x
RECEIVE BUSINESS MK FREE TO YOUR DOOR EACH MONTH, COURTESY OF ROYAL MAIL.
* indicates required

Budget REACTION: Government puts a £40bn target on business in the most significant tax-raising budget in modern history

Milton Keynes Chamber of Commerce gives its reaction to today (Wednesday)'s Budget statement in Parliament.

CHANCELLOR Rachel Reeves has presented the most significant tax-raising budget in modern British history, positioning businesses as a key source of funds to address the UK’s £22 billion budget deficit and maintain critical public spending.

Making history as the first woman to deliver a budget, Reeves outlined an Autumn Statement with policies aimed to generate an additional £40 billion in annual revenue from the corporate sector for the upcoming financial year.

This marks the first Labour Autumn Statement in 14 years and sets a new tax record, with the percentage of GDP collected in taxes projected to hit 38% by 2029-2030.

A notable component of the Chancellor’s plan is a 1.2% increase in employers’ National Insurance contributions, raising the rate to 15% from April. Additionally, the secondary threshold for National Insurance has been lowered from £9,000 to £5,100.

The government expects these changes to bring in £25 billion over the next five years. In light of the tax hike, the Chancellor emphasised that the employment allowance, which mainly benefits smaller companies, has doubled to £10,000, extending relief to all businesses – a change from previous restrictions on eligibility.

Simon Cox.

Other highlights include the decision to keep corporation tax at a fixed rate of 25% for the remainder of the current parliament. The Chancellor justified the adjustments as “difficult decisions on tax” while stressing their role in protecting the country’s financial health and public services.

Simon Cox, head of policy at Milton Keynes Chamber of Commerce, expressed concern over the impacts on local business owners. “The Chancellor spoke about protecting working people but the hard-working business owners and entrepreneurs have been overlooked here,” he said.

“This budget will place further pressures on businesses with increased taxation, increased payroll costs and National Insurance contributions any may see hesitation when it comes to employment within the county.”

In addition to tax changes, substantial increases in minimum wages are expected to affect SMEs. Starting next April, wages for workers over 21 will rise by 6.7% to £12.21 per hour and younger workers aged 18-20 will see a 16.3% increase, raising their hourly wage to £10. The Chancellor reiterated the government’s commitment to ultimately creating a single adult rate to “transform” the workforce.

She also announced a two-tier Business Rates system, which introduces a “higher multiplier” for high-value properties and reduces the relief for retail and hospitality businesses from 75% to 40%, effective from the 2026-27 financial year.

Properties in the agricultural sector and business property reliefs will be capped with maximum relief set at £1 million, taxing anything above that threshold at 50%.

The bold measures outlined in today (Wednesday)’s budget reflect Labour’s commitment to balancing fiscal responsibility with social welfare, although the corporate sector is positioned to absorb much of the financial impact.

………………………………….

An extra £300m for the sector is obviously very welcome indeed

Sally Alexander.

CHANCELLOR Rachel Reeves’ announcement of a £300 million boost to the UK’s further education sector has been greeted with both surprise and delight at Milton Keynes College.

“It is very rare for Chancellors to even mention further education in the Budget so her announcement of an extra £300 million for the sector is obviously very welcome indeed, as is the recognition of the importance to the economy of what we do,” said Milton Keynes College Group principal and chief executive Sally Alexander.

“We do not know yet how the increased funding for the SEN budget will be spread across education but this is also an important contribution to ensuring Fairer Futures for All, the mantra of our college group.”

She also welcomed the government’s continued commitment to East West Rail, on which the first passenger services are expected to run next year between Oxford, Milton Keynes and Bedford.

“From a local perspective, the continued commitment to the East-West rail linking Milton Keynes and Oxford as early as next year and then further to Cambridge in the future will be transformative for the local economy,” said Ms Alexander.

………………………………….

The government will be unable to stimulate long-term economic growth without cooperation and investment from both the public and private sector

Professor Joe Nellis.

Professor Joe Nellis of Cranfield School of Management and economic adviser to chartered accountants MHA, gives his assessment of the Budget statement.

A boost to the public sector

We support the well-trailed changes to the UK debt rules that the Chancellor confirmed today.

“The first Budget in our country’s history to be delivered by a woman is likely to be remembered for what the Chancellor herself called “difficult” decisions on tax and a series of announcements detailing investment in public services.
“The emphasis in the speech was on improving the underlying fundamentals in areas such as schools, housing, and transport, along with some specific support measures for high-growth sectors such as aerospace, automotive and life science manufacturing.
“Across our region there is a rich seam of private businesses performing well in these and other markets. The talent and the spirit of entrepreneurship is here but success brings its own challenges and hopefully today’s measures will support unlocking the potential already here.”
CHARLOTTE ANDERSON
Practice lead, Grant Thornton UK – Milton Keynes.

Investment is the engine of growth and the UK economy needs that growth more than ever if we are to ensure that this Budget is a one-off pain point and the rest of the term of this government is more optimistic in nature.

Tax increases alone are not going to balance the books and despite originally agreeing with her Conservative predecessor Jeremy Hunt, Chancellor Reeves is right to change how UK debt is evaluated.

We agree with commentators who say it makes more sense than the old measure though none of them are perfect. The old rules acted as too much of a brake on public sector investment, including infrastructure spending.

The UK economy needs that £20 billion – £25 billion a year invested in the right way and in the right place over the long term to ensure our roads, rails, hospitals and schools are fit for purpose to support a modern economy.

This extra fiscal headroom is evident in the measure for public spending announced by the Chancellor, with the NHS, schools, and social housing given a significant stimulus.

This significant boost to the size of the public sector could indicate a rebalancing of the economy for years to come but the public investment, coupled with a 2% target for public sector productivity increases, is a great boost to hopes for long-term growth.

A hit to the private sector

However, this Budget will be a shock to many in the private sector given the scale of the increase in employers’ National Insurance contributions and the reduction in the threshold at which employers pay it – moves that could negatively impact private sector investment.

This is effectively a tax on jobs, with SMEs – which account for a large proportion of total employment – taking the biggest hit.

The government will be unable to stimulate long-term economic growth without cooperation and investment from both the public and private sector and their prioritisation of one over the other may be a decision they live to regret.

………………………………….

………………………………….

Stay connected with local business through Business MK. Join our exclusive community for the latest news, insights, updates, features and thought leadership. 

Stay informed – subscribe now at bit.ly/3MZiqzQ. Unsubscribe at any time.


More from Milton Keynes:

More business articles: