For further comment or to arrange an interview please get in touch with Emily Taylor: emily@brightblue.org.uk or 07841 419316
Responding to the Budget 2024, Ryan Shorthouse, Executive Chair of Bright Blue, said:
“The Chancellor has set the right path for taxation, focussing on cutting National Insurance rather than Income Tax. This is good, both intergenerationally and economically, since it rewards a younger, working-aged population who derive almost all their income from working, rather than from dividends, rents and pensions.
“Frankly, however, the measures to mitigate the perverse ‘double taxation’ of work are too little, too late from the Tories. Instead of the Chancellor using his fiscal headroom for tax cuts and reliefs to all sorts of special interests, it would have been fairer and more effective to have just cut National Insurance – both for employers and employees – more deeply now.
“There are four essential activities that people can do to both improve their lives and contribute to the greater good: work more, raise children, help out in their local community and build up assets. A Conservative Government’s Budget should be focused on supporting people – especially younger generations and those on modest incomes – to do those very things. The truth is that the Tories missed what is likely to be one of their last opportunities for some time to really do so.
“The bottom line is that taxation, public debt and immigration are all at record levels after 14 years of Conservative Governments – the very opposite of what the public voted and expected them to do. The Government has failed to take the bold steps necessary to fix this.”
“This safety-first Budget means somewhat bolder policies are likely to be offered later in the year – first in an Autumn Statement and then during an election campaign – when the economy will have strengthened. But, by then, it will likely be too late.”
The 2024 Spring Budget adopted two Bright Blue’s policies:
- Reducing employees’ National Insurance
- New government funding for the development of community housing projects.
Taxation
- The main rate of employee National Insurance Contributions (NICs) will be cut by a further 2 percentage points.
- The main rate of Class 4 NICs for the self-employed will be cut by a further 2 percentage points.
- The non-dom tax regime will be abolished and replaced with a system where new arrivals to the UK pay the same tax as everyone else after four years.
- The higher rate of Capital Gains Tax on property will be cut from 28% to 24%.
Thomas Nurcombe, Researcher at Bright Blue, commented:
“There are certainly some steps in the right direction. The decision to cut National Insurance for employees and the self-employed is right, economically and morally.
“However, the Chancellor could have been a lot bolder, by going beyond the Budget’s measures and further rebalancing the weight of taxation away from work to wealth. Deeper cuts to National Insurance would create an intergenerationally fairer tax system, and may prove critical in winning over working-age voters in the forthcoming election.
“While the reduction in the higher rate of Capital Gains Tax on property may also free up some housing supply for first-time buyers, it could also decrease the supply of rentals and thus push the costs of renting higher, which are already almost half of one’s income for many graduates living in London.”
Savings
- Introduction of a new UK ISA allowing an additional £5,000 annual investment in UK equities tax-free
Thomas Nurcombe, Researcher at Bright Blue, commented:
“The idea of a British ISA is, in principle, a sound idea. In practice, however, very few people will be in a position to allocate above £20,000 each year to savings. When only a third of people have over £1,000 in a savings account, having an additional £5,000 ISA limit is a regressive and wasteful policy.”
Pensions
- Pension funds required to publicly disclose their investment returns and a breakdown of their UK investments.
- Introduction of the Value for Money (VFM) pensions framework, whereby pension schemes will be required to compare their performance against at least two schemes managing over £10 billion in assets, with the threat of the scheme closing to new entrants or winding up in the case of poor outcomes for savers.
Bartek Staniszewski, Senior Researcher at Bright Blue, commented:
“The performance of UK pension schemes has, in recent years, been very poor, especially in comparison to the performance of pension funds abroad. For a British pensioner who has contributed £1,500 a year for 40 years, at the time they retire, they will have almost £150,000 less than they would if they had invested with the average pension fund from abroad instead.
“As such, it is good for the Government to try and tackle the issue. However, simply threatening to close the schemes that underperform does nothing to address the reasons behind their underperformance, like the lack of economies of scale among the plethora of small UK pension funds.”
Families
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- High Income Child Benefit Charge to be assessed on a household basis by April 2026.
- Increase in the threshold of the Child Benefit Charge to £60,000 and halving the rate at which Child Benefit is repaid
Ryan Shorthouse, Executive Chair of Bright Blue, commented:
“Working families, especially one-earner couples and single parents, will benefit from the increase in the threshold for the Child Benefit Charge.
“Enabling HMRC to assess household, not just individual, income could potentially be a very radical and welcome change. There are other absurdities in the tax system which wrongly penalise one-earner families, such as eligibility for the Early Years Free Entitlement if someone earns above £100,000, which could also be rectified.”
Social security
- Budgeting Advance Loans’ repayment period increased from 12 to 24 months.
- The £90 application fee for Debt Relief Orders (DROs) abolished.
- Household Support Fund extended for an extra six months.
- Introduction of new claimant commitments within the Additional Jobcentre Support pilot scheme.
Bartek Staniszewski, Senior Researcher at Bright Blue, commented:
“The cost-of-living crisis is still with us; around 4 in 10 adults continue to struggle to afford to pay for energy bills. As such, an extension of the Household Support Fund – intended to mitigate the effects of the crisis – is the right move.
“Increasing the repayment period for Budgeting Advance Loans is a nigh-zero-cost measure that will give Universal Credit recipients some more flexibility – so often needed when struggling to make ends meet. Meanwhile, abolishing the fee for DRO applications will prevent those locked into debt from refraining from applying on the fear that the application is rejected, ensuring that more of those who need a DRO receive one.
“Finally, while it is right to provide better support for those who are struggling, that should come with higher expectations. As such, we welcome the Government increasing the number of times Universal Credit recipients must undertake a claimant commitment within the current Additional Jobcentre Support pilot scheme.”
Housing
- £242 million for 8,000 homes in Canary Wharf and Barking Riverside.
- Launch of a new £20m Community-Led Housing scheme.
- Reduction of the top 28% Capital Gains Tax rate on residential property sale to 24%.
- Stamp Duty relief on purchases of multiple dwellings abolished.
- Mortgage interest payment relief on furnished holiday lettings (FHLs) abolished.
- £7 billion over the next five years for Local Housing Allowance rates to increase to the thirtieth percentile of local market rents.
Bartek Staniszewski, Senior Researcher at Bright Blue, commented:
“What was actually announced on housing was, overall, disappointing. As much as the measures announced are good for what they are, the sums and changes involved are much too small to make even a dent in the enormous housing crisis that this country is facing.
“Most importantly, they do nothing to address the structural problems – such as the cost of land and the prohibitive planning system – that cause the housing crisis in the first place and, most of all, hurt those looking to get onto the housing ladder.
“The biggest announced expenditure on housing, the increase in Local Housing Allowance, is illustrative of this short-term approach; the Government spends more to subsidise renters, but it does not spend more to deliver more social housing.”
Energy and the environment
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- The freeze to fuel duty, in place since 2011, will be extended by another year, until March 2025.
- The Government will extend the sunset clause on the Energy Profits Levy on oil and gas firms by another year, to March 2029.
- A £120 million top up for the Green Industries Growth Accelerator to help build supply chains for offshore wind and carbon capture and storage.
- £1 billion for the latest Contracts for Difference Allocation Round (Round Six), including £800 million for offshore wind farms.
Will Prescott, Researcher at Bright Blue, commented:
“The decision to extend once again the cut in fuel duty is unsurprising but disappointing. Cuts to fuel duty disproportionately benefit more affluent people, who are much more likely to own a car. Tax cuts should be targeted on income from work.
“The Chancellor’s move to extend the windfall tax profits levy on oil and gas companies is logical and welcome. With public finances under strain and fuel industry profits still artificially inflated, largely because of the war in Ukraine, it is fair to expect a larger contribution from those firms.”
Public sector productivity
- The NHS will receive an additional £3.4 billion, doubling investment in NHS technological and digital transformation.
- £800 million to boost productivity across other public services, outside of the NHS including:
- Committing £230 million to deliver pilot schemes of police technology like facial recognition.
- Committing £17 million to accelerate DWP’s digital transformation.
- Committing £14 million for public sector research and innovation infrastructure.
- Piloting the use of AI solutions to support planning authorities to streamline their local plan development processes.
Sarah Kuszynski, Research Assistant at Bright Blue, commented:
“At a time when taxes are high and public finances are stretched, it is important to try and achieve a smarter, more agile state – a more productive state, as the Chancellor said, rather than a bigger one.
The Chancellor is banking a lot on AI-based solutions to help Britain’s ailing public services, with a Productivity Plan that contains a package of reforms to catalyse digital transformation and growth. However, AI is still a nascent technology. And the budgets set for public services beyond this parliament are very tight indeed.”
ENDS
Notes to editors
To arrange an interview with a Bright Blue spokesperson or for further media enquiries, please contact Emily Taylor at emily@brightblue.org.uk or on 07850 684474.
- Bright Blue is the independent think tank and pressure group for liberal conservatism.
- Bright Blue’s Board includes Diane Banks, Philip Clarke, Alexandra Jezeph, Richard Mabey and Ryan Shorthouse.
- Our advisory council can be found here. We also have 227 parliamentary supporters. Members of our advisory council and our parliamentary supporters do not necessarily endorse all our policy recommendations, including those included in this press release.
