News & Analysis

Industry’s response to the Autumn Budget

30th October 2024
Paige West
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The Chancellor has presented a Budget aimed at strengthening the foundations for progress after more than a decade of economic stagnation.

The plan includes measures to address NHS challenges and rebuild Britain, while safeguarding workers from increased taxes on their wages.

The government faced a tough starting point, inheriting £22 billion in unplanned spending demands, the highest debt levels since the 1960s, strained departmental budgets, and stagnant living standards.

Positioning itself as mission-led, the government has outlined difficult but necessary choices on tax, spending, and welfare to stabilise the economy and fiscal landscape. This Budget prioritises reducing hospital waiting lists and creating space for investment in critical infrastructure like schools, hospitals, and roads.

To support living standards, the government is increasing the National Living Wage, cutting duty on draught beer, maintaining bus fare caps, and holding steady on the main rates of income tax, employee national insurance, and VAT.

Aimed at rebuilding Britain, the Budget commits over £100 billion to public investment over the next five years and goes beyond previous promises with an extra £500 million for local road maintenance in 2025-26, ensuring over one million potholes will be filled annually.

Fixing the NHS and reforming public services

The Budget prioritises restoring public services by increasing day-to-day spending on health, education, and criminal justice by an average of 3.3% in real terms over the next two years. A key focus is fixing the NHS, with £22.6 billion allocated to support an additional 40,000 elective appointments per week, aimed at reducing waiting times. The government has also earmarked £1.5 billion for new surgical hubs, diagnostic scanners, and beds to expand treatment capacity and decrease emergency wait times. Additionally, £100 million will fund upgrades in 200 GP sites across England, enhancing productivity and accessibility in primary care.

Education is another focal point, with an extra £4 billion, including £2.3 billion directed toward the core schools’ budget to increase per-pupil funding. The school rebuilding programme will receive £1.4 billion to begin 100 infrastructure projects across the country, creating safer and modern learning environments.

Further, the Budget allocates funds to secure borders and improve public safety. A new Border Security Command will combat organised crime with 100 additional National Crime Agency officers, and the Home Office aims to reduce asylum support costs by over £4 billion by increasing asylum processing efficiency. The Budget also supports neighbourhood safety, with a commitment to adding 13,000 more officers and PCSOs to reinforce community policing.

To support these improvements, government departments are set to achieve a 2% efficiency target, saving billions by improving productivity and minimising wasteful spending, reflecting the government’s commitment to responsibly managing taxpayer funds.

Protecting working people and living standards

The Budget prioritises protecting the living standards of working people amidst economic challenges. The Chancellor upheld pledges to avoid increasing National Insurance, VAT, or Income Tax, ensuring no rise in tax burdens for workers. Additionally, tax thresholds for Income Tax and National Insurance Contributions will remain unfrozen from 2028-29, preventing working people from being pushed into higher tax brackets.

A key measure is the increase in the National Living Wage, which will rise to £12.21 per hour in April 2025, benefiting 3 million workers with an annual boost of £1,400 for a full-time worker. Young workers aged 18 to 20 will see their minimum wage increase to £10.00 per hour. For motorists, fuel duty is frozen for an additional year, alongside a 5p reduction extended until March 2026, saving significant costs for vehicle owners. To encourage zero-emission vehicle use, Vehicle Excise Duty for electric vehicles will be set at £10 until 2029, with adjustments for hybrid and conventional cars beginning in 2025.

Finally, working-age benefits and the Additional State Pension will rise by 1.7% in April 2025, reflecting inflation and providing support to around 5.7 million families, who will gain an average of £150 annually under the new Universal Credit adjustments.

Rebuilding Britain

The government’s commitment to rebuilding Britain focuses on targeted investment in public services, infrastructure, and industry, with no return to austerity. To support long-term growth and improve quality of life, the government plans substantial investment in schools, hospitals, and road maintenance, alongside efforts to deliver 1.5 million new homes. This approach builds on prior initiatives such as the National Wealth Fund, an Industrial Strategy, and international investment drives.

