Lodestone's Autumn Statement Round-Up
This afternoon, Rachel Reeves delivered the first Budget of a Labour Government in 15 years, and the first ever delivered by a female Chancellor.
There were few surprises in her statement from the Dispatch Box. Every member of the Cabinet - and indeed every single Labour MP - has worked hard since the Election to set the tone for what has been labelled one of the largest tax-raising Budgets in living memory.
There were no rabbits pulled from the Chancellor’s hat, no headline secret giveaways kept from the media to be revealed in the Chancellor’s time of need. There were, instead, a flurry of the lines we’ve grown accustomed to hearing from Labour frontbenchers in the last four months – these are ‘tough decisions’ being made today for the benefit of tomorrow; the reality of the situation the Government find themselves in is a direct result of the ‘blackhole’ left in the UK’s finances by the Conservative Government; and the tax hikes detailed in the Budget are the only way to protect ‘workers’ pay slips’.
These are lines we also heard from the final iteration of the previous Government, but in reality, this Budget is the polar opposite of that delivered by Truss and Kwarteng just 2 years ago. Where Truss and Kwarteng notoriously ignored the offer of (clearly needed) OBR help, Reeves has submitted her measures to the full ten-week scrutiny.
The Treasury have been clear that they want to get this right, and that part of doing so is being honest with the public about the mess we find ourselves in. The grown-ups may well be back in charge – and that may well be welcome – but that doesn’t mean that we don’t, at some level, long for the bliss of ignorance.
The Chancellor began her statement by doubling down on the context which Labour have been so keen to ensure the public can’t forget. She said the Government had been elected on a promise of change, and with that election victory, had a mandate to restore stability to the UK economy. She said that in order to secure the decade of renewal promised to voters at the Election, economic growth must be the number one priority. And to make that priority a reality, three things were needed; ‘Investment, Investment, Investment’.
This context is important, but so too is the gloomy impact that repeating these lines has on the psyche of the UK electorate, and our economy itself.
Reeves went on to list the measures which Labour have already taken to drive this investment – reforming skills provision and pathways through Skills England; transforming the way we finance renewable energy and major infrastructure projects through GB Energy and the National Wealth Fund; securing record-breaking investment and securing 38,000 jobs at this month’s International Investment Summit.
Long-trailed announcements on the minimum wage, more funding for schools and the NHS, employment rights, the triple lock, and carers allowance followed, with those on most sides of the Chamber celebrating progress. This was the crux of the Statement, a tax and spend, Social Democrat Budget - through these measures, a lot of poorer people stand to be a lot better off and the passion with which Reeves delivered this section of the Budget gave an insight as to how much that means for her personally.
But the Chancellor couldn’t only focus on the good, and soon followed with a bit of the bad and a touch of the ugly. Increased employer NI contributions, increases on Capital Gains, the introduction of a Vape Tax, increased Alcohol Duty (although not on draught beer), and a modest increase on Air Passenger Duty will be felt hard across the electorate.
In his response, the Leader of the Opposition – on the same day as his final appearance at PMQs ahead of the conclusion of the Conservative Leadership Election this weekend – accused the Chancellor of going back on her manifesto commitment not to raise taxes. He said the Budget proved what he and his party had warned, that the Prime Minister and the Chancellor had ‘not been straight with the British People’. Sunak said the Government had always intended to ‘borrow more, tax more, and spend more’ and accused the Chancellor of having ‘shameless political motivations’ in ‘cooking up a false justification for agenda’.
Sunak closed his response by stating that the Government can’t conjure economic growth on its own, and instead must work with investors, business, and workers to create the necessary environment – an environment Sunak claimed was put in jeopardy by the raising of taxes, and dishonesty shown from the Treasury.
Today was, as the Prime Minister labelled it, a ‘huge day’ for Britain. A female Chancellor delivering the first Budget of a new regime, intent on providing a lifeline for our public services, whilst protecting household incomes. Today was also about the personal politics of many of the Cabinet, with clear efforts made to tax those who are better off, in the name of providing more breathing room for those who are not. Only four of Sir Keir’s Cabinet attended a private school, and there were more than a few wry smiles on the Front Bench as Reeves confirmed the 20% VAT on school fees would come into place from next year.
Poorer people will be better off because of the measures introduced today, and because of the Chancellor’s gamble of backing investment and borrowing over austerity.
But today also serves to mark the beginning of the next phase of this government’s project. The last milestone of the ‘new’ Labour Government, who - now their first 100 days and the speculation surrounding the Budget are over – can focus on delivering on their decade of renewal.
