We break down the Budget – Autumn 2024

The Chancellor set out a plan for greater investment spending, improved education and healthier people to support higher growth throughout the economy. This will be afforded through increases to national insurance and capital gains which, while not unexpected, will have significant implications for businesses, individuals and investors.

We’ve looked at five areas that Eddisons operates in and asked our service experts how they interpret what has been announced

Education

The Chancellor said very early on in her speech that the government would be launching “Skills England”, a new service to tackle economic activity by involving NEETs in training and employability schemes.

Later, she described a number of huge monetary increases dedicated to both the improvement of schools and educational establishments. These included a £1billion uplift in SEN funding, tripling investment in breakfast clubs, and a £300m injection into further education.

However, where Eddisons education team has noted Reeves’ most significant boost is in the creation and maintenance of schools and Trusts. £2.1billion has been promised to improve school maintenance, including repairing and rebuilding schools affected by RAAC – going as far as naming some schools that were hardest hit by the crisis.

Business and Innovation

Serious cuts were needed to gain buoyancy after a turbulent economic time, but promises were made that working people would not be affected. To an extent, this was correct.

The Chancellor will raise the minimum wage by from £11.44 to £12.21 per hour, and from £8.60 to £10 per hour for 18-20 year-olds. National Insurance, VAT and income tax will not be increased either, as per the Labour Party’s manifesto from the summer.

However, the NI contributions from employers will be increased by 1.2 percentage points to 15%, and the threshold at which employers will start paying that NI has been lowered from £9100 to £5000, which is huge and will cause issues for businesses across the country.

Saying this, some of the businesses that struggled the most due to the pandemic are getting a helping hand. A 40% relief on business rates for retail and hospitality will be honoured, up to £110,000 per business, and all high street businesses will have 2 permanently lowered business rates. This will most likely be funded through the higher multipliers for “the most valuable properties”.

Director Stuart Moorhouse, of Ernest Wilson Business Agents comments: "Whilst it is disappointing that the Chancellor has lowered the threshold that employers' NI starts getting paid, it is better news for small business owners that the employer NI allowance has been increased to £10,500." Managing Director Paul Williamson adds: "BADR remains unchanged until the next tax year making this a good time to sell before the increase kicks in."

Reeves went into detail about business, and more specifically about the evolution of business. Life science, technology and creative sectors will be boosted with extra investment and an extra £6.1bn will be funnelled into our research and innovation hubs – great news for our Cambridge and Manchester regions where these industries are currently thriving.

Housing and planning

Stamp duty for second homes and buy-to-let properties has risen an extra 2% to 5%, in a bid to discourage second home buyers and investors whilst housing for first-time buyers is in demand.

As well as stamp duty, right to buy discounts are to be reduced to protect dwindling council stock.

Director of SDL Property Auctions, part of Eddisons, Andrew Parker was “pleased to see no change to CGT [Capital Gains Tax] on property sales as this would have caused disruption as people often want to sell quickly.

“However, it is disappointing to see that the stamp duty payable has increased from 3 to 5% - with immediate effect – as this will impact a lot of purchases and is another blow to landlords.”

These two tactics, although unpopular with many, are part of a housing package – championed by deputy PM Angela Rayner – which will help to raise the £500m needed for affordable housing and £128m for new homes in other schemes across the country, including Liverpool’s Central Docks.

Energy and Sustainability

In a bid to appease both trade unions and environmental lobbyists alike, Reeves has dedicated spending to boost our nation’s decarbonisation sector through creating jobs and increasing levies.

Carbon capture and storage is a relatively new and under-utilised market, so Reeves has put plans in place for the UK to become a key supplier of hydrogen, with 11 new green hydrogen plants to be built across England, Scotland and Wales – the first commercial scheme of its kind in the world.

Alongside the advancement of GB Energy, confirmed in the speech to be based in Aberdeen, this fresh approach to energy production is a promising step toward sustainable living.

Additionally, and as expected, Reeves has increased the oil and gas windfall tax from 35% to 38%, whilst extending the levy by one year. This will make the tax rates for oil and gas manufacture among the highest in the world.

But there are concerns from experts. “What a mixed bag,” says Head of Sustainability and Decarbonisation, Nazar Soofi. “On the bright side, it includes increased funding and incentives, essential for driving innovation and reducing carbon footprints.”

“However, it lacks a comprehensive long-term climate strategy to address how we can meet our ambitious but necessary Net Zero targets. Trickling along is not going to cut the mustard.

“As we move forward, it’s imperative that we push for a more integrated approach that aligns fiscal policy with our climate goals.”

Transport

The Chancellor announced towards the end of her statement that there has been a lot of work done by herself and Transport Secretary Louise Haigh to pick up the pieces of the many abandoned transport schemes from the last government, to try to revive and reassure the nation that public transport can be a reliable service once more.

With the mayors of Greater Manchester and the Midlands gaining meaningful control of their areas through specified funding, there is a suggestion that local issues such as trains, buses and connectivity schemes will be furthered sooner rather than later.

A little closer to everyone’s hearts, Reeves is promising £500m for road maintenance to fix potholes.

Closing comments

These measures have been anticipated since the Labour Party returned to power, and people of all backgrounds have been expecting a considerable change to living since the winter fuel payment was axed some weeks ago.

Business-owners are bearing the brunt in the short-term, but this is evidently a budget designed to pay off in the coming years. We hope to see new shoots of growth in industry where potential has been highlighted most likely e.g., green energy and innovation.

We are keen to observe how the more severe taxations affect our market in terms of instructions and leasing, but are hopeful that housebuilding and school regeneration will continue to boost the real estate sector.

About Eddisons

Eddisons offers a wide range of property service to investors and organisations. For over 180 years we have helped our clients navigate change in an evolving market place. With over 450 people operating from over 30 offices across the country we provide unrivalled property advice to commercial and public sector clients across the regional markets we operate in.