Road improvements are a priority, with an additional £500 million for pothole repairs in 2025-26, bringing total funding for road maintenance to nearly £1.6 billion. Overall, public investment is set to increase by £100 billion over the next five years while maintaining a downward debt path, and departmental capital spending will rise to £131 billion in 2025-26. To fuel growth across the country, additional funds will be directed towards local and regional transport improvements, including a £1.3 billion budget for Metro Mayors and over £650 million for transport in rural and urban areas.

The government is also supporting innovation and digital infrastructure, earmarking £20.4 billion for R&D in 2025-26 and over £500 million for expanding Project Gigabit and the Shared Rural Network. Housing development is receiving a boost with £500 million for affordable homes, raising the Affordable Homes Programme budget to £3.1 billion. To assist the private housing market, £3 billion will support SMEs and Build to Rent projects, expanding housing options nationwide.

To help high street businesses, a reform of business rates will take effect from 2026-27, lowering taxes for retail, hospitality, and leisure properties while increasing rates for high-value properties like distribution warehouses. Additionally, a temporary 40% relief for small businesses and a freeze on the small business multiplier will provide nearly £2.4 billion in support over five years, with one-third of small business properties continuing to benefit from rates relief.

Repairing public finances

The Chancellor's Budget aims to stabilise public finances by implementing targeted tax adjustments, focusing on contributions from businesses and high earners to support essential public services, including the NHS and education. Employer National Insurance will increase by 1.2% from April 2025, with the Secondary Threshold lowered, though small businesses will benefit from an increased Employment Allowance, enabling many to avoid National Insurance on wages for up to four full-time staff. Capital Gains Tax (CGT) rates will also increase for higher earners, expected to raise £2.5 billion, while Inheritance Tax (IHT) thresholds will remain fixed until 2030, with pension pots and relief on high-value estates now more aligned to reduce tax planning loopholes.

In addition to these adjustments, the government will offer relief to the hospitality sector by reducing alcohol duty on draught products sold in pubs, supporting brewers and small producers. This measure, set to cut duty bills by over £85 million annually, provides a small but meaningful reduction on each pint sold in pubs. Furthermore, Air Passenger Duty (APD) will be marginally adjusted to reflect inflation, with modest increases for economy fares but a 50% hike for private jets to align with environmental goals.

These tax measures are intended to distribute fiscal responsibility across higher earners and businesses while protecting working people from increased direct taxes, helping balance public finances to fund critical services and investments in the nation’s future.

Thoughts from industry

Aaron Merkin, Chief Technology Officer of Fluke Reliability said: ‘‘In a sector integral to the growth of the economy, it’s good to see the promise of the new UK government being fulfilled. The promise of the Labour manifesto was to invest in the sector through its strategic partnerships and Industrial Strategy Council, and despite the challenges of the reality they inherited, its given hope to UK manufacturing that they are able to stick with their promise. The recent dip in the manufacturing PMI to 51.5 illustrates a wary approach from businesses as they’ve waited for clarity, but the clarity has now been provided and it is exciting to see what comes next. 

“Considering the challenges facing the economy, such as supply chain disruptions, inflation, and geopolitical tension, the commitment to investment is the turning point UK manufacturing has been waiting for. 

“With over £2bn committed to funding a modern industrial strategy for the automotive sector, and £520m for a new Life Sciences Innovative Manufacturing fund, there is a lot of growth potential for these industries of the future.

“Investment into such sectors can enable manufacturing enterprises based in the UK to combat industry challenges, such as the global skills shortage, by utilising tools that are often overlooked due to tightening budgets.”

Dr. Andrea Cullen, CEO and Co-Founder at CAPSLOCK said: “The policies in this year's Autumn Budget fell short of truly solving the deeply ingrained challenges facing the UK’s cyber security resilience. Policies such as Skills England, which was briefly mentioned in the speech as part of the seven pillars of growth, will do little to solve the severe talent shortage and lack of diversity seen in the sector. The key to addressing this issue lies in creating a grassroots movement that starts well before further and higher education and, instead, at the earliest stages of education – primary school.    

