Spring Budget 2024: Reaction

The Chancellor of the Exchequer, Jeremy Hunt, presented his 2024 Spring Budget to Parliament on 6 March and published supporting documents on the gov.uk website.

When the Chancellor finished his statement in the Commons, the Office for Budget Responsibility (OBR) published updated forecasts for the UK’s economic and fiscal outlook. The OBR is the independent public finances watchdog, which produces the official forecasts for the economy and public finances used by the Chancellor.

The Chancellor has cut the main rate of National Insurance contributions for employees and the self-employed by 2 percentage points. The cost is being met through a mixture of other tax increases, higher government borrowing and improvements in the underlying forecast for borrowing.

The Chancellor said he was presenting a “Budget for long term growth” which would deliver “more investment, more jobs, better public services and lower taxes”.

MPs gave their immediate reaction in the debate that followed the Chancellor’s statement to the House of Commons.

The Library briefing Spring Budget 2024: A summary picks out the key announcements in the Budget and provides overview of the latest forecasts.

You can find all of the Library’s research on Spring Budget 2024 in one place.

How have think-tanks responded to the Autumn Statement? The Institute for Fiscal Studies

The Institute for Fiscal Studies (IFS) published an initial response to the Budget, in which IFS Director Paul Johnson said cuts to the main rate of National Insurance contributions for employees and the self-employed “will benefit millions of workers”, and is preferable to cutting income tax rates, as reducing National Insurance contributions “reduces the tax wedge between different sorts of income, benefits those of working age in work, and should have marginally more positive work incentive effects”.

Despite National Insurance rate cuts, Mr Johnson went on to say that “this remains a parliament of record tax rises” and that by the time of the next election, tax revenues “will be 3.9% of national income, or around £100 billion, higher than at the time of the last election.”

On public spending, Mr Johnson argued that implementing the Chancellor’s plans “would require cutting unprotected services – including councils, courts, further education colleges and prisons – at around half the pace that George Osborne did between 2010 and 2015”.

In introductory remarks to an IFS event held on the morning of 7th March, Mr Johnson said that the Budget measures do not change “anything very significantly”, and that the Budget contains “implicitly” planned spending cuts “to many areas of day-to-day spending on public services despite very obvious signs of strain in many areas”.

The Institute for Government (IfG)

Analysis of the Budget published by the Institute for Government (IfG), welcomed cuts to National Insurance contribution rates, before arguing that the Budget “showcased some common poor practices in tax policy making”, in particular “announcing major tax changes without a proper policy development process”. It said taxes are set to rise “to a post-war high as a result of decisions made by Conservative chancellors over the past 14 years.”

The IfG’s analysis also argued that while the Budget was unlikely to “undo either the short-term effects of the pandemic or the wider problems caused by poor decisions over decades”. It said the Chancellor “has done little to set public services on the path to recovery” and that the current Government “bequeaths a dismal public services legacy to whoever wins the general election”.

The Resolution Foundation

The Resolution Foundation’s Budget analysis Back for More? described the Budget as a “pre-election Budget” that “produced pre-election tax cuts”, as the Chancellor “pressed ahead with big tax cuts” despite “the lack of a hoped-for public finance improvement”.

The analysis went on to argue that “fiscal caution is being thrown to the wind” as extra borrowing is being used to fund two thirds of the announced tax cuts. This has “reduced the Chancellor’s headroom against his fiscal rule to have debt falling by 2028-29” and “would fail to meet three out of the four fiscal rules used by his predecessors since 2010”.

National Institute of Economic and Social Research (NIESR)

The National Institute of Economic and Social Research (NIESR) response described the Budget as a “low-key Budget unlikely to unlock the UK’s growth and productivity problems”. It argued “a new framework” is required for fiscal policy, with an emphasis on “improving outcomes for UK households and regions”, rather than focusing on “arbitrary debt and deficit targets”.

The NIESR response goes on criticise the cuts to National Insurance contribution rates, arguing it is “regressive” as households in the lowest income decile are “set to gain 0.2% of their annual disposable income whereas the top five decile gain 1.4% of their annual disposable income”.

