Budget 2024: Chancellor aims for stability in opening gambit.

However, for the last four months, it has been the country waiting with bated breath for Rachel Reeves, the first female Chancellor, to finally deliver her much-anticipated Budget.

From blackholes to potholes, Labour has been framing its poor inheritance and the inevitable tough choices on years of Conservative chaos, despite backlash to the contrary. 

During yesterday’s address to the House of Commons, Rachel Reeves took her chance, with the nation watching on, to set out the previous government’s failings in meticulous detail, while attempting to navigate a positive path towards stability for the country’s future finances. 

Drawing on the past, building for the future?

The era-defining nature of this Budget was widely touted, but the Chancellor drew inspiration from the Labour Party’s past to shape her speech.  A ‘cradle to grave’ narrative ran throughout with a focus on schools and the NHS.  A £22.6 billion increase in day-to-day spending on healthcare and £6.7 billion in capital investment for the nation’s crumbling schools are the headline grabbers – harking back to the Labour Party of Attlee and Bevan.

The Chancellor also set out to support the delivery of new homes, funding the recruitment of planning officers, and increasing the Affordable Homes Programme by £500 million – all of which had been trailed.  The considerable work already undertaken in the updated National Planning Policy Framework (NPPF), due to be adopted in the coming months, has been supplemented by £3 billion of additional support for SME housebuilders and the Build to Rent sector, further supporting the private housing market.

In a rare moment of harmony with the previous regime, Labour has been upfront in its desire for more devolution, announcing new funding settlements from Greater Manchester and the West Midlands and securing the delivery of new transport schemes including the Transpennine Route Upgrade between York and Manchester.  Despite being proposed first under the last Labour government in 2009, there was also confirmation that HS2 will run to Euston after all – news greeted with an almost universal sigh of relief for the beleaguered project.

Supporting industry and the growth economy

‘Invest, invest, invest’ was Rachel Reeves’ mantra as she followed through on Labour’s pre-election promise to provide a catalyst for economic growth. 

Ed Miliband has been one of the busiest cabinet ministers since the election, and the Budget rewarded his hard work by providing £3.9 billion of funding for carbon capture, usage and storage projects in addition to the previously announced Great British Energy.

Throughout the Budget, the Chancellor avoided providing too many specific details, deferring the Trade Strategy until 2025 and choosing to set out R&D schemes as part of Phase 2 of the Spending Review.  Despite this, life sciences, one of Britain’s burgeoning industries, is becoming too big to ignore, and is set to receive up to £520 million as part of an Industrial Strategy which prioritises long-term growth.

Growth may be the goal, but the Budget was light on incentives for private investment to drive Britain’s economy.  The Chancellor targeted businesses for tax rises, leaving firms looking for a ‘carrot’ to balance the tough economic ‘stick’.

After a week of will-they-won't-they on Freeports, the Chancellor announced a designated tax site in South Wales and the East Midlands Investment Zone to support advanced manufacturing and green industries.  The Budget kept on message with Labour’s love for the regions, continuing to bolster high-potential innovation clusters in Glasgow, Manchester, and the West Midlands.

Promises made, promises fulfilled?

Never to miss an opportunity to talk about Labour’s fiscal inheritance, Rachel Reeves called on the experts, including the Office for Budget Responsibility (OBR) and the Office for Value for Money, to hammer the point home – a notable dig at last government's famous distain for experts.

This has been the largest tax-raising budget since 1993 and it is clear businesses will be shouldering the largest share of burden with £25bn being raised through employers’ national insurance contributions. However, the Chancellor showed confidence throughout the marathon 77-minute speech, extending the freeze on fuel duty and taking a penny off the price of a pint – surprise moves which hadn’t been leaked. 

Labour had to be patient to deliver its first Budget for a political generation, and is making up for lost time by adding VAT on private school fees, raising air passenger duty rate for private jets to 50 per cent and scrapping the non-dom status.  Despite announcing a delay to lifting the freeze on income tax bands until 2028, the Budget showed signs of a government settling into power after a challenging four months. 

Despite the tax rises and early jitters in the financial markets, Rachel Reeves has avoided giving the spooks on a Halloween Budget.  Time will tell if the Chancellor, an under-14 chess champion, has placed herself as the all-powerful Queen looking for stability after the tough economic period.