Autumn Budget 2024 | Main takeaways
Housing, hospitals, and schools were all winners in Rachel Reeves’s first Budget as she reiterated her desire for more public investment and announced tax rises of £40bn.
The key theme of her speech was cautious renewal, with references to her predecessors’ economic mismanagement acting as a buffer for her difficult decisions. Reeves also highlighted her intention to reduce reliance on borrowing – targeting a fall from 4.5% to 2.5% of GDP this year.
Investment in housing
Reeves committed to £5bn of government investment into housing, including the teased £500m boost to the Affordable Homes Programme. The clogged-up planning system will see £46m of additional funding to support recruitment into local planning authorities and pledge to digitise local government.
Schools funding
The Chancellor allocated £1.4bn to rebuilding schools, a £550m increase on this year, with plans for 100 projects to begin delivery in England over the next year, and 518 schools in total through the programme. A £2.3bn rise in the core schools budget will pay for the recruitment of 6,500 teachers. A previously touted commitment to introduce VAT on private schools was also carried through and will start from 1 January 2025.
Skills England
This is a new programme aimed at improving educational outputs and occupational mobility while addressing skills challenges that are holding back some sectors. Skills England’s main priority will be to ensure a highly trained workforce is provided to grow the economy in the future.
NHS Hospital Programme
A £22.6bn increase in day-to-day NHS spending as well as an increase of £3.1bn to provide capital investment in health. Reeves also committed £1.5bn for new surgical hubs and diagnostics scanners. Objectives to improve productivity using technology will see a £2bn investment aiming to free up staff time and improve record keeping.
Key sector funding
Specific industries, earmarked by the Chancellor as key to the longevity of the UK economic success, were granted long-term funding as part of the Industrial Strategy. The aerospace sector, which has a strong regional presence in the North West will see £975m in funding. There will be £2bn over five years for the automotive sector driving growth in areas such as the North East. A further £520m will be allocated for a Life Sciences Innovative Manufacturing Fund.
Transport
Increased investment into local transport in the form of £200m for City Region Sustainable Transport Settlements which would bring local transport spending for Metro Mayors in 2025/26 to £1.3bn. Reeves committed to delivering the TransPennine Route Upgrade between York and Manchester, as well as pressing on with the Northern Powerhouse Rail plans. Sheffield’s Supertram and the West Yorkshire Mass Transit system will also get financial support. Funding to the tune of £650m for local transport in regions outside of combined authorities was also confirmed.
Capital Gains Tax
Reeves announced an increase in both the lower rate and higher rate of capital gains tax. The lower rate will rise from 10% to 18%, the higher rate will increase from 20% to 24%. The chancellor promises this will keep the UK tax system internationally competitive, with lower rates than comparable EU countries.
Business rates
The government will provide a 40% business rates relief for retail, hospitality, and leisure sectors – a reduction from the previous 75%. In addition, for the next fiscal year, the small business multiplier in England will be frozen. The standard multiplier will be uprated by the September 2024 CPI rate to 55.5p.
Stamp Duty
To come into effect imminently, Stamp Duty will be increased by 2 percentage points from 3% to 5%. The aim of this policy is to provide first-time buyers with a comparative advantage over second-home buyers, landlords and businesses purchasing commercial property.
Green energy
An allocation of £8bn for carbon capture projects and carbon storage infrastructure was given. Reeves stated that the UK had already secured £34.8bn of private investment into the UK’s clean energy sector at the International Investment Summit. GB Energy was given £125m.
Integrated Settlements for Mayoral Combined Authorities
From the start of the 2025-26 financial year, the government will implement integrated settlements for Greater Manchester and West Midlands Combined Authorities. Liverpool City Region Combined Authority and the North East, South Yorkshire and West Yorkshire Mayoral Combined Authorities will receive settlements from the start of the 2026-27 financial year. The settlements aim to give mayors meaningful local control over funding in a single flexible pot. The wider local funding landscape will be simplified, reducing the quantity of grants by consolidating them within the Local Government Finance Settlement.