The General Election Budget of 2024

If the polls are to be believed, there will be a significant change in the Westminster government this year. Speculation continues to vary between a May or Autumn General Election being called. Against this backdrop, on Wednesday 5 March, Chancellor Jeremy Hunt MP delivered what may be the last Budget or ‘fiscal event’ before the election.

The government is desperate to claw back some popularity before calling the big vote, and this Budget was very much in that vein. Hunt’s announcement was uncharacteristically loose and rowdy: he made frequent jabs and jokes at the opposition and received jeers and constant interruption in response. The whole thing gave the impression that this was mostly political theatre and MPs are ready for the campaign trail.

To sum it up, the message of this Budget was about tax cuts to mollify the Conservative party base and give their MPs something to campaign on, alongside continuing restrictions on public spending and murky ‘productivity gains’ to achieve a smaller and ‘more efficient’ state. There was also a notable sprinkling around of various pots of money aimed at key constituencies which the Conservatives are at higher risk of losing.

Despite the campaigning context, there were some themes and initiatives that charity leaders and trustees will want to take note of.

A tough hurdle for any transformative policy changes

Due to the proximity of the election, expectations among policy folk in the sector about this Budget were low. In its submission to the Treasury, the Civil Society Group repeated much of its submission to the Autumn Statement last year, calling for a number of measures that could benefit charities and their beneficiaries more widely.

These included: support for the Guarantee our Essentials campaign which calls for increasing benefits like Universal Credit to cover the rising cost of living; more adequate funding for public services especially for local government, including uplifts in grants and contracts for charities and other social organisations to cover the true cost of delivery; continuation and better delivery of Levelling Up and UK Shared Prosperity Fund funding, and various technical charity tax reforms.

Effective lobbying produces some niche results for charities and their beneficiaries

Sadly these calls mostly weren’t heeded, but the Chancellor did mention charities like Citizens Advice, the Trussell Trust and the Joseph Rowntree Foundation by name in his speech. These charities have led the Guarantee our Essentials campaign and promoted other policy reforms to help those most in need.

The Chancellor did have some limited good news in the form of an extension of the Household Support Fund for another six months [Red Book 3.35, p 48]. This is central government funding distributed to local authorities to help people get basic essentials, and it supports things like food banks, financial help with energy bills, and other types of crisis support for people. A six-month extension (valued at £500m) for this fund is preferable than it ending this March as planned, but it doesn’t solve the long-term problem of rising poverty and effectively punts the cost-of-living crisis onto the next government.

There were a few other minor but important reforms that help people in poverty which various charities will welcome. For example, the Chancellor announced that he was removing the £90 administration fee for ‘Debt Relief Orders’, which are ‘a personal insolvency debt solution for individuals who cannot pay their debts’ [Red Book 5.76, p 76].

Medical charities will no doubt appreciate his announced £45m to support their research on dementia, cancer and epilepsy [Red Book 4.60, p 61], and arts organisations will want to take note of a range of initiatives to boost the ‘creative industries’, including various tax credits and tax reliefs. The Budget book confirms ‘permanent higher rates of tax reliefs for theatres, orchestras, museums and galleries to continue the government’s support for world-class productions. From 1 April 2025 these rates will be permanently set at 45%/40% for theatres, museums and galleries’ touring/non-touring productions, and at 45% for orchestras.’ [Red Book 4.45 p 59].

There was also a mention of the threat to Gift Aid caused by the government’s Digital Markets Bill, with the Budget Red Book saying that government will deal with this problem with a Statutory Instrument, presumably after the Act is passed, ‘so that charities can continue to claim Gift Aid while complying with these new protections’ [Red Book 5.38, p 72]. With amendments to the Bill still working their way through the House of Lords, we will need to further scrutinise what this announcement means.

Short-term benefits and long-term threats in the much-trailed tax changes

The Chancellor reiterated his party’s thinking that ‘lower taxes mean higher growth, more prosperity and more funding for our public services’. He broadly continued his spending plans from the recent Autumn Statement, with overall public spending set to increase by 1% above inflation for the forecast period. However, even with inflation starting to ease, because some departmental budgets like defense and health will remain ‘protected’ from these levels and receive more investment, others will therefore continue to suffer substantial cuts for the foreseeable future.

This includes funding for local governments, which are increasingly in financial crisis and which charities often have important relationships with. The Budget red book does however confirm ‘an additional £500 million of new funding for councils to support the provision of adult and children’s social care, announced on 24 January.’ [Red Book 2.8, page 24]. Again, this funding is probably welcome in the short term, but a drop in the ocean of what’s needed which is in order of many billions not millions of pounds.

Jeremy Hunt scrapped or announced reforms to a number of taxes such as ‘non-dom status’, which are intended to counter-balance his not very secret ‘rabbit in the hat’ of a further 2% cut to National Insurance. This means charity workers will have more take home pay from 6 April, but it’s of little direct benefit to charity employers. More broadly, it’s worth thinking about how far and fast these successive NI cuts have travelled, and what the future impact on critical social services may be.

Under Boris Johnson, there were plans to increase NI contributions to 13% to provide funding to fix the social care system. On taking up his post in Autumn 2022, this Chancellor scrapped those plans and has since made further cuts, bringing NI down to 8% in this Budget. NI is in theory supposed to fund health and social care, and pensions. These cuts may be welcome in the short term for workers, but over a longer period where will the money come from to support needed reform of the system and its sustainability for future generations?

Conclusion

This electioneering budget will likely ramp up the speculation about the timing of the General Election. It’s less than two months until a possible May date, and possibly only six or eight months until an Autumn poll. In the interim, unfortunately, there’s little sign of substantial policy change at Westminster which could alleviate current conditions and multiple social crises. Nevertheless, charities must keep making their case and engaging with the political system through the election year, so they can influence what comes next.

Join us at our online course ‘Using Your Voice in an Election Year’ on the 11 April where we’ll break down the current guidance on campaigning during election time, and assess some of the risks that may come with it. Register here.