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Labour waited nearly four months after the General Election to deliver today’s Budget statement.
Its impact will be felt for far longer.
But while today’s announcements will undoubtedly be a bitter pill for businesses to swallow, with a Spending Review and Industrial Strategy on the horizon, they also provide an opportunity for business to shape Labour’s approach moving forward.
Read on for the Brands2Life Public Affairs team’s analysis of the implications and opportunities of today’s Budget.
The impact of this Budget on business is undeniable. The overarching £40bn in tax rises will fall squarely on the shoulders of business.
It is an enormous figure, the largest since 1970. The rise in Employer’s National Insurance (along with a reduction in the threshold for paying it) is potentially the largest single tax rise for business ever – £25bn. That threshold change alone will cost most businesses around £615 a year per employee.
But beyond the headlines, there were some interesting announcements for businesses, particularly in the health and technology sectors.
Driving productivity was a central theme, and technology was positioned as key to this. There will be a review on barriers to the adoption of transformative technologies that could enhance innovation and productivity, and £1 billion will be made available for technology that could boost NHS productivity.
The Government will now publish an Artificial Intelligence Opportunities Action Plan setting out a roadmap to capture the opportunities of AI to enhance growth and productivity and better deliver services for the public. It’s a significant opportunity for companies working in this space to influence how the UK harnesses AI.
More widely, the Government will maintain the UK’s R&D tax reliefs, and allocate £20.4 billion of R&D investment in 2025-26, including at least £6.1 billion of support for core research.
The Government will also provide £70 million in 2025-26 for the new Life Sciences Innovative Manufacturing Fund, as part of a longer-term funding commitment of up to £520 million.
With the Budget delivered, Labour now has to pivot from the ‘doom and gloom’ messaging of recent months. There is undeniably a logic for its approach to date – by emphasising financial black holes, tough choices ahead, and broken public services, it primed the public and business for potentially unpopular announcements.
And if you wanted a sign that narrative and message matters, despite announcing tens of billions of extra borrowing and tax, the cost of UK borrowing actually dropped slightly during the Budget statement.
It’s a reminder that a strong, credible narrative, consistently deployed, matters.
But the public will now expect a pay off – the pain they may be feeling, has to be worth something, and that something is an improved economic outlook in the months and years ahead.
That fundamental need for the Government to deliver economic growth provides an outstanding opportunity for businesses who wish to shape their policy, regulatory and commercial environment.
Labour wants ideas and insight that can help stimulate the growth needed, particularly if it helps counteract some of the potentially negative impact of business tax rises.
There are two key milestones ahead:
Around each of these milestones, businesses should be developing robust plans for influencing the approach taken by the Government. These two events will set your regulatory and commercial environment for years to come, and you should be considering the audience you need to reach, the messages that will resonate with them, and the best channel through to engage them.
Now is the time to be prepared for what comes ahead, or risk falling behind your competitors.
For an informal conversation about how you can approach influencing the new Labour Government, contact us on [email protected].
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