Chamber Partner Reactions to Government’s Autumn Budget
Date published:
Gill Hunter, managing partner at Square One Law, said:
“Our clients’ reactions to the budget yesterday are very mixed.
The Chancellor’s decision to raise employer NI contributions by 1.2% to 15% and lower the threshold to £5,000, coupled with the increase in minimum wage increases the burden on many of our clients particularly those in care, hospitality and retail. Businesses already operating on narrow margins may now face hard choices about wage growth, hiring, and benefits. However, options like salary sacrifice schemes may become more popular, as businesses search for ways to reduce their NI burdens without compromising pay structures. The increases may push some businesses towards pension contributions over pay rises, which, while tax-efficient, doesn’t necessarily ‘put pounds in people’s pockets.’ Although the doubling of the employment allowance to £10,500 will exempt around 865,000 small employers, the wider impact on the job market in our region remains uncertain.
The Capital Gains Tax (CGT) rates increases were expected and we have already been working with clients to scenario plan for mergers and acquisitions activity with this in mind. The Treasury is holding the Business Asset Disposal Relief (BADR) lifetime cap at £1 million to keep incentives for entrepreneurship, but relief rates will rise gradually. Many of our clients are concerned that this will be a deterrent to entrepreneurship and investment, but there is some relief that the implementation is staggered.
There were some welcome announcements on the incentives and investment front, notably for electric vehicle adoption, R&D, science and carbon capture technology.”
Gearalt Fahy, employment law specialist at Womble Bond Dickinson, said:
“Starting April 6, 2025, businesses will face a double whammy: the employer’s NICs rate will rise from 13.8% to 15%, and the threshold for tax liability will be lowered. Coupled with a significant 6.7% hike in the national living wage (over 16% for those under 21) on the same date—following an even larger increase on April 6, 2024—this will hit hard. The hospitality and care sectors, in particular, will feel the pinch, as they rely heavily on lower-paid employees and many won’t benefit from the increased employment allowance.
Hot on the heels of the government’s recent introduction of the Employment Rights Bill into Parliament, which aims to fulfill key promises from its Plan to Make Work Pay, businesses are bracing for change. The Bill proposes 28 significant employment reforms, including day-one rights like the ability to claim unfair dismissal, enhanced protections against harassment, and stricter regulations on fire and rehire practices and zero-hours contracts. While some hail these as the most transformative employment law changes in a generation, the government has indicated that the first of these reforms may not take effect until autumn 2026. This delay offers a silver lining for employers, providing ample time for businesses to engage in consultations and prepare for the upcoming changes. Employers should start considering adjustments to their employment structures, policies, and procedures now.”
Richard Cockburn, Partner at international law firm Womble Bond Dickinson, comments on the UK government’s confirmation it will provide funding for 11 green hydrogen projects.
“The Chancellor has confirmed £2bn of funding for 11 projects going through Hydrogen Allocation Round 1. However, there was no news about the relevant revenue support contracts being signed between the UK government and the developers. The revenue support would be available to projects after they have started producing green hydrogen.
Our latest Energy Transition report confirms that this is a sector which is going through a rocky period due to concerns about uncertainty of market demand for green hydrogen and high input power costs. This makes today’s confirmation of continued support welcome news for the UK hydrogen industry.”
Alison Dunn, CEO at Society Matters Group, said:
“Following the Chancellor’s budget today we remain concerned that the changes in Winter Fuel Payments have come too quickly, and not allowed as many older people to make the changes needed to protect themselves from the change. However, if you think you or someone you know may eligible its not too late to check. If you make a successful application for Pension Credit before the 21st December entitlement will be backdated and you’ll qualify for this year’s Winter Fuel Payment – it takes just as few minutes to do. More broadly we continue to worry for people in our region who have very little disposable income, what seems like a small increase in the bus fare cap could mean less mobility and less opportunity. The commitments made by our regional Mayor Kim McGuinness in relation to improvements to our transport system remain vitally important and most welcome.
However, the increase in investment into our public services and affordable homes, and the moves to help more people move into work – a definite way to move away from poverty – are much needed, and the move towards a single adult National Living Wage rate will make a great difference to our young people as they try to build their lives.
Confirmation of the extension of the Housing Support Fund and discretionary housing payments is much needed, but is not substitute for abolishing the Two Child Cap which prevents parents from claiming benefits for more than two children in their family. The changes to the maximum debt repayment that can be taken out of Universal Credit will be welcomed by thousands of families in the North East and the announced changes to Carer’s Allowance, increases in social care and SEND provision will make a real difference to people looking after someone else.
We think this is a budget that addresses some of the issues we see in our work, but not all of them so the Society Matters Group will continue be here for the people who need help to navigate this complex system and to help local businesses understand how these changes might impact them and their staff.”
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