Christie & Co comments on the 2024 Spring Budget

Key takeaways 

• It was confirmed that the UK economy is in recession however the Office for Budget Responsibility (OBR) expects the economy to grow by 0.8% this year and 1.9% next year – 0.5% higher than their autumn forecast 
  
• The OBR also expects inflation will go below the Bank of England target of 2% in a few months' time, nearly a year ahead of the previous OBR statement 

 Individual Tax Reforms

• National insurance contribution will be cut by 2p, going from 10% to 8% of pay, following a 2p cut from 12% in the Autumn Budget last year. The cut will take effect from 6 April this year 
  
• Self-employed national insurance will be cut to 6% 
  
• Stamp duty relief for people buying more than one dwelling will be abolished 
  
• The higher rate of property capital gains tax is to be reduced from 28% to 24%. Hunt said the move is predicted to increase revenues as there will be more transactions 
  
• Hunt says he will consult on a new rule to make child benefit apply to collective household income, rather than on an individual basis, which he aims to introduce by April 2026. But, as a more imminent help, Hunt announces the threshold will go up from £50,000 to £60,000, and the top of the taper at which it is withdrawn will go up to £80,000 
  
• The Government will create a “British” ISA in the form of an extra £5,000 tax-free allowance for the public to invest exclusively in UK 

 Business Tax Reforms

• Fuel duty to be frozen again for another 12 months and the 5p cut to fuel duty will be maintained, costing an estimated £5bn 
  
• Alcohol duty freeze extended until Feb 2025, benefitted 30,000 UK pubs 
  
• Vaping levy – following the announcement of a UK wide ban on disposable vapes, a new vape tax will be introduced which will raise £500m. There will also be a one-off increase in tobacco duty 
  
• Air passenger duty will increase for business class passengers 
  
• The VAT registration threshold will go up from 85k to 90k, a £10bn tax cut for businesses - not as far as the 100k some were hoping for 
  
• Permanent rate for theatre tax reliefs announced - to be fixed at 45% 
  
• Extension of the UK’s windfall tax on the profits of oil and gas companies until 2029
• The furnished holiday lettings regime will be abolished 

 Public Spending, Funding & Investment 

• Public service cuts – 1% increase in public spending to be maintained 
  
• Small businesses - £200m of funding to extend recovery loan scheme, helping 11,000 SMEs 
  
• Multi-billion-pound funding granted for NHS productivity plan in full, which will double what the NHS is currently spending on technologies – an additional £2bn 
  
• Childcare plan - guarantee on the rates that will be paid to childcare providers to deliver governments previous offer for children over nine months to two years old 
  
• Children in Care – £165m investment for children’s care facilities  
  
• SEN schools – £105m worth of investment granted to build new SEN schools  
  
• Regional investment zones – in an effort to create new jobs outside of London, a North-East trailblazer devolution deal will be introduced which will provide up to £100m worth of investment 
  
• £270 million devoted to advanced manufacturing industries, to fund car and space innovation, to grow "zero emission vehicle and clean aviation technology" 

See what our experts have to say in response...  

Commenting on the day nurseries sector, David Eaves, Director – Childcare & Education, Christie & Co, said, “Following today’s Spring Budget, it’s important to not forget the 30.6% growth in funding for new childcare entitlements as highlighted in IFS’s ‘Public service spending: an even bigger squeeze’ report published in November 2023, whereby early years was a major outlier as other areas of spending saw depleted and sometimes cuts to funding. Funding for Schools, for example, will be held flat in real terms, with 0.0% growth expected.  

“In his statement today, the Chancellor did announce there will be increases to the funded rates over the next two years, which will likely be welcomed by the sector, although further clarity will be required to ensure this keeps pace with cost increases and the burden is not gradually passed back to providers or parents over time, as has been the case under the current funding system. Furthermore, reforms to Local Authority funding rules, ensuring they will have a finite window to communicate funding rates and that a minimum of 97% of funding will be passed on to providers, should allow settings to plan for the future with greater certainty; however the well-publicised issues with parents having difficulty obtaining their code to access the expanded two-year-old funding needs to be addressed before the wider roll out. Finally, while the Government launched a trial recruitment campaign in February in an attempt to encourage individuals into the early years workforce, including one-off bonuses of £1,000 in select Local Authorities, the impact of this will not be known for some time, with many settings highlighting a lack of qualified staff as a major barrier to providing the expanded funding offer.” 