The NIESR response welcomed the “government’s continued commitment to Levelling Up”, such as new devolution deals, though argues “the scale is insufficient, and the allocation has been too low and patchy to close the gap between the top performing and worst performing areas”. It argued that without reforms to council tax, local authorities’ ability to provide “critical public services on which the most vulnerable people depend will be compromised”.

Institute for Public Policy Research

Harry Quilter-Pinner, Director of Policy and Politics at the Institute for Public Policy Research (IPPR), described the Budget as a “slash-and-crash budget” that “put politics before the needs of the nation”.

George Dibb, Associate Director for Economic Policy at IPPR, praised tax reforms that “don't hit working families but raise more revenue from the wealthiest”, such as reform of the non-dom tax system, higher tax on holiday rentals, and a further levy on first-class air travel. However, he argued that overall the Budget demonstrated an “obsession with cutting taxes today at the expense of vital public services tomorrow”.

Fraser of Allander Institute

The Fraser of Allander Institute, which specialises in the Scottish economy, said cuts to National Insurance contribution rates will “[reduce] taxes paid by the median Scottish employee by £342 a year”, describing the cut as “good news for people across the country, even if it is a relatively small increase after half a decade of stagnation”.

TaxPayers’ Alliance

The Chief Executive of the TaxPayers’ Alliance, John O’Connell, said it was “encouraging to hear the Chancellor talk about a simpler tax system, given much of the pressure on taxpayers comes from complexity”, though he argued that the Government “must prioritise cutting the tax burden”, which requires “a much firmer grip on the cost of government crisis”.

The response went on to criticise the new duty on vaping products, describing it “the latest sin tax” and a tax that unfairly that targets those trying to give up smoking.

Institute of Economic Affairs

Similarly Christopher Snowdon, head of lifestyle economics at the Institute of Economic Affairs described the new duty on vaping products as a “deeply cynical cash grab from the Chancellor” that was “scientifically and economically illiterate” and would punish those seeking to give up smoking.

Tom Clougherty, Executive Director of the Institute of Economic Affairs, said the Budget contained “good and bad things” but concluded it “ultimately won’t do much to revive the stagnating economy that lies behind most of our current woes” and did not address “long-term fiscal challenges, particularly around the impact of an ageing population”.

Adam Smith Institute

Director of Research of the Adam Smith Institute, Maxwell Marlow praised the cut to National Insurance contribution rates and the “Chancellor’s commitment to even greater tax cuts in the future”. Marlow’s response also advocated “the abolition of entire taxes” such as inheritance tax and the “scrapping National Insurance itself”.

Centre for Policy Studies

Karl Williams, Centre for Policy Studies Research Director also commended the cut to National Insurance contribution rates, stating “cuts in taxation are always welcome” and also praised the government sale of NatWest shares as a means “to boost share ownership in the UK”.

How have business organisations responded?

In her response, Shevaun Haviland, the Director General of the British Chambers of Commerce, argued the Budget contained “no major announcements to help shift the dial on conditions for business”. However, she praised the cuts to National Insurance contribution rates and the increased Child Benefit threshold, as measures that could lead to increased participation in the workforce and “make a significant dent in the job vacancies holding back our economy”. She also praised the increase in the VAT threshold to £90,000, stating this “will help SMEs in our Chamber network to grow and invest”.

Similarly, Rain Newton-Smith, Chief Executive of the Confederation of British Industry (CBI), praised cuts to National Insurance contribution rates as a measure to incentivise work “at a time when access to labour represents a major obstacle to business growth”.

A separate summary of the Budget published by the CBI described the Budget as “a balancing act aimed at giving momentum to the economy without sacrificing progress on bringing down inflation”. It called for “broader economic support for businesses”, pointing to pressures such as increased business rates and an increase to the National Living Wage.

Federation of Small Businesses Policy Chair, Tina McKenzie, also stated that business owners would have “hoped that there would be more measures announced today that would help ease the tough decisions small employers are having to make”. However, it praised cuts to National Insurance contribution rates and commitments to make progress on the HMRC administrative burden, as well as the national roll-out of the Business Energy Advice Service.

