The Chancellor of the Exchequer, Rachel Reeves, presented her 2024 Autumn Budget to Parliament on 30 October and published supporting documents on the gov.uk website. She is the first woman to deliver a UK Budget. This is the Labour Party’s first Budget for more than 14 years.

When the Chancellor finished her 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 that produces the official forecasts for the economy and public finances used by the Chancellor.

The Chancellor has increased government spending by around 2% of GDP a year, on average, over the next five years. One-third of the additional spending will go on government’s investment spending on things such as transport, housing, and research and development (R&D). The remaining two-thirds will go on government’s day-to-day spending.

Half of the increase in spending is funded through an increase in taxes, mainly through higher employer National Insurance contributions (NICs) and capital taxes. The remaining half is funded largely through additional borrowing.

The Chancellor said the Budget is “restoring stability to our public finances and rebuilding our public services” and restoring “economic stability”.

MPs gave their immediate reaction in the debate that followed the Chancellor’s statement to the House of Commons. This continued on Thursday and will continue next week.

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

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

How have think-tanks responded to the Autumn Statement?

Institute for Fiscal Studies

The Institute for Fiscal Studies (IFS) published an initial response to the Budget. In the response, IFS Director, Paul Johnson, described the Budget as containing “big tax rises, more cash for public services, more borrowing and more investment.”

Mr Johnson also described the Budget as containing two “gambles.” The first gamble refers to whether increased funding for public services will be sufficient to “turn performance around”, with the risk that “temporary spending pressures” will persist. Johnson says that if this gamble doesn’t pay off, the Chancellor “may well need to come back with another round of tax rises in a couple of years’ time – unless she gets lucky on growth.”

The second gamble is whether extra borrowing “will be worthwhile”, and whether the benefits of extra borrowing, such as more funding for public services and greater public investment, “will more than offset the costs”, such as, “higher debt servicing costs… higher inflation and higher interest rates.”

Mr Johnson goes on to say that the outcome of the second gamble depends on “how well the government spends the money.”

In introductory remarks to an IFS event on the morning of 31 October, Mr Johnson said the Chancellor was “faced with a genuinely difficult inheritance” for which “the last government must take a lot of the responsibility”, and has responded by “increasing taxes, spending and borrowing, taking the former to record levels.”

Mr Johnson also commented that changing the fiscal rules to allow more investment is “probably sensible” and should “boost long term growth if it is well spent”, commending the focus on the long term.

Institute for Government (IfG)

In analysis of the Budget published by the institute for Government (IfG), Thomas Pope, the IfG’s deputy chief economist, described the Budget as a “clear break from the recent past”, saying the government will be one that “taxes, spends and borrows significantly more than the previous government claimed it would”, though the effects of Budget measures, “may take more than one electoral cycle to be felt.”

IfG analysis praised the new fiscal rules and “wider changes to the fiscal framework” as measures that “should support more stable, sustainable fiscal policy”, as well as the new corporate tax roadmap, and the government’s commitment to “more stable, higher levels of investment,” though also argued that public service spending “is set to grow quite slowly beyond next year”, which may frustrate the government’s “progress on its missions”.

National Institute of Economic and Social Research (NIESR)

Analysis published by the National Institute of Economic and Social Research (NIESR) argues that the Budget “sets the tone for fiscal policy over the course of this Parliament”, though it says the Budget does not provide a “firm foundation for stronger growth, higher living standards for the least well-off and sustained regional regeneration.”

The NIESR response welcomes measures such as higher spending on public services, more public investment, and the increases in the National Minimum Wage and National Living Wage, which it says will “boost the living standards of over 3 million workers,” though adds “higher employment costs” for businesses will have “significant negative impacts on employment and wage growth, especially in low-paid sectors such as hospitality.”

The response also welcomes the change to fiscal rules, in particular measuring government liabilities through public sector net financial liabilities (PSNFL) rather than public sector net debt (PSND), saying this change will “have a meaningful effect on the government’s ability to finance much needed public investment today.” However, the response goes on to argue that despite this change, the debt target “remains arbitrary” and will “continue to restrict public investment by not leveraging the value of fixed assets on the government’s balance sheet, nor allowing enough time for public investment to generate returns through higher GDP.”

The Resolution Foundation

The Resolution Foundation’s Budget analysis More, more, more described the Budget as the “most anticipated Budget of modern times” and one that “lived up to the hype with huge tax and spend announcements.”

The analysis argues the Budget will result in “more spending, more tax, and more borrowing”, with the “largest tax rise relative to the size of the economy in any formal fiscal event on record” and the Chancellor borrowing more to reverse planned cuts in public investment, having “rewritten one of her fiscal rules in order to give herself room to do that.”

