Budget 2024 Overview

This afternoon Jeremy Hunt delivered the Spring Budget in the House of Commons, his third fiscal event as Chancellor of the Exchequer.

Hunt claimed he wanted “to change history” with his measures today, the most eye-catching of which was a 2p cut to National Insurance for employees and the self-employed. Much-trailed in the press, this centrepiece announcement is estimated to cost £10bn and save the average earner £450 a year. Hunt framed the giveaway in the context of falling inflation and reduced national debt: “Because of the progress we’ve made, we can now help families not just with temporary cost of living support but with permanent cuts in taxation.”

Given the tax burden remains at its highest since 1945 and fiscal headroom is clearly severely limited, Hunt was unable to cut a penny from Income Tax, as numerous Conservative MPs and commentators had called on him to do.

Yet given the clear restrictions facing him, and the fact Hunt may be forced to borrow to fund his cut to National Insurance, having ruled out any cuts to future public spending, this Budget may still represent a political gamble.

Responding to the Budget, Ros Morgan, Chief Executive of Heart of London Business Alliance, said:

“Measures announced today will no doubt help some businesses in the West End. In particular, we are pleased that the Chancellor has recognised the economic contribution of our creative industries by making cultural tax reliefs permanent. Support for our orchestras and theatres, funding for “hotspot policing” and the freeze to alcohol duty will be welcomed.

“To address the pressures facing the economy, our members in the West End wanted to see sustainable reform of business rates, the reinstatement of tax-free shopping for tourists, a proper global marketing budget for London, and action to help rough sleepers off the streets, especially in Westminster. 

“When the capital does well, so too does the nation. It’s disappointing that the Chancellor didn’t consider that for today’s Budget.”

Measures relevant for HOLBA members

• A 2p cut in National Insurance tax for employees from 10% to 8%, with the self-employed rate cut from 8% to 6%, costing £10 billion
• Extended freeze on alcohol duty until February 2025
• £75m announced (but not scheduled) for violence reduction units and “hotspot policing”
• Made tax relief for orchestras and theatres permanent, at 45% for touring and orchestral productions and 40% for non-touring productions
• Scrapping tax breaks on holiday lets, raising £300m
• The Government will consider the findings of the OBR review of the costing of the removal of tax-free shopping

Key measures announced by the Chancellor today include:

• Extending the fuel duty freeze, costing £5bn
• Reform to the child benefit taper, lifting the start of the charge to earners at £60,000, and extending the taper to £80,000
• Scaling back tax breaks for non-doms, raising £2.7bn
• Great British ISA introduced to encourage investment in UK assets. This is an additional £5,000 allowance in UK shares, on top of the existing £20,000 ISA allowance.
• VAT registration threshold for businesses increasing from £85,000 to £90,000 from April
• Tax breaks and expanded full expensing for SMEs to boost investment
• Extending windfall tax on profits of oil and gas companies to 2029, raising £1.5 billion
• Household Support Fund extended for a further six months
• Raising air passenger duty for business travellers
• A new tax on vapes and increase in tobacco duty, raising £500m

Political impact

Unsurprisingly this Budget speech was Hunt’s most political since assuming the role, with the headline tax giveaway unveiled with the general election in mind. The Chancellor’s confirmation that inflation will fall below its 2% target this year – ahead of schedule – was met with cheers of relief from the Conservative benches and silence from Labour opposite. The Deputy Speaker stopped proceedings on multiple occasions to quieten Labour hecklers – “Never had it so good!” shouted one when Hunt painted an unconvincingly rosy picture of the national finances. “Trust the Labour Party not to want to talk about debt,” Hunt countered: “They don’t have a growth plan so they may as well listen to ours”.

Labour insiders insist today’s Budget increases the likelihood of a Spring general election. This has been categorically denied by Government ministers, who point to the dire state of their party’s poll numbers. But no matter when it is called, one announcement from Hunt today will worry the Labour frontbench above all others. Despite growth projections looking less bleak than projected, in five years’ time the OBR expects fiscal headroom to be around just £9bn – in practical terms, no more than Hunt had today. The Government’s vision of lower tax cuts and economic growth may have been mocked by the opposition in the chamber today, but Labour will know the chances of more generous Budgets under their watch are still remote.

You can access all Governmental documents accompanying the Chancellor’s Spring Budget here.

If you have any questions or if you would like to discuss any of the above in further detail, please contact our Head of Public Affairs, Matt Panteli, on mattp@holba.london.