Responses from other organisations

Dr Mary-Ann Stephenson, Director of the Women’s Budget Group, said the Budget contained “tax give-aways that benefit men over women and benefit the better off rather than those most in need”. Dr Stephenson also described the Budget as “entirely lacking… any long-term vision for the country and the economy” and criticised the lack of “acknowledgement of the environmental and ecological challenges we are facing and the decisive moment we are in”.

The Local Government Association (LGA) response said it was “disappointing that the Government has not announced measures to adequately fund the local services”. It noted that local authorities’ core spending power in 2024/25 “has been cut by 23.3% in real terms compared to 2010/11” and that it is “unsustainable” to expect local authorities “to keep doing more for less in the face of unprecedented cost and demand pressures”. The LGA criticised the one-year financial settlement for local authorities, the sixth in a row, arguing councils need “greater funding certainty through multi-year settlements to prevent this ongoing decline and to also ensure key national Government policies”.

Paul Kissack, Chief Executive of the Joseph Rowntree Foundation, described the Budget as “a Budget for big earners and big owners” saying headline tax cuts do not “fill the gap for the millions in our country experiencing deepening poverty”. While the foundation’s response endorsed the extension to the household support fund, stating this has “given essential help for some families at difficult times”, it also criticised the “short termism” of this measure, saying “extending a temporary support scheme for a paltry six months doesn’t equate to fixing the fundamental problem that made its existence necessary”.

In his response, TUC General Secretary Paul Nowak called the Budget “deeply cynical” and the “the last roll of the dice from a desperate government that has presided over 14 years of economic failure on growth and living standards”. The TUC’s response also described cuts to National Insurance contribution rates as a “political con-trick” that would result in poorer public services, before arguing for “a proper long-term plan to raise wages for everyone and to restore public services”.

What’s the response been from political parties? Labour

In his response to the Chancellor’s speech, Labour leader Keir Starmer described the Budget as “the last desperate act of a party that has failed” and said that, with taxes “at a 70-year high”, the British people were “paying more for less”.

Writing in the Daily Mirror, Shadow Chancellor Rachel Reeves said the Budget delivered “the latest chapter on 14 years of economic failure” and was “all spin and no substance”. She said the Labour Party was ready to “fight the general election on the economy” and would “deliver a long-term plan to grow our economy to deliver more jobs, more investment and to put more money in people’s pockets”.

SNP

Drew Hendry, SNP Shadow Spokesperson for the Economy, described the Budget as “not a Budget for growth”, saying it contained “very little for people on low incomes and that the Chancellor “must finally match the level of ambition that we are seeing in other countries.” SNP leader Humza Yousaf said the UK Government was “slashing money for public services to fund a further tax cut that will put money in the pockets of high earners”.

Liberal Democrats

Liberal Democrat leader Sir Ed Davey described the Budget as one that “reeks of desperation and deceit”, which had no “plan for long-term economic growth, no real extra support for the NHS and our public services, and no end in sight for the years of unfair tax hikes”.

Liberal Democrat Treasury and Business Spokesperson Sarah Olney stated the Budget contained “very little” for “ordinary people who are struggling with costs going up everywhere.”

Plaid Cymru

Ben Lake, the Shadow Plaid Cymru Treasury Spokesperson, called the Budget a “short-termist Budget” that “prioritised the short-term electoral fortune of the Government”.

Sinn Féin

Caoimhe Archibald, the Sinn Féin Minister of Finance in the Northern Ireland Executive, described the Budget as “an opportunity missed for investment in public services”. She said that increased Barnett consequential funding for Northern Ireland would “not make a dent in the many financial challenges” facing Northern Ireland.

Democratic Unionist Party

The Democratic Unionist Party (DUP) Treasury Spokesman Sammy Wilson described the Budget as another “missed opportunity by the Chancellor to show that working people will be rewarded”. However, he also welcomed increased Barnett consequential funding for Northern Ireland and the extension of the Long Term Plan for Towns to Northern Ireland.