31 Oct 2024

Budget 2024: Businesses shoulder the biggest burden - Chamber

GBCC Raj Kandola 22.jpg 1

Business leaders in Greater Birmingham today called on the Government to build stronger ties with the business community, after firms were hit with a series of tax rises in the Budget.

Chancellor Rachel Reeves’ Budget – the first under a Labour government since 2010 – included tax rises worth up to £40bn to fund the NHS and public services.

And Greater Birmingham Chambers of Commerce said there is no escaping that businesses will “shoulder the biggest burden” of yesterday’s announcements.

Raj Kandola (pictured), director of external affairs at Greater Birmingham Chambers of Commerce, said: “The Chancellor was keen to project an image of being fiscally responsible whilst also talking up the UK’s prospects as a destination of choice for growing a business and attracting investment.

“There’s no getting away from the fact that she has chosen businesses to shoulder the biggest burden of tax rises in a bid to strike the right balance.”

The Budget featured several previously trailed announcements, including:

  • An increase in employer National Insurance contributions to rise from 13.8 per cent to 15 per cent on salaries above £5,000 from Apri
  • Employment allowance - which allows smaller companies to reduce their NI liability - to increase from £5,000 to £10,500
  • Tax paid by private equity managers on share of profits from successful deals to rise from up to 28 per cent to up to 32 per cent from April 2025
  • Main rate of corporation tax, paid by businesses on taxable profits over £250,000, to stay at 25 per cent until next election
  • Legal minimum wage for over-21s to rise from £11.44 to £12.21 per hour from April
  • Rate for 18 to 20-year-olds to go up from £8.60 to £10

The Chancellor also announced further business rates relief for retail, hospitality and leisure businesses, as well as a freeze on fuel duty.

And she committed the first £125m in funding for publicly-owned Greater British Energy, as well as giving the green light for HS2 to be extended to London Euston.

Raj Kandola added: “Raising the rate and lowering the threshold for employers National Insurance, coupled with increases to the National Living Wage will clearly add to the crippling cost pressures many continue to face on a daily basis, as evidenced in our latest Quarterly Business Report.

“Changes to corporate gains and inheritance tax will also be felt by those entrepreneurs and investors looking to dispose assets.

“There were announcements made such as business rate relief for those operating the retail, hospitality and leisure industry and a continued freeze on fuel duty that will be welcomed – whether this will be enough to bolster confidence remains to be seen particularly as longer-term decisions around the wider business rates system and VAT framework have been avoided.

“Changing the public borrowing rules seems to have caused relatively few ripples amongst the bond markets.

“However, businesses will rightly question the Government’s ability to use this spare capacity to deliver large scale infrastructure given the challenges we’ve seen with HS2 and other key projects over the years.

“We can only hope the announcements made related to Great British Energy and other green projects will kickstart investment and create jobs.

“The speech hit the right notes in identifying the importance of boosting infrastructure spend, tackling skills gaps, driving innovation and continuing to turn the dial on regional devolution, as recommended by the Business Commission West Midlands. Firms are craving a stable political and economic environment that gives businesses the confidence to invest and grow.

“However, it’s hugely disappointing to see plans in place to cut back on culture spend locally – not only does this industry fuel tourism and footfall, it also plays a huge role in a shining a spotlight on the region internationally and ultimately attracts more foreign direct investment.

“The coming weeks and months are crucial – the Government must use this Budget as a platform to build stronger ties with the business community in order to shape a coherent growth narrative that will boost private sector confidence and fuel prosperity.”

What does the Chancellor’s Budget mean for business? Read this comprehensive blog from the GBCC policy team, which breaks down all the key announcements. 

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