The ambition is evident, even amidst the backdrop of gloomy forecasts and negative narrative. And it may even be the case that this constant negativity and modest growth forecasts from the Treasury are paving the way for a giveaway Budget at the end of the Parliament. But that’s a long way off, and a lot needs to happen before we can congratulate Labour on delivering.
But this is what mission-led government is all about; setting the vision, creating the right conditions for success, and then hoping you can deliver.
Only time will tell if they can.
Please see below for an extensive read-out of all the measures announced by the Chancellor today and do contact a member of the team to discuss what these may mean for you and your team.
Treasury
▪ The Chancellor will Publish a line-by-line breakdown of the apparent £22bn blackhole of hundreds of unfunded
pledges from the previous Government.
▪ Establish a COVID-19 corruption commissioner.
▪ Lower the threshold at which businesses start paying NI on workers' earnings from £9,100 to £5,000.
▪ Increase the lower rate for capital gains tax from 10% to 18%, with the higher rate going from 20% to 24%.
▪ Freeze inheritance tax thresholds for a further two years until 2030.
▪ increase the Soft Drinks Industry Levy.
▪ Introduce a 2% productivity, efficiency and savings target for all departments to meet next year by using
technology more effectively and joining up services across government.
▪ Hire an extra 5,000 HMRC compliance officers.
▪ Cap the headline rate of corporation tax at 25% for this parliament.
▪ Increase capital gains on carried interest to 32%, and make rules simpler, fairer, and better targeted.
Department for Business and Trade
▪ Increase minimum wage by 6.7% to £12.21.
▪ Increase minimum wage for 18–20-year-olds by 16.3% to £10 an hour.
▪ Increase employer National Insurance contribution from 13.8% to 15%, from April 2025.
▪ Increase Employment Allowance from £5,000 to 10,500 so 865,000 employers won’t pay any national insurance,
and over 1,000,000 will pay the same or less - allowing 4 full time workers on minimum wage without paying any
national insurance.
▪ Reform business rates from 2026-2027, and introduce two permanently lower tax rates for retail, hospitality,
and leisure workers.
▪ Provide 40% relief on business rates for the retail, hospitality and leisure industry in 2025-26 up to a cap of
£110,000 per business.
▪ Freeze small business tax multiplier from 2025.
▪ Increase income threshold in line with inflation.
▪ Multi-year funding commitments including £1bn to aerospace for R&D, £2bn to automotive industry, £520m for
Life Sciences Innovative Manufacturing Fund.
▪ Publish a corporate tax roadmap to provide business certainty called for by the Confederation of British Industry
and the Institute of Directors.
Department for Work and Pensions
▪ Fair Repayment Rate introduced: reducing Universal Credit debt repayment rate from 25% to 15% of standard
allowance, benefiting 1.2 million households.
▪ Crackdown on welfare fraud by expanding DWP counter fraud teams and giving new legal powers to crackdown
on welfare fraudsters – saving £4.3bn.
▪ Publish the ‘Get Britain Working White Paper alongside the introduction of Skills England to ensure there is the
highly-trained workforce needed to deliver economic growth.
▪ £240m for 16 projects targeted at those who are "economically inactive" and most at risk of being out of
education, employment, or training.
▪ Investment to modernise and expand HMRC, hiring 5,000 extra compliance officers.
▪ Increase the National Minimum Wage to £12.21 an hour (6.7%) in line with the Low Pay Commission’s
suggestions. Those aged 18-20 will get a 16.3% bump to £10 an hour.
▪ Improve access to maternity and paternity leave and increase employment protections through the
Employment Rights Bill.
▪ The Mineworkers Pension Scheme Investment Reserve Fund will be transferred, providing justice to retired
miners and widows.
▪ Increase Basic and New State Pension rates by 4.1% in 2025, in line with the triple lock.
▪ Introduce a New Fair Repayment rate which will reduce the level of debt repayments that can be taken from a
household's Universal Credit payment each month from 25% to 15% of their standard allowance.
Department for Energy Security and Net Zero
▪ Funding for GB Energy’s establishment in Aberdeen, as part of a multi-year investment in clean energy.
▪ Commitment to carbon capture and storage with new investments across 11 green hydrogen projects in
England, Scotland, and Wales.
▪ Increase the differential between fully electric and other vehicles in the first rates of Vehicle Excise Duty, starting
in April 2025.
▪ Increase the Energy Profits Levy rate to 38%, expiring in 2030, and remove the 29% investment allowance.
▪ Maintain current decarbonisation allowances for oil and gas producers.
