The CBI’s Autumn Budget campaign asked the new government to deliver long-term sustainable growth – even when weighing up tough fiscal choices. The Chancellor set out a more balanced approach to the fiscal rules, which should help to unlock private sector investment in UK infrastructure and support the net zero transition over the long term.
In our Autumn Budget 2024 submission, we set out a comprehensive package of policies that would deliver benefits across different areas of the economy, focused on boosting productivity and business investment, supporting the transition to net zero, and optimising enablers of growth.
As a result, the Budget built on some of our asks, including announcements on the Corporation Tax Roadmap, which will help provide certainty and predictability within the tax system for businesses. This sat alongside a programme of increased public investment, including in infrastructure, which is key to unlocking growth.
However, in the short term, this is a tough Budget for businesses, given the increase in National Insurance Contributions and other employer cost base increases. These increase the burden on business, limit the private sector’s ability to invest, ultimately make hiring more expensive, and restrict the capacity to offer pay rises.
Let’s unpack where the CBI, together with our members, drove change
Corporate Tax Roadmap paves the way for a more stable tax regime
The roadmap includes capping the headline Corporation Tax rate at 25% for the remainder of the Parliament. It maintains key investment reliefs such as permanent full expensing, Annual Investment Allowance, R&D tax credits and the Patent Box. This will help provide predictability of the tax environment which in turn will support business confidence, encouraging long-term investments.
Delivering quality training
The Chancellor committed to investing £40m to begin much-needed reform of the Apprenticeship Levy into a more flexible Growth & Skills Levy. This will be welcomed from businesses across the economy who have expressed frustration with how the Levy has impacted their ability to invest in a broader range of training solutions.
Protection of R&D investment and tax reliefs
Public R&D investment has slightly increased to a record £20.4bn, including an uplift of 4.5% for DSIT’s R&D budget to £13.9bn. This has been coupled with the maintenance of the R&D tax relief. This protection of the baseline levels for R&D provides a steady foundation to build on in the multi-year spending review in the spring.
Areas where the CBI needs to continue campaigning for change
Increase in employers’ National Insurance
From 6 April 2025, Employers’ National Insurance will rise by 1.2% to 15%, and the earnings threshold will be reduced from £9,100 to £5,000. The CBI has warned the government that this could impact business growth, leading to reduced investment, hiring freezes, lower pay, price increases and jobs moving overseas. Smaller employers will be shielded from some of the impact with the Employment Allowance increasing from £5,000 to £10,500. This tax hike will be tough for many firms, as it’s due regardless of profitability.
Increase to National Living Wage (NLW) and National Minimum Wage for 18-20 year olds
The Chancellor announced that the government has accepted the Low Pay Commission’s recommendation to increase the NLW by 6.7% to £12.21 from April 2025. This will be a cause for concern for many businesses, which will need to accommodate this increase against a challenging economic backdrop and face the cumulative impact of several years of increased costs. With productivity growth stagnant, this will require difficult choices, with some likely to squeeze investment or raise prices to finance it.
No Net Zero Investment Plan and a lack of tax incentives to promote green technologies
The CBI has been campaigning for the government to deliver a Net Zero Investment Plan to identify the funding gaps and set an investment strategy for decarbonisation technologies. In the context of the tight fiscal position, establishing such a tool would ensure that public and private investment flows at the speed and scale required to meet the Climate Change Committee’s balanced pathway to net zero by 2050.
Likewise, today’s Budget gave little in the way of using green tax incentives to promote high-growth green technologies. With competition fierce for attracting new growth industries, outsmarting rather than outspending our competitors means making better use of our tax system.
As always, our next steps are guided by our members. A united business voice is a strong business voice. To help shape the CBI’s ongoing response to the Autumn Budget, please complete our five-minute Autumn Budget Survey, which closes at 17:00 on 5 November 2024.
For more detail on the economic backdrop, the reaction to what was announced, where the CBI had impact and what it all means for your business, please read the sections below.