“The Budget failed to move beyond its traditional, top-down allocation of resources and superficial initiatives. Instead, it needed to focus on long-term planning and investment that addresses the root causes of the skills gap. This includes reshaping how STEM subjects are taught, ensuring they incorporate modern cyber security challenges and innovations. Training must be re-evaluated to align with industry needs, and more must be done to provide relatable role models from diverse backgrounds to inspire young people, particularly underrepresented groups, into the field. There was also a lack of support for apprenticeship programmes and initiatives that can provide hands-on experience, creating accessible pathways into the sector for young talent.    

“By integrating cyber security awareness and technical skills into core subjects, young people will be confident in identifying digital threats and will be inspired to consider careers in this rapidly growing field. This long-term investment from the government will help build a workforce that is ready to defend against the evolving threat landscape, ensuring the UK remains secure and resilient.” 

James Rigg, CEO of Trojan Electronics, commented: "While we are disappointed that the VAT on repairs remains, the CLEAR group and Trojan Electronics will continue to advocate for sustainable change within the sector. The high cost of repairs remains a barrier for many consumers, and we believe reducing or removing VAT on repair services would encourage the sustainable choice of fixing rather than replacing broken electricals.”

"This Budget was a missed opportunity to make repairs more affordable for the public. However, we remain committed to advancing our work with the CLEAR group, pushing for broader support from policymakers to make sustainable repair solutions a priority for both the environment and consumer savings."

Emma Roberts, Director of External Affairs, WorldSkills UK said: “The Chancellor has set out a comprehensive set of plans to grow the UK economy with skills rightly recognised as a critical element in boosting productivity and improving living standards.

"Alongside our partners in education and industry our aim is to deliver, at scale, directly into places of learning and work, the world-class technical skills demonstrated by Team UK at the skills Olympics, to support those sectors the Chancellor is investing in as part of the Government's industrial strategy. 

"Employers and investors need the innovative, competitive and productive skills WorldSkills UK's programmes can deliver."

Suhaib Zaheer, Senior Vice President & General Manager at Cloudways says: “The National Insurance tax rise shows calls from small and medium sized businesses (SMBs) were not heard – causing a blow to those trying to grow their enterprises. Accounting for three-fifths of UK employment, SMBs now need to look at combatting rising operational costs; reducing hiring; and cutting wages and pension contributions to remain solvent.    

“SMB productivity and reliability will be essential going into the final two months of 2024, as firms navigate adapting how they run their business, in preparation for tighter margins.”  

Mark Stokes, CEO of space tech firm Magdrive, said: “While the Government is focused on black holes of the financial variety, it was important it didn’t neglect the UK’s space sector in today’s Budget. Thankfully, there were positives for the growing industry. For R&D-intensive industries like space, the business tax roadmap allows us to prepare more effectively for the future, and R&D tax credits enable us to execute our long-term plans.

“Balancing fiscal responsibility with support for innovation is key. While the government’s commitment to R&D is essential, it’s equally important to make sure that fiscal policies do not hinder the scalability of the space sector beyond R&D, which is worth over £17 billion a year to the economy. We must hope that in future Budgets the government is more robust in its policies to support UK space advance as a global leader.” 

Peter Turner, COO of TeamViewer said: "It was interesting to see the lack of AI investment in today’s Autumn Budget, as it fails to reflect the growing role AI plays in transforming productivity and skills development across the UK. In fact, new research from TeamViewer has found that three-quarters of UK decision-makers anticipate AI will drive one of the greatest productivity booms in a century. This isn’t surprising, as AI is already saving IT professionals an average of 16 hours each month, allowing teams to focus on high-level tasks that drive innovation. The expected tax incentives and expanded digital infrastructure would not only accelerate these gains but ensure that AI’s productivity potential reaches every sector, so hopefully this will be addressed in the near future.

“The Budget also didn’t place emphasis on security and regulatory clarity which is critically needed to address concerns highlighted by our research – 79% of tech respondents flagged AI security risks, particularly around data handling, as a significant issue. Support for secure AI adoption is essential for fostering responsible growth, empowering organisations to innovate confidently while managing risk. With investment in both digital infrastructure and security, the UK would be well-positioned to lead in AI-driven productivity, enabling sustainable growth and economic resilience.”