▪ 11 new green hydrogen projects across the UK.
▪ Establishment of GB Energy HQ in Aberdeen.
▪ Support in 25/26 for UK fusion energy research.
▪ £2.7bn of funding to continue Sizewell C’s development through 2025-26. The equity and debt raise process for
this project will shortly move to its final stages and will conclude in the spring.
Home Office
▪ The Chancellor pledged to “stop shoplifting in its tracks,” committing additional funding to target organized gangs
targeting retailers and scrapping the “effective immunity” for low-value items.
▪ £230m will be allocated to tackle homelessness and rough sleeping.
▪ Home Office funding will increase from £20.3bn in 2023-24 to £22.1bn in 2025-26.
▪ A minimum £500million additional investment across prisons and probation in 2025-26 to recruit thousands of new
prison and probation staff, keeping prisons safe and managing offenders in the community.
▪ £2.3bn of investment in prison expansion over 2024-25 and 2025-26, ensuring thousands of new prison places open
over the next two years.
Ministry of Defence
▪ £2.9bn budget increase, ensuring NATO commitments are met and military support to Ukraine is sustained at
£3bn annually.
▪ Strategic Defence Review to be published next year, aiming for long-term spending target of 2.5% of GDP on
defence.
▪ Implement the Strategic Defence Review
▪ £2m grant for Holocaust education, including the Holocaust Educational Trust (HET)
▪ Set out of the path to spend 2.5% on defence at a future fiscal event
Department for Education
▪ £2.3bn added to the core school budget for 2025, with a commitment to hire teachers in key subjects.
▪ Tripling of investment in breakfast clubs across thousands of schools, increasing to £30m in 2025–26,
following a £7m trial across up to 750 schools starting in April next year.
▪ An additional £300m will be provided for further education as well as a £1bn uplift in funding to support special
needs education.
▪ £6.7bn capital investment allocated to the Department for Education, including £1.4bn for rebuilding over
500 schools and £2.1bn for improving school maintenance, a 19% real-terms increase on this year’s
budget. This includes £300m in additional funding to address issues related to RAAC concrete in schools.
▪ Treasury allocated £1.8bn for the expansion of Government-funded childcare, along with £15m in capital
funding for school-based nurseries.
▪ £44m announced to support kinship and foster carers, which includes a pilot kinship allowance program
across up to 10 local authorities (potentially part of broader social care funding).
▪ VAT to be introduced on private school fees starting January 2025, with legislation removing business rates
relief for private schools from April 2025. Additional funds will be allocated to support military families in
offsetting this change.
▪ The core schools budget will see an increase of £2.3bn in 2025.
Department for Health and Social Care
▪ £11.8bn earmarked for compensation for victims of the infected blood scandal.
▪ NHS receives a £22.6bn increase in the day-to-day budget and a £31bn increase in the capital budget,
marking the largest funding boost outside of COVID spending since 2010.
▪ A 10-year health plan to address NHS capacity and reduce waiting lists, scheduled for release in spring.
▪ £1.57bn allocated for new surgical hubs, scanners, and radiotherapy machines as part of the Government's
pledge to increase the number of NHS hospital appointments and procedures in England by 40,000 per
week.
▪ Increase in carer’s allowance from £81 per week to 16 hours of work at the new National Minimum Wage
- equating to £10,000 a year.
▪ Renewal of the tobacco duty escalator at RPI +2%, with a 10% duty increase on hand-rolled tobacco this
year.
▪ Introduction of a flat-rate duty on all vaping liquid, effective October 2026, along with an additional one-
off increase in tobacco duty to incentivize smoking cessation.
▪ Soft Drinks Industry Levy will increase to account for inflation, with duty aligning annually with CPI.
▪ Alcohol duty rates on all non-draught products to increase in line with RPI starting February 2025, while
draught duty will be reduced by 1.7%.
Department for Science and Technology
▪ Deliver £20bn to R&D, including £6.1bn to protect core research funding for areas like engineering,
biotechnology and medical science.
▪ Over £2bn pledged for the electric vehicle industry to bolster the UK manufacturing base.
▪ Deliver £20m to improve reliable fast broadband.
Ministry of Housing, Communities and Local Government
▪ Affordable Homes Programme extended, total investment surpassing £5bn to help build 1.5 million homes this
parliament.
▪ £1bn allocated for remediation of dangerous cladding post-Grenfell recommendations.
▪ Treasury to increase Affordable Homes Programme funding to £3.1bn, to deliver thousands of new homes.
▪ Investment to redevelop sites such as Liverpool Central Docks and support growth in Cambridge, aiming to deliver
2,000 new homes.
