Climate Change and the Environment, stated, “The Budget fails to recognise one of the fastest-expanding areas of business – the net-zero economy.” This sentiment underscores the criticism that more ambitious and comprehensive measures are needed to ensure the UK can effectively address climate change and achieve its long-term environmental targets. The Labour Government, which presented the Budget, has been criticised for not doing enough to “fix the foundations” of the UK economy through green investment, despite their claims of addressing slow economic growth and stagnant living standards.

Planning

The Budget includes several key measures aimed at boosting the construction sector. One of the major highlights is the nearly 50% increase in funding for local roads maintenance, bringing the total to almost ￡1.6 billion for 2024-25. This funding will go beyond the Government’s commitment to fix an additional one million potholes across England each year.

In terms of transport infrastructure, the Budget provides funding for HS2 trains to run to Euston, including tunneling to the central London terminus, which is expected to catalyse private investment into the station and local area. There is also a pledge to deliver priority transport schemes, such as the TransPennine route upgrade between York and Manchester via Leeds and Huddersfield, and progressing HS2 Phase One to improve connectivity between London and Birmingham.

For the education sector, the Budget allocates ￡1.4 billion to help rebuild schools, including an increase of ￡550 million from the previous year. Hospitals will see a ￡3.1 billion increase to the capital Budget, with more than ￡1 billion dedicated to tackling reinforced autoclaved aerated concrete (RAAC) and the backlog of maintenance, repairs, and upgrades across the NHS estate. Additionally, a dedicated fund will be established to upgrade 200 GP surgeries across England.

Housing measures include ￡3 billion of additional support for SMEs and the Build to Rent sector through housing guarantee schemes. The stamp duty land tax surcharge on second homes will increase by two percentage points to 5%, which is expected to support over 130,000 additional transactions from people buying their first home or moving home over the next five years. Additionally, a ￡500 million "top-up" to the Affordable Homes Programme aims to build up to 5,000 additional affordable homes.

These measures reflect the Government’s commitment to addressing infrastructure needs, supporting public services, and promoting sustainable development in the construction sector.

There have been mixed reactions from the construction and engineering sectors to the Budget. While the industry is generally receptive to the significant infrastructure funding announced, there are concerns about the lack of focus on skills development.

Chancellor Rachel Reeves’ Budget includes substantial investments in infrastructure projects, such as the HS2 extension to Euston, the TransPennine route upgrade, and East West Rail. The Budget also allocates nearly ￡1.6 billion for local roads maintenance, which is a 50% increase from the previous year, aiming to address the issue of potholes and improve road conditions.

However, industry leaders have expressed concerns that the Budget does not adequately address the skills shortage in the construction sector. Colin Wood, chief executive of AECOM Europe, UK/Ireland, and India, emphasised the need for a clear pipeline of projects to build the necessary skills and invest in innovation. He noted, “While the funding for major projects is welcome, the industry needs more support to develop the workforce required to deliver these projects successfully.”

Brian Yates, UK and Ireland managing director at Stantec, echoed these sentiments, highlighting the importance of addressing long-term challenges in the built environment. He stressed the need for programs and initiatives that boost regional transport connectivity and leverage investment in renewable energy and carbon capture schemes.

Overall, while the infrastructure funding in the Autumn Budget 2024 is seen as a positive step, there is a call for more comprehensive measures to address the skills gap and ensure the successful delivery of these ambitious projects

Safety and employment

The Autumn Budget 2024 has several implications for safety and employment. One of the key measures is the significant increase in the National Living Wage, which will rise by 6.7% to ￡12.21 per hour for those aged 21 and over, starting from April 2025. This increase is expected to provide an additional ￡1,400 annually for full-time workers. For younger workers aged 18-20, the Minimum Wage will see a substantial 16.3% rise to ￡10 per hour. These changes reflect the Government’s commitment to reducing income inequality and supporting low-income workers.

In terms of employment, the Budget introduces an increase in employer National Insurance contributions by 1.2% to 15%, effective from April 2025. This change, along with the lowering of the threshold at which employers start paying National Insurance from ￡9,100 to ￡5,000, is expected to increase costs for businesses, particularly those with a high number of part-time workers. To offset these costs, the Employment Allowance for small businesses will double from ￡5,000 to ￡10,000, providing relief to nearly 865,000 small businesses.

The Budget also emphasises enhancing employee protections and improving workplace safety. This includes commitments to better protections against unfair dismissal and workplace bullying, as well as improved access to parental leave. Additionally, the Government plans to publish the “Get Britain Working” white paper later this autumn, which aims to address unemployment and support people in finding work.

Overall, the Autumn Budget 2024 aims to balance the need for economic stability with measures to support workers and improve workplace conditions.