Commenting on the SEND sector, Courteney Donaldson, Managing Director – Childcare & Education, Christie & Co, said, “While at today’s Spring Budget, the Chancellor committed ‘an initial £105 million towards a wave of 15 new special free schools to create over 2,000 additional places for children with special educational needs and disabilities (SEND) across England’, this is a drop in the ocean given the fast-rising tide of demand. Post-COVID-19, we have seen a surge in demand for SEND places amid the volume of EHC plans increasing by 9.2% between January 2021 and January 2022, this is the second highest growth rate, falling slightly below the 10.5% volume uplift the previous year. Furthermore, in 2022, 39.6% of new EHC plans were not issued within the 20 weeks statutory timescales for completing EHC assessments, while 40.1% in 2021 were delayed, which clearly illustrates that local authorities cannot keep up with demand and that 2,000 additional places regretfully fall very short from meeting prevailing needs.” 

Commenting on the Children’s Social Care sector, Courteney Donaldson, Managing Director – Childcare & Education, Christie & Co, said, “Today’s Budget announced that the Government will provide £45 million to match funding to local authorities to build an additional 200 open children’s home placements and £120 million to fund the maintenance of the existing secure children’s home estate and rebuild Atkinson Secure Children’s Home and Swanwick Secure Children’s Home. Budget detail confirms the wider development of proposals on what more can be done “to combat profiteering, bring down costs and create a more sustainable market for residential placements” which will be published later this year. Furthermore, it will work with the Local Government Pension Scheme to consider the role they could play in unlocking investment in new children’s homes.” 

Commenting on the pubs and restaurants sector, Neil Morgan, Senior Director – Pubs & Restaurants said, “The Chancellor's budget was rather underwhelming and delivered crumbs of assistance for the hospitality sector, considering the cocktail of cost challenges facing operators. Whilst an extension to the alcohol duty freeze was announced, key trade bodies such as UKH and the BII were lobbying hard for a VAT reduction which wasn't forthcoming. This will come as a huge disappointment to the industry. 

"There were some small green shoots with regards to the OBR’s forecasts for marginal economic growth and fall in inflation, which should create a more stable trading environment, as long as this happens. Operators will surely be hoping that the  individual tax reforms, including a cut to NI, will be enough to boost household disposable income and encourage people to go out and enjoy pubs and restaurants.” 

Commenting on the retail sector, Steve Rodell, Managing Director – Retail & Leisure said, “The convenience retail and forecourt sectors have broadly welcomed today’s budget, which came without surprises. The key announcements of relevance for retailers include the freeze on alcohol and fuel duties (including the previously announced 5p cut on fuel) until Feb 2025, a new vape tax from Oct 2026, to be introduced along with higher duty on tobacco, and a new capital allowance offer on business investment for leased assets which will enable businesses to continue upgrading with new and green technology. 

"Alongside this, the Chancellor announced a significant funding package to boost car and space innovation, which is a step in the right direction for electric vehicle (EV) uptake however, manufacturers will be disappointed that he didn’t take the opportunity to reduce VAT on EV’s. For individuals, National Insurance will be cut by 2p from Apr 2024 which should help to give workers pay packets a marginal boost. However, many will be feeling more could have been done to support the sector, particularly as nothing was mentioned in regard to business rates, which are due to go up in April.” 

Commenting on the residential and holiday park markets, Jamie Keith, Director – Head of Holiday and Residential Parks said, “Today’s budget was largely as expected, with relatively few surprises. The British public are still very much experiencing a cost-of-living crisis, although the worst appears to be behind us in terms of inflation lowering and modest economic growth projected for 2024. 

“The holiday park market should benefit from the scrapping of a series of tax breaks designed to help holiday let landlords. This may result in more housing stock being released to the market, reducing the overall volume of holiday accommodation stock (from Airbnb for example). This should mean an increase in demand for holiday parks, which are not directly affected by such changes. This sentiment is corroborated by The Capital Gains Tax (CGT) cut from 28% to 24% (from April 2024) which should also support holiday let landlords to offload more housing stock to the market. 

“In contrast, today’s measures provide little benefit to the Residential Park Home sector, as the majority of park home owners are pensioners. As a result, their ability to pay increased residential park home pitch fees remains a concern. However, the lack of changes to the ‘Triple Lock’, which is often speculated as financially unsustainable in respect of pensions, is good news for the sector.”