▪ Add £3.1bn to the Affordable Homes Programme.
▪ Increase the additional Stamp Duty rate from 3% to 5%.
▪ Provide investment to renovate sites across the country including at Liverpool Central Docks to deliver 2,000
additional new homes and funding to help Cambridge realise its growth potential.
▪ An initial £3.4 billion over the next 3 years for the Warm Homes Plan.
Foreign, Commonwealth and Development Affairs
▪ The Chancellor confirmed the Government will abolish the non-dom tax regime in April 2025.
▪ £2.26bn will be contributed to the G7’s revenue acceleration agreement, with repayment sourced from profits
generated by immobilised Russian sovereign assets.
Department for Transport
▪ The Government has announced they will freeze Fuel Duty, costing £3bn.
▪ Maintaining the incentives for electric vehicles in company car tax from 2028 and increasing the differential
between fully electric and other vehicles in the first year rates of Vehicle Excise Duty from April 2025.
▪ Air passenger duty is to rise by £2 for an economy class flight but will rise by 50% per passenger on private
flights.
▪ Securing the delivery of the TransPennine upgrade to connect York, Leeds, Huddersfield and Manchester.
▪ Securing the delivery of East-West Rail between Oxford, Milton Keynes and Cambridge.
▪ Securing the delivery of HS2 between Old Oak Common and Birmingham and a commitment to secure the
funding required to begin tunnelling work to London Euston station.
▪ The extension of Brierley Hill Metro in the West Midlands, the renewal of the Sheffield Supertram and West
Yorkshire Mass Transit.
▪ Providing over £650m of local transport funding.
▪ Extension of the bus price cap for a further year, setting it at £3 until December 2025.
▪ A £500m increase in road maintenance budgets for next year to fix an additional 1 million potholes each year.
Department for Culture Media and Sport
▪ The Department for Culture, Media and Sport has received a budget of £2.3bn in 2025-26. This is equivalent to an average
annual real-terms growth rate of 2.6% from 2023-24 to 2025-26.
▪ The Creative Careers Programme will receive and extra £3m, to build on its success in raising awareness of career routes
and tackling skills gaps in this key sector.
▪ Grant-in-Aid for the National Museums and Galleries will rise by an undisclosed amount to help support their long-term
sustainability.
▪ New cultural infrastructure funding will be made available to will build on existing capital schemes.
▪ A programme of ceremonial activities for the commemoration of VE and VJ day and the Government’s response to the
recommendations from the UK Commission on Covid Commemoration.
▪ Funding increase for UK Sport’s Olympic and Paralympic programme with an increase in funding of over 10%, providing
£9m a year extra.
Ministry of Justice
▪ Provide £1.8bn to compensate the victims of the Post Office Horizon scandal.
Department for Environment, Food & Rural Affairs
▪ The Chancellor committed to reforming Agricultural Property Relief, ensuring the first £1m of combined business and
agricultural assets remains free from inheritance tax. For assets exceeding £1m, inheritance tax will apply with 50% relief,
at an effective rate of 20%.
▪ The Chancellor pledged to continue driving progress in expanding fast, reliable broadband and mobile coverage
nationwide, with a focus on rural areas.
▪ The Chancellor is providing £5bn over 2024-25 and 2025-26 to support the transition towards a more productive and
environmentally sustainable agricultural sector in England, ensuring food security. This includes £60m this year for the
Farming Recovery Fund.
International Development
▪ Government Departments will be provided with £13.3bn for Official Development Assistance in 2024-25 and
£13.7bn in 2025-26, enabling the UK to spend 0.5% of Gross National Income (GNI) on ODA in 2024 and 2025.
▪ The Government aims to cut asylum costs in the UK, so a greater proportion of the ODA budget can be spent
overseas.
▪ The Government remains committed to restoring ODA spending to 0.7% of GNI as soon as the fiscal
circumstances allow.
Devolution and Regions (Northern Ireland, Scotland, Wales)
▪ Funding for devolved administrations set to the highest real-terms level since devolution: £3.4bn for Scotland,
£1.7bn for Wales, £1.5bn for Northern Ireland for 2025–26.
▪ Greater Manchester and the West Midlands will be the first Mayoral Authorities to receive integrated settlements.
▪ Providing £25m of additional funding to the Welsh government for the maintenance of coal tips.
▪ City and growth deals have been announced in Mid South West and Causeway Coast and Glens in Northern Ireland.
▪ City and growth deals have been announced in Argyle and Bute.
Women and Equalities
▪ N/A