Autumn Budget 2024: multi-billion pound NHS investment and increased business taxation

The first Labour Budget in 14 years and first ever by a female Chancellor promised “investment, investment, investment” – a deliberate echo of a Labour Party mantra from almost three decades ago, perhaps.

Chancellor Rachel Reeves opened her maiden Budget by emphasising that her “belief in Britain burns brighter than ever” – before quickly bringing the country back down to Earth by announcing that she would be providing a “line-by-line breakdown of the £22 billion blackhole we inherited.”

Throughout an hour and a half-long speech that was peppered by interventions for calm from deputy speaker Nusrat Ghani, Reeves detailed her plans to build 11 new green hydrogen projects across England and Scotland, “go after the promoters of tax avoidance schemes,” invest £5 billion in the building of 1.5 million homes, and bring to the fore major rail upgrades across the north and between the east and west of England.

HS2, Reeves confirmed, will sensibly terminate at Euston Station, instead of a little-known park in North West London.

Reeves went on to reiterate that she would keep every commitment made on tax in the Labour manifesto, meaning no National Insurance (NI), VAT or income tax increases on individuals.

She also revealed that personal tax thresholds will rise in line with inflation from 2028–2029

“Working people will not see higher taxes in their pay slips,” Reeves said.

The Budget also confirmed the long-discussed and now imminent appointment of a COVID-19 corruption minister – because “that money belongs in our public services,” Reeves made clear.

The Get Britain working whitepaper, “tackling the root causes of inactivity with an integrated approach across health, education and welfare,” was introduced, and Reeves also promised to “repair the fabric of our nation” by investing £6.7 billion (a 19% increase) to rebuild and maintain schools and hire new teachers.

She also outlined changes to the way debt is measured, so that going forward it will include the benefit of future investment that the borrowing will create – moving to a system more like Germany or Japan – to make increased investment possible.

A seven-point growth strategy was also outlined: restore economic stability, invest in infrastructure, ensure all parts of UK can deliver potential, improve employment and skills, launch a long-term industrial strategy, provide record funding for research and development, and maximise growth for clean energy mission.

Reeves went on to thank the Office for Budget Responsibility, and noted that from now on they will publish forecasts for 10 years rather than five – presumably to give the markets a clearer picture of what might be ahead than they have had previously.

A packed schedule of work for the four-month-old Labour Government? It certainly sounds like it.

Here, OT delves into the specifics on small business, and what the Budget suggested might be in store for the NHS.

Down to business

As predicted, the Budget did not bring a cavalcade of welcome news for business owners.

Bosses should factor in an imminent pay rise for their youngest and most junior members of staff: the national minimum wage will increase by 6.7% to £12.21 next year, whilst the minimum wage for 18- to 20-year-olds will go up by 16.3% to £10 per hour, Reeves outlined.

Employer NI will increase to 15%, whilst the secondary threshold (the rate at which businesses start paying per staff member) will be reduced from £9300 per year to £5000.

“We are asking businesses to contribute more,” Reeves said, before Ghani interjected that MPs should “simmer down” because “constituents are watching and need to hear the Chancellor.”

NI might have been the most discussed (and likely most contested) issue at play, but it wasn’t entirely bad news for businesses.

There was a perhaps unexpected slither of good news on Fuel Duty, with Reeves noting that she inherited an assumption that the 5p ‘cost of living’ cut introduced in 2022 would end – and that keeping it would cost £3 billion.

However, increasing Fuel Duty would be the wrong choice and it will therefore remain frozen for another year, Reeves said, promising: “No higher taxes at the petrol pumps next year.”

The Employment Allowance will be increased from £5000 to £10,500, meaning “865,000 employers will not pay any NI at all, and one million will pay the same or less than they did previously,” Reeves said.

Corporation tax will be capped at 25%, Reeves also confirmed, and the small business tax rate multiplier will be frozen next year.

Businesses that have been hit by theft will welcome the news that Reeves plans to scrap “the effective immunity for low value shoplifting.”

Additional funding will be allocated “to crack down on the organised gangs that target retailers” and more training will be provided “to our police officers and retailers to stop shoplifting in its tracks,” Reeves added.

She also provided a boost to entrepreneurs, by maintaining the lifetime limit for Business Asset Disposal Relief at £1 million, to “encourage entrepreneurship and entrepreneurs to invest in their businesses.”

Reeves also had a message for MPs on the opposite benches, who have long held themselves up as representatives of the party that most values business.

“If the party opposite chooses to oppose this choice, then they are choosing more austerity, more chaos, more instability,” she said.

A major investment in the NHS

In opening her speech, Reeves emphasised that public services would remain a priority.

“I said that there would be no return to austerity, and that is the choice that I have made today,” she told the packed House of Commons.

She added: “Because I have taken difficult decisions on tax today, I am able to provide an injection of immediate funding over the next two years to stabilise and to support our public services.

“At the election we promised there would be no return to austerity. Today, we deliver on that promise.”

Reeves did acknowledge, however, that the country cannot simply “spend our way to better public services.”

She said that “hospitals [are] without the equipment they need,” and went on to reference the Darzi Report, which laid out the deep-rooted problems in A&E, cancer and mental health services.

Healthcare has experienced its “most austere decade since the NHS was founded,” the Darzi report said.

The Government is “beginning to repair the damage,” Reeves told the House.

She emphasised that day-to-day funding will be prioritised to ensure that the Government can stick to its manifesto commitments.

For the NHS, this means a £22.6 billion increase in day-to-day budget.

The £22.6 billion was characterised by Reeves as a “downpayment” on the 10-year plan, which is set to be published in the spring of 2025 when the NHS consultation that is currently running closes.

Reeves promised repairs to the NHS estate, to increase capacity for beds and for additional diagnostic tests, and to open new surgical hubs and diagnostic centres, as part of the initial investment.

She also noted that technology will be utilised in achieving the NHS’s goals, although specific details were not outlined.

Health secretary Wes Streeting “will be setting out further details of his review into the new hospital programme in the coming weeks,” Reeves said.

She also noted that the Government’s plans aim to bring NHS waiting lists down to below the current target of 18 weeks.

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