Despite these “bold” measures, the analysis argues that the “immediate outlook for real pay is far from rosy and, after this Budget, has worsened” and that public investment alone will not be enough to “raise Britian’s stagnant growth rate”, which will require further action on skills, planning and industrial policy, among other things.

Institute for Public Policy Research (IPPR)

Harry Quilter-Pinner, interim executive director at the Institute for Public Policy Research (IPPR), described the Budget as marking a “decisive, positive shift for the UK economy” through higher investment and increased tax revenues to support public services, arguing these measures indicate the Chancellor is “steering the country away from stagnation and austerity, towards a better economy.”

George Dibb, associate director for economic policy at IPPR, also praised the Budget, arguing that changes to how the government measures debt in its fiscal rules will “open desirable space for greater borrowing to rebuild the foundations of the UK economy”, while reforms to tax on income from wealth, including capital gains tax and inheritance tax, are the “first steps in making the UK tax system fairer, even if some do not go as far as we would hope.”

TaxPayers’ Alliance

The Chief Executive of the TaxPayers’ Alliance, John O’Connell, said the Chancellor has “condemned the country to a record high tax burden”, arguing that increases to National Insurance contributions paid by employers “will decimate businesses up and down the country” and that the cost of this “will ultimately be borne by working people through lower salaries.”

Institute of Economic Affairs

Similarly, Tom Clougherty, executive director at the Institute of Economic Affairs argues that “businesses will see their costs rise and it will be workers who pay the price” of increases to employer National Insurance contributions. Clougherty also says that the government is “putting an awful lot of faith in its ability to choose and deliver public sector capital projects that deliver meaningful economic benefits”, even though “few outside Whitehall will share their optimism.”

Commenting on the 16% increase to the National Minimum Wage paid to 18-20 year olds, Professor Len Shackleton, editorial and research fellow at the Institute of Economic Affairs said this measure will “add to the other costs imposed on employers either explicitly in the budget or implicitly as a result of new work rights.” Professor Shackleton goes on to argue that in the medium term, this “extra pressure on smaller employers… is likely to send some to the wall”, while in the longer term it will lead employers to “automate many jobs, to contract work out to the self-employed, or to switch production to other countries.” 

Adam Smith Institute

Maxwell Marlow, director of research at the Adam Smith Institute, said that while the Chancellor was right to “go for growth”, many measures outlined in the Budget “will have the complete opposite impact to that which is intended by the Chancellor and will worsen – rather than fix – Britain’s problems.”

Marlow argues that the abolition of the current tax regime for non-UK domiciled individuals (‘non-doms’) will “drive away highly-mobile wealth creators, and so their tax contribution will decrease and they will invest less in our economy”. He also says that increases to the minimum wage will “increase the cost of goods and services, and make it harder for businesses to employ more people”. He adds that levying VAT on private school fees “will not improve state sector provision”, but will instead risk “overwhelming state schools, increasing class sizes, and reducing opportunities for under-privileged children.”

Centre for Policy Studies

Centre for Policy Studies’ director Robert Colvile’s response argues that the Budget will “reduce business investment, trade and private sector activity” and will make “existing investors very nervous about continuing to do business in Britain” through increases to capital gains tax, stamp duty, energy taxes, inheritance taxes, cuts to agricultural and business reliefs, and the abolition of non-dom status, which will send a “a powerful anti-growth message to overseas investors.”

Fraser of Allander Institute

The Fraser of Allander’s response said the Budget will result in “a really significant uplift in spending” in Scotland (largely through the Barnett formula due to higher spending in devolved areas), which will likely “make the Scottish Government’s job of balancing its budget significantly easier.”

The response also praised the Chancellor’s announcement that she will hold the Budget every year in the Autumn, as this commitment may lead to a “single fiscal event a year” that would “stop tinkering impulses.” It said this would be welcomed by devolved administrations, as their budgets depend on decisions taken at the UK Budget, saying one Budget a year would give them “more certainty and the ability to plan and take meaningful decisions.”

How have business organisations responded?

In her response, Shevaun Haviland, the director general of the British Chambers of Commerce, called the Budget “a tough budget for business to swallow”, as increases to National Insurance contributions paid for by employers and the 7% increase to the National Living Wage (paid to workers aged 21 and over) means “many firms will find it more challenging to invest and recruit in the short-term.” Haviland’s response goes on to welcome other measures, including infrastructure spending, business rates relief and additional support for small business, which “will take some of the sting out of the tax rises”, although she said that the “future benefits outlined by the Chancellor [are] by no means guaranteed.”

Similarly, Rain Newton-Smith, chief executive of the Confederation of British Industry (CBI), labelled the Budget “a tough Budget for business”, as “increases to the employer cost base” such as higher National Insurance contributions “will increase the burden on business and hit the ability to invest and ultimately make it more expensive to hire people or give pay rises.”

