ICSM Business – budget 2024: industry is generally underwhelmed by Jeremy Hunt’s red box

By Harry Mottram: Pundits lined up on TV and the radio following the Chancellor of the Exchequer Jeremy Hunt’s budget announcements to give their verdicts for the consumer and for business and they were less than enthusiastic. ‘A damp squib’, ‘underwhelming’, ‘is that it’ and from an unnamed Tory backbencher ‘terrible.’ And you can understand the frustration of some on the Conservative benches in parliament as they will have to fight an election soon and need some ammunition to fight off the expected Labour challenge. Cut taxes? Lower energy prices? Halve VAT? Nothing much to raise a cheer for many sitting behind the MP for South West Surrey although sole traders and freelancers may welcome the turnover threshold for businesses above which registration for VAT is required increasing from £85,000 to £90,000 from 1 April 2024. And they will appreciate a tax cut through a further 2p reduction in the NICs main rate from 8% to 6%.

The Chancellor said his budget was ‘a budget for growth’ although with the economy technically in a recession his words didn’t ring true with many in business. However, the Government’s battle with inflation – double figures last year and now around 4% - was helping.

For industry the most welcome announcement was on ‘full expensing’ – it means companies can deduct the full amount they invest in equipment and machinery from their profits so for every pound a company invests, its taxes are cut by up to 25p.

Some employers may welcome the introduction of apprenticeships for the over 50s which could see some early retirees re-enter the workforce – and with some 7 million adults not in work by choice there is a keenness in Government to get more people back into work.

The cut of two percent in national insurance for those with a job is welcome but with the tax thresholds static it means for many workers there is a tax increase as wages increase. The tax threshold starts at an annual income of £12,570 so if you are just under that level but have a pay rise you’ll start paying tax which will off-set the NI cut – which is why for many workers the budget means more tax. What Labour will do if they win the next election remains to be seen – but what many in business would like to see are reforms to business rates, cutting fuel duty, lowering energy costs and investment in infrastructure such as roads, railways, hospitals, new homes and schools – all of which generate economic growth.

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