A Budget for Long Term Growth

The Chancellor heralded today’s budget as a “Budget for Long Term Growth” which delivers on lower taxes, better public services and more investment...

Headlines will no doubt focus on how the Government has built on their Autumn Statement cut to National Insurance by announcing an additional cut of 2% (from 10% to 8% for full-time employed workers and 8% to 6% for the self-employed).

He delivered the news that inflation will fall to the 2% target by the next quarter, and one which will increase the size of the economy by 0.2% in 2028-29, a rosier picture than the one we were told to expect this time last year. He even recognised the invaluable role SMEs play in our economy and sees them as vital to the UK’s economic growth prospects. This all fits nicely with our core Manifesto theme of economic security.

Notable announcements:

• NIC Cut:
  • An additional 2p reduction to the main rates of employee and self-employed NICs from 6 April 2024.
• Fuel Duty:
  • Maintaining rates of fuel duty at the current levels for a further 12 months.
• SME support:
  • Increasing the VAT registration threshold from £85,000 to £90,000
  • Extension of the Recovery Loan Scheme (now renamed the Growth Guarantee Scheme) to the end of March 2026, offering a 70% government guarantee on loans to SMEs of up to £2 million in Great Britain, and £1 million in Northern Ireland. 
• Agriculture flooding:
  • £75 million to Internal Drainage Boards to bolster investment in water and flood management assets which are vital to protect agricultural land from the impact of floods and storms.
• Digital/AI:
  • £7.4 million AI Upskilling Fund pilot that will help SMEs develop the AI skills of the future.
  • Launch of SME Digital Adoption Taskforce which will investigate how best to support the adoption of digital technology by SMEs to boost their productivity.
• Skills:
  • £3 million to match industry-led funding for a skills and education programme to attract more people to take up roles as local planners in planning authorities. We are pleased to see this announcement as it links to our Manifesto ask for ways to support local planning authorities to enforce flood regulation on new builds.

Missed Opportunities:

Despite some welcome interventions, we do believe there was a missed opportunity to recognise the vulnerabilities inherent within our economy, and therefore go further to improve economic security and better manage the risks of the future.

A summary of our key Budget asks include:

• Cut to the overall rate of Insurance Premium Tax (IPT);
• IPT exemptions for multi-occupancy buildings with fire safety issues, and cyber policies;
• Greater flood defence investment to account for impacts of inflation;
• Vat exemption for flood resilience building materials.

BIBA will continue to engage with all political parties to ensure that managing risk appropriately and building a secure economy are priorities for them in this election year. We will continue to raise the key issues within our Manifesto, as well as working on emerging issues as they are raised.

Graeme Trudgill, BIBA’s Chief Executive, commented that,

 “With the cost of living continuing to bite, we welcome the positive measures to ease the burden on businesses and working people announced in the Budget today. However, we also recognise the missed opportunity when it comes to taking more decisive action on issues such as Insurance Premium tax, and increased flood investment in response to inflationary pressures.  

 “Managing risk and ensuring economic security by closing protection gaps and building business resilience are and should be the priority of all political parties. Therefore, BIBA will continue to champion these and wider issues on behalf of our members as we move further into this election this year.”