A separate summary of the Budget published by the CBI praised Budget measures such as the Corporate Tax Roadmap, reform of the Apprenticeship Levy and maintenance of the R&D tax relief as being of long-term benefit, before adding “in the short term, this is a tough Budget for businesses.”

Federation of Small Businesses policy chair, Tina McKenzie, praised the Budget, saying it showed “a clear direction in business policy now for the whole of this Parliament to target support at small businesses, rather than big corporates.” The response welcomed increasing the employment allowance for small businesses, a freeze in the small business multiplier for business rates, plans for a small business strategy command paper, and a freeze in fuel duty as all beneficial to small business. However, the response also warned that larger small and medium-sized businesses will struggle with increased employer National Insurance contributions on top of the large costs from the Government’s employment law plans.”

Responses from other organisations

Cllr Louise Gittins, chair of the Local Government Association (LGA) welcomed extra funding for local government, saying it will help councils meet some “but not all of the significant pressures in adult and children’s social care and homelessness support.” The LGA’s response also welcomed additional funding for children with special educational needs and disabilities, Right to Buy reform, funding for potholes, and affordable housing. However, the response also argues that councils require “greater funding certainty through multi-year settlements and more clarity on financial reform” to protect services.

In his response, Paul Kissack, chief executive of the Joseph Rowntree Foundation, welcomed investment in social homes, the increase in the minimum wage and help for carers to work, but argued measures announced in the Budget “won’t be enough to fix the foundations for millions who struggle winter after winter in devastating hardship.”

In his response, TUC general secretary Paul Nowak said the Chancellor has “acted decisively to deliver an economy that works for working people”, going on to say that tax increases will “ensure much-needed funds for our NHS, schools and the rest of our crumbling public services” and that the Budget “sets us on an urgently needed path towards national renewal.” 

The response published by the Women’s Budget Group says the Budget offers “some promising green shoots for women” through additional investment in the NHS and schools and additional spending for local government and social care, as “women and those they care for rely more on these services and are more likely to work in them.”

What has the response been from political parties?

Conservative Party

In his response to the Chancellor’s speech, Conservative Party leader Rishi Sunak said the  Chancellor has “launched an enormous borrowing spree” and “tried to cover up that splurge by fiddling the fiscal rules” and “totally failed to grip public spending.”

Speaking to BBC Breakfast, Shadow Chancellor Jeremy Hunt said increases to employers National Insurance contributions will result in “long-term damage to growth and competitiveness”, before describing the Budget as “the biggest tax-raising Budget in history.”

Liberal Democrats

In his response, Liberal Democrat leader, Sir Ed Davey, acknowledged that the Chancellor “had to make big, difficult decisions”, though believed “she has got too many of them wrong”, arguing that the “cost of living crisis will not be solved by hitting families, pensioners, family farms and struggling small businesses.”

Reform

In his response, Reform Party leader Nigel Farage welcomed the fuel duty freeze and reduction in Alcohol Duty rates for draught beer, though described the Budget as “economically illiterate” and the growth forecast as “dismal”, saying “the big picture is that we are in decline. We are getting poorer.”

Green Party

Writing in the Metro newspaper, Green Party co-leader Adrian Ramsay said the Budget consisted of “a patchwork of promises, barely delivering on the long-term change that people voted for in July”, saying the Budget “virtually ignored” the climate and nature crises “despite the huge impact they will have on our economy in the coming years.”

SNP

Dave Doogan, SNP Treasury spokesperson, said the Budget’s National Insurance increases “are a direct assault on Scotland’s businesses, workers, and growth plan”, and will result in “lower wages for workers next year and in subsequent years.”

In First Minister’s Questions in the Scottish Parliament, SNP leader and Scottish First Minister, John Swinney, said the Budget was “a step in the right direction” that will deliver “an increase in funding for Scotland as a result of the Barnett consequentials for health and education”. However, he also said that the Budget contained “issues that will prolong the agony of individuals in our society.”

Plaid Cymru

Plaid Cymru MP, Llinos Medi, said there was “little in the Budget that fixes the foundations for Wales”, saying the “uplift to the block grant will not rebalance Wales’s fiscal settlement.”

Sinn Féin

Caoimhe Archibald, the Sinn Féin Minister of Finance in the Northern Ireland Executive, said the Budget “appears to be a genuine attempt to protect public services and invest in infrastructure”, though “harm done by austerity” will not “be reversed by one Budget.”

Dr Archibald also welcomed “commitments to capital spending” and the reinstatement of funding for Northern Ireland’s two paused Growth Deals.

Democratic Unionist Party

The Democratic Unionist Party (DUP) Treasury Spokesman, Sammy Wilson, welcomed additional money for Northern Ireland under the Barnett formula, though stated that the ending of the agricultural property relief would have “huge implications” for the agricultural sector in Northern Ireland.

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