Autumn Budget 2024: Henley academics have their say

Marking a historic occasion as the first female Chancellor of the Exchequer, Rachel Reeves has presented her Budget statement this week, the first from Labour in nearly 15 years.

She delivered the highest level of tax increases ever announced in the hope that it delivers economic growth in the long term.

We spoke with leading Henley academics to unpack its implications.

Adrian Palmer

Will the budget address the UK’s long-term productivity problem? Increasing expenditure on public services will be welcomed by many, but there is a danger that this may simply push up input costs where skilled labour and physical resources are scarce.

The private sector generally has market forces to keep an edge on productivity, but the budget allocated a bigger share of the economy to sectors where this discipline may be absent. Railways will be an interesting area to watch. The government now has much more control over the sector with market forces being sidelined. Some observers suspect that government funding will find its way to support entrenched working practices, rather than modernising to meet customers’ expectations more cost effectively.

Radu Tunaru

The recent budget is a combination of pre-announced and must do corrections but also includes some missed opportunities.

There were many important things that were kept as they were for one or few more years. Travel is taxed and this is balanced by some promise that some big projects will still go through. In the meantime the cap for bus fares moved from £2 to £3, that is 50%. This is certain and that cannot be inflation only explained.

Likewise, tobacco and vaping are taxed and so is draught drinks, as they should. This worked well as a direct measure to curb some NHS related problems. But sugar tax will be “reviewed”. You cannot go into a single shop nowadays without being invaded by sugar based products. Tax this one as well and the government would solve another important problem for NHS.

The housing one is fabulous, adding another 500 million, or something like between 1000 and 2000 houses. This should be on the same side of the budget with pensions and inheritance tax. We are told that NHS and education would benefit of 4.7% rise in real terms. Somewhere else we are told that inflation is expected to move along 2.5%. Inflation however, has two parts, internal and external. So if the inflation moves back up to 4% then NHS and education would benefit of only 3.2% increase in real terms.

I think that this budget is best described by the old saying, prepare for the worst and hope for the best.

Melissa Carr

It’s heartening to see healthcare take centre stage in today’s budget. Our cash-strapped health service desperately needs an injection of cash. But funding alone won’t fix one of the NHS's biggest issues: a burnt-out and demotivated workforce.

Keith Arundale

On the downside for the PE sector: Clearly the large increase in employers' NI will erode operating margins unless corresponding increases in selling prices of goods and services or reductions in headcount can be made. PE firms seek to increase value largely by improving margins through increasing sales opportunities and / or reducing costs; the NI increase will make this more difficult and could result in longer holding periods for portfolio companies with delayed exits and delayed distributions to limited partner investors.

On the upside for the PE sector: The National Wealth fund should unlock £billions in UK clean tech / green and growth industries to encourage and supplement private equity investment in these areas. The plans for increased investment in infrastructure and transportation should improve the conditions for PE investment particularly in the regions; currently some 64% of PE investment is in London and the South East so help for the other less well-served regions of the UK is to be welcomed.