AUTUMN STATEMENT [BUDGET]

OCTOBER 30th 2024

People’s Charity Analysis of the Autumn Budget 2024

Introduction

The UK government’s 2024 Autumn Budget, presented by Chancellor Rachel Reeves, reflects a commitment to addressing economic challenges through targeted tax reforms, increased public spending on infrastructure, and enhanced social welfare provisions. While these changes aim to stabilise and stimulate the economy, they come with implications for businesses, charities, and the public. This paper explores the key budget areas, evaluating potential benefits and drawbacks for communities, non-profits, and service users.

Key Budget Areas and Implications

1. Taxation Reforms

Overview
The budget introduces higher taxes primarily on corporations and high-earning businesses, accompanied by an increase in employer National Insurance contributions. This approach aims to distribute the tax burden more equitably, sparing individual taxpayers while generating significant government revenue.

Pros

       •      Revenue Generation: Corporate taxes contribute to government reserves for essential services, helping to sustain social programs that benefit vulnerable populations.
       •      Reduced Individual Burden: Targeting businesses instead of individuals could alleviate financial pressure on low-to-middle income families.

Cons

       •      Impact on Business Investment: Increased taxes may reduce profits for businesses, potentially impacting job creation and charitable donations, especially those reliant on corporate philanthropy.
       •      Possible Inflationary Effects: If businesses pass costs onto consumers, essentials may become less affordable, especially affecting lower-income groups.

2. Public Spending on Infrastructure and Social Welfare

Overview
A significant portion of the budget is allocated to infrastructure improvements and welfare spending. Increased investment in health, education, and housing aims to address long-standing issues exacerbated by recent economic downturns.

Pros

       •      Community Development: Infrastructure upgrades can lead to job creation and improved community facilities, benefiting local economies and service users of charities like ours.
       •      Enhanced Public Services: Funding for health and education may improve access and reduce waiting times, addressing urgent needs in underserved areas.

Cons

       •      Implementation Time: Large infrastructure projects often face delays, meaning benefits may not materialise for years, while communities in need require immediate support.
       •      Potential Over-Reliance: If social programs are not sustained long-term, communities and charities risk relying on temporary funding surges rather than consistent support.

Economic Outlook and Forecasts

Overview
The budget’s reliance on business taxation to stabilize the economy is expected to be accompanied by fiscal projections from the Office for Budget Responsibility (OBR). These forecasts will indicate potential growth and economic health over the next fiscal period.

Pros

       •      Fiscal Responsibility: The government’s approach could help reduce the national deficit, fostering stability in public finance and                  confidence in the UK economy.
       •      Growth Potential: Projected economic improvements could stimulate long-term employment and support sustainable development, benefiting the charity sector indirectly through a healthier economy.

Cons

       •      Uncertain Economic Environment: With global economic challenges, projections may be optimistic, risking a shortfall if revenues do not meet expectations.
       •      Dependency on Business Resilience: Businesses may need to adjust to new taxes, and some sectors could face financial strain, impacting their ability to support community initiatives or maintain employment levels.

Conclusion

People’s Charity acknowledges the government’s intention to balance economic recovery with investment in social welfare. While the increased taxes on businesses aim to relieve the individual taxpayer, there are concerns regarding the potential impact on job security, charitable funding, and living costs. For charities, the reliance on business contributions to fund community support could be problematic, as any economic slowdown would ripple into decreased donations and volunteer availability. Therefore, it is crucial that the government considers mechanisms to mitigate these impacts on charities and local communities, ensuring a balanced, inclusive recovery.