Dr John Lazar CBE FREng, President of the Royal Academy of Engineering, says: “The Chancellor’s first budget was a difficult balancing act, and we are pleased to see a long-term commitment to research and innovation, which is proven to help business, productivity and growth. We know the pressures on public finances that put government spending on research and development in the spotlight, and also that R&D spending is the catalyst for economic success. We welcome the commitment to protect government investment in R&D, and the acknowledgement of the key role that the UK’s National Academies play in driving innovation in engineering, biotechnology and medical science. It is now up to the Science, Engineering and Technology sector to work with the government to deliver the innovation and growth needed to unlock investment and create jobs.

“With sustained investment in innovation and entrepreneurship, the UK is well placed to leverage its impressive engineering and technology strengths to sustain business confidence, catalyse investment and power growth, and ultimately improve our public services and productivity.

“The economy can only grow if the infrastructure that underpins it keeps pace with its needs – we welcome the £100bn additional investment over the next five years to fund public infrastructure, and the boost this will give to UK capabilities and regional development."

Beatrice Barleon, Head of Policy and Public Affairs, EngineeringUK, responds: “We welcome the Chancellor’s commitment to invest in education and skills as a central pillar of the Government’s growth agenda, not least through the creation of Skills England and the announcement of a £40 million pot to develop new foundation and shorter apprenticeships in key sectors. We look forward to continuing to support the Government to develop a new Growth and Skills Levy, ensuring an apprenticeships system that provides ample routes into engineering and technology careers for young people.

“The pledges of significant funding uplifts for school budgets and further education colleges will be key to addressing the teacher recruitment crisis, which is particularly acute in STEM subjects. To resolve the teacher workforce crisis in the long-term, this must be accompanied by a similar commitment to teacher retention, such as by reversing short-sighted cuts to subject-specific CPD for STEM teachers. 

“Moreover, the announcement of a series of new energy and infrastructure projects, such as green hydrogen plants and carbon capture and storage facilities, underscores the centrality of ensuring an engineering and technology workforce that is fit for the future to achieve the Government’s mission of turning the UK into a clean energy superpower.

“Ahead of the publication of the full industrial strategy next Spring, we look forward to supporting the Government with the development of sector plans for key growth-driving industries, many of which depend heavily upon the supply of skilled engineers and technologists.”

James Bamborough, Sustainability and Net Zero Policy Manager at the Institution of Engineering and Technology (IET) said: “We’re pleased to see that one of the measures in the 2024 Autumn Budget is a review into barriers facing greater adoption of transformative technologies that could enhance innovation and productivity. It is vital that the findings of this review are supported in the Industrial Strategy to maximise the potential of technology and digitalisation for the public good, thereby delivering a more productive and resilient economy. 

“However, if we are to take full advantage of emerging technologies then we need the skilled workforce to fully utilise them. The UK is currently facing a shortage of 173,000 STEM workers and 49% of employers say there is a skills shortage among existing employees. We hope that Skills England will recognise the vital importance of engineers and proactively close the skills gaps. 

“It is also very encouraging to hear the Chancellor deliver £3.4 billion for the Warm Homes plan over the next three years. 80% of the houses we will be living in in 2050 are currently in use, representing 95% of the decarbonisation required in our homes. However, if Britain is to fix the foundations of its housing stock, decarbonise homes, lower energy bills and boost health we must see exactly how this money will be spent. This must include an understanding of technologies and geographical implications of said technologies to ensure that the best solutions are used in the correct way. 

“The Government’s commitment to 11 new green hydrogen plants will also support their goal of making Britain a clean energy superpower. However, transitioning to hydrogen will require a range of technical skills in addition to academic and industrial researchers though to project management and customer-facing skills. The deployment of green hydrogen must be part of a holistic approach to the energy transition and the £6.1bn support for core research funding in engineering will help nurture groundbreaking technologies and innovation in the energy sector.”

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